Archive:Social protection statistics - main indicators

Data from September 2008, most recent data: Further Eurostat information, Main tables and Database.

Map 1: Total expenditure on social protection as %GDP in 2006

Social protection systems are highly developed in the European Union (EU): they are designed to protect people against the risks associated with unemployment, parental responsibilities, ill health and invalidity, the loss of a spouse or parent, old age, housing and social exclusion. You can find more information about Social Protection in the Social Protection main page.

In 2006, gross average expenditure on social protection accounted for 26.9% of GDP in the EU-27 countries and 27.0% in EU-25 (see Map 1).

The countries with the highest ratios spent (in relation to GDP) more than twice as much as the three countries with the lowest ratios, namely the Baltic countries.

In 2006, the EU-27 countries with average or above-average ratios (see figure 1) represented 39.5% of the EU population. Out of them the group with more than 29% (France, Sweden, Belgium, the Netherlands and Denmark) accounted for 21.2% of all EU inhabitants.

Those spending between 21% and 26.9% of their GDP on social protection (Italy, United Kingdom, Finland, Portugal, Greece, Slovenia and Hungary) accounted for 32.1%. Countries that spent less than 21% of their GDP on social protection (Spain, Luxembourg, Poland, Czech Republic, Cyprus, Ireland, Malta, Slovakia, Bulgaria, Romania, Lithuania, Estonia and Latvia) represented only 28.4% of the EU population. Iceland, Norway and Switzerland are not included in these calculations.

Main statistical findings

Per capita expenditure on social protection (in PPS)

Graph 2: Expenditure on social protection in PPS per capita in 2006

If social protection expenditure is expressed in terms of per capita PPS (purchasing power standards), the differences between countries are more pronounced (see Graph 1). Within the EU-27, Luxembourg had the highest expenditure in 2006 (13 458 PPS per capita), followed by the Netherlands and Sweden (with around 9 000 PPS per capita). The average value in these three countries is between 5 and 8 times higher than in the five EU countries with the lowest expenditure, i.e. Romania, Bulgaria, Latvia Lithuania and Estonia (with values between 1 277 and 1 976 PPS per capita).

Of the countries outside the EU-27, expenditure is highest in Norway (9 901 PPS), with only Luxembourg being higher.

The disparities between countries are partly related to differing levels of wealth, but they also reflect differences in social protection systems, demographic trends, unemployment rates and other social, institutional and economic factors.

Graph 2: Expenditure on social protection as %GDP and PPS per capita in 2006

There is a positive correlation in general between the expenditure on social protection expressed as a percentage of GDP and in PPS per capita (see Graph 2). This is especially true for the group of countries (Latvia, Estonia, Lithuania, Romania, Bulgaria and Slovakia) with the lowest levels of GDP aimed to social protection (in the graph the countries below the level of 17.5%) and for the group (Switzerland, Austria, Germany, Denmark, Netherlands, Belgium, Sweden and France) with the highest levels (in the graph the countries above the line at 26.9%).

Nevertheless, the level of per person expenditure (expressed in PPS) varied considerably for countries that tend to have a low-to-medium level of expenditure as a percentage of GDP directed to social protection (between 17.5% and 26.9%, the value for EU-27). In such cases, even though countries have a similar level of expenditure in terms of GDP, their levels of per capita expenditure (expressed in PPS) differ markedly (horizontal reading of the figure).

This is the case of the following groups:

1. Poland, Malta, Czech Republic, Cyprus and Ireland;

2. Spain, Iceland and Luxembourg;

3. Hungary, Slovenia and Norway.

In these groups high dispersion in per capita expenditure should be interpreted in the light of the different combinations of levels of expenditure on social protection, levels of GDP and population.

Graph 3: Expenditure as % GDP and rates of change in expenditure and GDP, EU25

Table 1: Expenditure on social protection (as % of GDP)

Evolution of social protection expenditure as a percentage of GDP

In EU-25 and EU-15, as well as in the euro zone (EA-15), expenditure on social protection as a percentage of GDP rose continuously between 2000 and 2003 (see Table 1).

Since 2003 the ratio has remained fairly stable; it contracted significantly in 2006, but the level still remained above that recorded in 2000. As illustrated in Graph 3 for EU-25, this most recent contraction is the result of significantly faster growth in GDP than in the level of expenditure on social protection. Between 2002 and 2006, expenditure on social protection as a percentage of GDP in the EU-25 was about 0.4 - 0.5 percentage points lower than in the euro zone (EA-15), since EU-25 includes a number of non-euro countries with low values for the ratio. In most cases these are countries that have continued to show strong GDP growth since 2000 (i.e. Estonia, Latvia, Lithuania, and, to a lesser extent, Slovakia); for most of them the share of social protection expenditure in GDP during these six years has therefore generally decreased.

