According to a study carried out by the Swedbank Institute of Finance*, 40% of residents count themselves as part of the so-called middle class, while 42% – place themselves below the middle class but not among the poor, and almost 13% rate their household as poor. Only a small share of society, 1.3% of residents, consider themselves well off, or above the middle class. Those who count themselves as middle class are more often respondents who are married or living with a partner, who have children, who have middle or upper-middle incomes and who hold a higher education qualification.

Looking at the trend over recent years, the number of households in Latvia that count themselves as middle class or well off has gradually fallen since 2019 (down by four percentage points), while correspondingly more households count themselves as poor (up by three percentage points). Compared with neighbouring countries, there is greater optimism among the population in Estonia, where the majority, 55% of society, see themselves as belonging to the middle class or as well off. In Lithuania this share is higher still, reaching 58%.

Evija Kropa, expert at the Swedbank Institute of Finance:

“The survey data show that everyday financial difficulties are making people in Latvia doubt whether their current income will be enough to maintain the same quality of life as before. Some 45% of those surveyed admit they are worried about whether they will remain in their present social group over the next two to five years. The greatest instability appears among those who count themselves as belonging neither to the middle class nor to the poor. In this group, 53% of people are concerned about their financial stability.”

The income level a middle-class family in Latvia would want: 3,777 euros

In people's view, income per family member needs to reach an average of 1,259 euros for a household to count as middle class. Notably, this figure has not changed significantly: in the 2019 survey, the minimum monthly income per member of a middle-class family was given as 1,249 euros.

Although this seems a very high income level overall, it is still the lowest when set against the views of people in Lithuania and Estonia, where the income figures given are higher still, at 1,479 and 1,611 euros per family member respectively. For example, in a household of three, people believe the income level would have to be at least 3,777 euros in Latvia, 4,437 euros in Lithuania and 4,833 euros in Estonia for it to be called middle class. Compared with European Union figures, meanwhile, the income level of Latvian households is roughly half as high. The trend is positive, however, as back in 2014 we reached only a third of European Union household income.

What can the middle class afford?

The middle class is defined not only by income level, but also by what can be done with that income and what standard of living it secures. Asked what additional criteria characterise a middle-class household, people most often mentioned owning their own property (87%), being able to cover all compulsory monthly payments without difficulty (77%), being able to afford a week-long trip abroad at least once a year, being able to afford additional spending once all compulsory payments have been made (70%), and being able to afford private and paid medical services. The least valued items were higher education (mentioned by only 33% of respondents) and having a pension savings pot (50).

In assessing how people themselves manage to meet these criteria, the greatest difficulties concern additional discretionary monthly spending, being able to afford paid medical services and taking a trip abroad.

“People's views on belonging to the middle class are dominated by criteria linked to immediate consumption, which are also geared more towards achieving short-term wellbeing, leaving long-term financial health in second place. Alongside current spending, a middle-class household most certainly also needs to look after its future financial stability by saving towards larger goals and for old age, and by building up a reserve for the children's education. Since people do not see higher education as greatly important in achieving a middle-class standard of living, it seems only logical that providing an education for their children is not the main focus either. Yet the data from this same survey show that those with a higher education more often earn middle and high incomes, and also more often count their own household as middle class,” says Evija Kropa.

To turn the situation in a more positive direction and encourage the formation of a larger middle class in Latvian society, people believe the most important step would be to curb and reduce the cost of living (50%), followed immediately by cutting labour taxes (48%) and raising income levels (44%). A significant proportion of respondents also point to the need to promote entrepreneurship (31%) and reduce inequality (25%).

* The survey “People's views on belonging to the middle class and the criteria that characterise it” was carried out by the research centre SKDS in June 2024, polling 1,014 permanent residents of Latvia aged 18-75