Social protection in the EU

EU12 social protection spending as a percentage of GDP fell slightly in 1994 to 28.6% from 28.8% the year before, Eurostat, the Statistical Office of the European Communities in Luxembourg, says in a report today.

The report shows that caring for Europe’s ageing population continues to take the lion’s share. And it highlights the increasing share of unemployment benefits.

In the EU, Denmark (33.7% of GDP), the Netherlands (32.3%) Germany (30.8%) and France (30.5%) recorded the highest ratio of social protection expenditure. However, provisional data for Finland indicate an even higher level of 34.8% (up from 25.4% in 1990). Austria was also high at 30.2%.

Today’s report shows this latest EU average (28,6%) to be well up from 24.3% at the start of the eighties, although from 1990 the new German Länder are included. It traces a steep rise in the nineties as a result of the slowdown in GDP growth and rising unemployment. But in 1994 social protection expenditure stabilised or even fell slightly in real terms in Spain, Italy and the Netherlands as a result of efforts to curb expenditure.

In 1994, social benefits per person were highest in Luxembourg and Denmark: over 6,000 PPS³ (purchasing power standards). In contrast, Greece spent 1,644 PPS per person and Portugal 2,162.

Gap between highest and lowest benefits per person has narrowed. In 1980 the ratio was 1 to 5.5; in this latest year 1 to 4. This, reports Eurostat, is thanks to bigger rises in spending in real terms in countries that spent the least in 1980 - Portugal, Greece, Spain and Ireland.

In most Member States, old age benefits take the lion’s share of total social protection spending - in Italy and Greece well over 60%. Lowest proportion in 1994 was Ireland’s 27.5%. EU12 average was 44.2% (43.3% in 1980).

Between 1980 and 1994 these benefits rose by 59% in real terms. One reason, says the report, was the high incidence of early retirement in the 1980s. It adds: "Faced with an ageing population, several countries are currently carrying out reforms to their pension schemes, the effect of which will gradually become apparent over the course of time."

Between 1980 and 1994, the proportion of expenditure on sickness, disability and accidents at work decreased from 37.5% to 35.2%, due to a relatively lower pace of growth in expenditure on this group compared to benefits as a whole. It accounted for the biggest share of total benefits in the Netherlands (43.6%), Ireland (36.8%) and Finland (35.6%). EU12 average: 35.2%.

EU-wide, unemployment and employment protection accounted for 9.2% of total social protection spending. Figures vary from well over 15% in Spain, Ireland, and Denmark to less than 3% in Greece, Italy and Luxembourg. But differences in national practices make it difficult to draw too many conclusions.

In 1994, EU average spending on unemployment as a percentage of total social protection was 9,2% (6,4% in 1980). In Germany, Ireland, Luxembourg and Portugal it doubled. However, the trend was downwards in Belgium (11.6% to 11.0%) and particularly the United Kingdom (9.6% to 7.3%).

Family and maternity spending formed 7.6% of the EU12 total in 1994. Highest was in Ireland, Luxembourg and Finland - over 13%; lowest in Greece and Spain, 1.2% and 1.7% respectively.

Proportion going on family benefits in 1980-94 fell in all Member States, mainly as a result of the fall in fertility in all developed countries. EU-wide, it went from 10.5% to 7.6%.

EU-wide, contributions by employees and employers are the main source of finance for social protection (58% in 1994). But there are large differences between Member States. Social contributions are particularly high in Belgium, Greece and France, where they account for over 65% of total receipts. At the other end of the scale, Denmark, who finances its social protection system through taxes (over 75% of receipts).

In the EU, general government contributions accounted for 30.2% compared to 27.9% in 1980. The report says there is a tendency for a bigger share from government, only in Belgium, Denmark, Ireland, and the Netherlands the proportion is decreasing.

	As % of GDP	On old age/survivors as % of total benefits		On unemployment etc as % of total benefits
	1994	1994	1980	1994	1980
Belgium	27.0	44.2	41.5	11.0	11.6
Denmark	33.7	36.6	35.7	16.8	12.9
Germany	30.8	41.2	42.6	9.2	4.5
Greece	16.0	66.8	66.1	2.7	2.7
Spain	23.6	42.6	41.0	18.1	15.7
France	30.5	43.7	43.9	8.1	5.1
Ireland	21.1	27.5	31.4	17.2	8.8
Italy	25.3	64.0	55.1	2.5	2.3
Luxembourg	24.9	46.0	47.5	2.3	0.9
Netherlands	32.3	36.8	31.0	10.4	6.1
Portugal	19.5	40.1	39.4	5.8	2.8
UK	28.1	41.3^a	42.8	7.3^a	9.6
EU12	28.6	44.2	43.3	9.2	6.4
Austria	30.2	44.5		5.3	:
Finland	34.8	32.3		15.2	: