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,
edu-cation 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
The National Accounts have 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 Indicator 5, Indicator 10
Indicator 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.
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 government units or NPISHs to households to meet the same kinds of
needs as social insurance benefits 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 government 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.
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.
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.
Lequiller, F. and D. Blades
(2007), Understanding National Accounts, OECD
OECD (2000), System of National Accounts, 1993 - Glossary, OECD
UN, OECD, IMF and Eurostat
(eds.) (1993), System of National Accounts 1993,
United Nations, Geneva, http://unstats.un.org/unsd/sna1993.
|Indicator in PDF
|20.1. Social benefits to households
|20.1 Social benefits to households