Purchasing power of middle class families of Tallinn, Riga, Vilnius.

How many places in senior live in residences can the middle class afford in the capital regions of Baltics. Based on comparison with Paris area.

Target audience.

The aged people themselves are not in a position to pay for nursing homes care neither in France, nor in Baltics. So we are talking about families, not about households. A family can include multiple households: the household of aged parent(s) and several households of adult children. All these households participate in financing of the stay of aged relative in Senior Care live-in facility.

French reference point.

We'll compare our target regions (the regions the capitals of Baltic States- Vilnius, Tallin, Riga) with Ile-de-France — the region what includes Paris in France. The total quantity of beds in live-in facilities in this region of France is 93730 beds & ALF units (62% of them nursing beds) for the population of 12 million (or 18.2 percent of the population of France.)

The average pension in France is around 1300 euros

The residential part of price of retirement facility is 3 294 euros in Paris (2501 euros in Ile de France). This sum exceeds the pension almost 3 times.

We know that in Baltic states the pensions vary from 250 euros per month (Lithuania), through 350 euros per month (Latvia) to 380 euros per month (Estonia), which is 2-3 times lower than prices charged by totally filled functioning commercial aged-care residences.

So the situation is the same as in France. The families of the upper middle class pay for the private live-in aged-care service, not residents themselves. So we have to compare the income of upper middle class of Baltic states with prices of the residences to be constructed.

Upper middle class

We will consider as “middle class” the 60% of population — from 3rd to 9th deciles — according to the distribution of income.

Upper middle class will be the seventh, eighth and ninth deciles of population — or 30% of all the households.

We see that the distribution of income by quantiles in Baltic States is quite homogeneous and resembles the distribution of income in France.

To get the total income of the upper middle class, we’ll summarise the values of the Seventh, Eighth and Ninth deciles

And we’ll get the upper middle class shares of Income.

Not surprisingly the the relative income of upper middle of Baltic States is higher than of French one.

How many spots in residences can the middle class afford in the capital regions of Baltics.

We know that the population of the capital regions of Baltics (Riga, Tallinn, Vilnius regions) is 1,7M, or 26% of total population.

Mean net income data are available from Eurostat

Based on it we can calculate the net income for 1 person of upper middle class per year

So taking into account the population of each of the countries we’ll get the equivalised net income for upper middle class person (each of household) per year for all the 3 Baltic Countries of 12 417,47 €

Now we will calculate the population of the households of Middle Class of the capital regions of Baltics — 507 000 (30% of 1690 000).

Based on the quantity of beds/ALF units in Ile-de-France (93 730) and the average price (2501 euros per month) and the net Income of households of Paris region we can get the percentage that the French upper middle class spends on the payment of spots in live-in facilities- 2.9%

By applying this percent to the net income of upper middle class households of Baltics capital regions and using of 1000 euros per month as the price for live-in facility, we get that 15400 beds/ALF units can be paid by Middle Class families.

The ratios of aged people to total population/middle class are quite similar in Baltic states and in France. The percentage of all population older than 65 years is 17.0%, 17.9%, and 18.4% in the three Baltic states compared to 17.5% in France. We can conclude that the presented calculations are appropriate and the purchasing power of the upper middle class of the capital regions of the Baltic States is sufficient to pay for 15 401 beds/ALF units.

Used sources of information