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Social expenditures are a measure of the extent to which countries assume responsibility for supporting the standard of living of disadvantaged or vulnerable groups.
Definition
Social expenditure comprises cash benefits, direct "in-kind" provision of goods and services, and tax breaks with social purposes. Benefits may be targeted at low-income households, the elderly, disabled, sick, unemployed, or young persons. To be considered "social" programmes have to involve either redistribution of resources across households, or compulsory participation. Social benefits are classified as public when general government (that is central, state, and local governments, including social security funds) controls the relevant financial flows. All social benefits not provided by general government are considered "private" . Private transfers between households are not considered as "social" and not included here.
Comparability
For cross-country comparisons, the most commonly used indicator of social support is gross (before tax) public social expenditure relative to GDP. Measurement problems do exist, particularly with regard to spending by lower tiers of government, which may be underestimated in some countries. Data on private social spending are often of lesser quality than for public spending.
No data for private expenditure are currently collected for countries ranked separately on the left-hand side of the chart.
Overview
In 2005, on average, public social expenditure amounted to 21% of GDP. In Sweden and France, public social spending is about 29% of GDP while it is 7% in Mexico and Korea.
Gross public social expenditure increased from about 16% in 1980 to 18% in 1990 and to 21% of GDP in 2005 across OECD countries. On average, public social spending-to-GDP ratios increased the most in the early 1980s, early 1990s and in the beginning of this millennium . In between these decennial turning points spending-to-GDP ratios changed little; during the 1980s the average OECD public social spending to GDP ratio oscillated just below 20% of GDP while during the 1990s it trended downwards after the economic downturn in the early 1990s, fluctuating around 20% of GDP.
The three biggest categories of social transfers are pensions (on average 7% of GDP), health (6%) and income transfers to the working-age population (4%). Public spending on other social services exceeds 5% of GDP only in the Nordic countries, where the public role in providing services to the elderly, the disabled and families is the most extensive.
There are also considerable differences across countries in the extent to which social protection systems rely on private provision. In 2005, gross private social spending was highest (at just over 10% of GDP) in the United States and lowest (at less than 1% of GDP) in the Czech Republic, Hungary, Luxembourg, Mexico, Poland, New Zealand, Spain and Turkey. In some OECD countries, the role of private social benefits has increased in recent years, especially in Canada, the Netherlands and the United States. Reductions in the generosity of public employment-related social benefits (sickness and incapacity related income support) since the 1980s have encouraged the growth of private benefits to top-up public programmes. In Denmark, the Netherlands and Sweden, governments have legislated increased employer's responsibility for the provision of sickness benefits during the first part of the 1990s.
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Sources
Further information
Analytical publications
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Adema, W. and M. Ladaique (2009), How Expensive is the Welfare State? Gross and Net Indicators in the OECD Social Expenditure Database (SOCX), OECD Social Employment and Migration Working Papers, No. 92, OECD, Paris.
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OECD (2002-2008), Babies and Bosses - Reconciling Work and Family Life, (See www.oecd.org/els/social/expenditure), OECD, Paris, (See www.oecd.org/els/social/family).
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OECD (2009), Society at a Glance: OECD Social Indicators - 2009 Edition, OECD, Paris, (See www.oecd.org/els/social/indicators/SAG).
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OECD (2009), Doing Better for Children, OECD, Paris, (See www.oecd.org/els/social/childwellbeing).
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OECD (2009), Sickness, Disability and Work, OECD, Paris, (See www.oecd.org/els/disability).
Web sites
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| Indicator in PDF |
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| Table |
| Public and private social expenditure |
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| Public and private social expenditure |
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