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National Accounts at a Glance 2009
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branch General Government
  branch 19. Social benefits

Social benefits reflect current transfers to households in cash or in kind to provide for the needs that arise from certain events or circumstances, for example sickness, unemployment, retirement, housing, education or family circumstances that may adversely affect the well-being of the households concerned either by imposing additional demands on their resources or by reducing their incomes. Transfers are typically made by governments and NPISH, and they form a significant share of total general government expenditure and households disposable income; particularly for the lower income groups of society. They are an important factor in analyses of households' welfare and income inequality and the redistributive role of government.

Definition

The National Accounts has two distinct categories of Social benefits: the first is Social benefits other than social transfers in kind. The second is Social transfers in kind (see also Sections 5, 10 and 11). The distinction between the two is important. Transfers relating to the former are typically in cash and so allow households to use the cash indistinguishably from income coming from other sources, whereas transfers under the latter are always in kind, and so households have no discretion over their use.

Social benefits other than social transfers in kind is further broken down into two key components: Social insurance benefits and social assistance benefits in cash.

The latter consist of cash transfers made by go-vernment units or NPISHs to households to meet the same kinds of needs as social insurance be-nefits but where the households or needs are outside of any social insurance scheme or where the social insurance benefits are not considered sufficient to cover the needs. It does not include payments to government/NPISH employees in their capacity as current or former employees.

 

The SNA breaks down Social insurance benefits into three further categories: Social Security benefits in cash; Unfunded employee social insurance benefits; and Private funded social insurance benefits. The first two are most relevant for go-vernment and the first, in particular, reflects a significant proportion of government expenditure. It includes cash payments for: sickness and invalidity benefits; children, family, dependants' and maternity allowances; unemployment benefits; pensions; and death benefits. Unfunded employee social insurance benefits include cash or in kind payments to employees for similar circumstances including payments on general medical services not related to the employee's work. Government as an employer incurs expenditures here, typically reflecting employee pensions.

Social transfers in kind reflect payments for individual goods and services such as education, health and housing, provided by government and NPISHs, to households either free or at prices that are not economically significant.

Comparability

Whilst there are significant differences between Social transfers in kind and Social benefits other than social transfers in kind vis-à-vis households' choice, they are not entirely mutually exclusive in a policy context. Governments for example can provide pensions that include a free housing component, (and this component would be recorded as a social transfer in kind) rather than a pension in cash that allows the recipient to pay a market rent. Similarly some governments provide food coupons, which would be recorded as a social transfer in kind, instead of cash benefits.

This suggests that international comparisons of social benefits should focus on the totality, those in kind and in cash. Indeed comparisons of the components of social benefits other than social transfers in kind should also be attempted with some caution as the coverage of people and consequences/needs in social insurance schemes varies across countries. A further caveat concerns social benefits paid to government employees as these can be delivered through private funded rather than unfunded schemes.

Moreover, in practice not all countries record all social transfers in kind in the same way. Some countries treat the reimbursements on some individual goods and services in the secondary distribution of income account; with the reimbursed component forming part of household final consumption and not general government final consumption. Total general government expenditure, households' actual final consumption, disposable income, adjusted disposable income and saving are unaffected by these differences however.

Source

Online database

Further reading

Indicator in PDF Acrobat PDF page

Table
19.1. Social benefits to households
    Table in Excel

Figure
19.1. Social benefits to households Figure in Excel
Social benefits to households