Between countries with strong GDP growth, Romania experienced levels of expenditure on social protection growing faster than GDP

The growth rate in per capita expenditure at 2000 constant prices

In EU-25, per capita social protection expenditure at constant prices has increased since 2000 by an average of 1.9% per annum. In EU-15 (1.8%) and EA-15 (1.5%), the average calculated over the same period (2000-2006) was less than for EU-25. Within the period under review, per capita expenditure (at constant prices) on social protection in the EU increased between 2001 and 2002 by the highest year-on-year rate, i.e. 2.7% at EU-25 level; the level was lower for EU-15 (2.6%) and higher for EA-15 (3.2%); 2002 was the only year in which countries outside the euro-zone raised the level of per capita benefits by more than in the euro-zone. After the strong decrease in 2004, annual rates of growth remained fairly stable for all aggregates.

The trends shown in Table 2 can be explained by a combination of factors, chiefly adjustments to social benefits and legal changes in the social protection systems. Other possible factors to explain these trends include the quality of the 2006 preliminary data. The specific annual averages of countries are affected by the year-on-year rates, according to different time patterns.

On the one hand, the particularly marked increase recorded between 2001 and 2002 in Ireland (22.4%) and Hungary (14.8%) explained the high average of these countries, namely 8.7% and 7.7% respectively. In Cyprus4 the 2002-2003 rate (14.2%) showed the most significant increase, pushing up the average (5.8%). In Estonia and Romania there were remarkably positive high rates between 2003 and 2004 and between 2005 and 2006 that helped to rank these countries among those with the highest averages (8.1% and 11.6%, respectively). In Latvia and Lithuania it is mainly in the last few years that the average rate (6.5% and 6.6%, respectively) has been given a positive boost.

A more uniform pattern across the whole period under review shows two other countries increasing their per capita expenditure, but to a lesser extent: Austria (1.4%) and Italy (1.7%).

On the other hand, the negative rates recorded beginning in 2004 in Germany, and between 2003 and 2005 in Slovakia reduced the averages of these countries to low levels: 0.2% and 1.4% per year respectively

Table 2: Expenditure on social protection per capita at constant prices (annual rate of growth)

Table 3: Social protection receipts by type (as % of total receipts)

Different systems of financing

In 2006, the main sources of funding of social protection at EU-27 level (see Table 3) were social contributions, which made up 58.9% of all receipts, and general government contributions from taxes (37.6%). Social contributions can be broken down into contributions paid by the persons protected (employees, self-employed persons, retired persons and others) and those paid by employers.

The European average for 2006 masks major national differences in the structure of social protection funding. More than 70% of all receipts were funded by social contributions in Estonia (80.4%) the Czech Republic (80.3%) and Belgium (70.8%). On the other hand, Denmark (62.8%), Ireland (53.2%) and the United Kingdom (50.4%) - plus Norway – financed their social protection systems largely from taxes, which accounted for over 50% of total receipts. Sweden, Cyprus, and Luxembourg were also heavily dependent on general government funding (over 45%).

The share of other receipts (property income and other receipts) was low: 3.5% in 2006 for the EU-27. This share was well over 10%, however, in Poland, Cyprus, Greece, Romania, Portugal and the Netherlands, and also in Iceland (it refers to the receipts of occupational compulsory pension funds) and Switzerland.

These differences are historical and result from the institutional rationale that underlies social protection systems. Northern European countries, where government funding dominates, are steeped in the “Beveridgian” tradition (in this type of system, it is sufficient to be a resident in need in order to be eligible for social benefits). Other countries are strongly attached to the “Bismarckian” tradition, in which the system is based on the insurance concept (in the form of contributions).

The structure is changing over time (with respect to the year 2000) according to different patterns. Cyprus, Hungary, Malta and the Netherlands (and Norway) increased their share of government funding; normally that meant a reduction in social contributions, which in Cyprus and Hungary was also linked to a reduction in other receipts; the exception was the Netherlands, where other receipts mainly decreased. A trade-off in favour of social contributions from government contributions was observed in the Czech Republic. The increase observed in other receipts was to the detriment of funding from tax revenue in Ireland and Slovakia and of social contributions in Poland.

Data sources and availability

Figures are collected from National Statistical Institutes or/and Ministries of Social Affairs. Most of the data are compiled from administrative souurces.

For more detailed information, please refer to the consolidated quality reports.

Context

The European System of Integrated Social Protection Statistics (ESSPROS) was developed in the late ‘70s by Eurostat jointly with representatives of the Member States of the European Union in response to the need for a specific instrument for statistical observation of social protection in the EC Member States.

ESSPROS is a common framework which enables international comparison of the administrative national data on social protection. It provides a coherent comparison between European countries of social benefits to households and their financing.

ESSPROS is composed of the core system and of modules. The Core system contains annual data (starting from the year 1990) collected by Eurostat on: Quantitative data: Social protection receipts and expenditures by schemes (a distinct body of rules, supported by one or more institutional units, governing the provision of social protection benefits and their financing). Qualitative database: Metadata by scheme and detailed benefit. The receipts of social protection schemes are classified by type and origin. The type gives the nature of, or the reason for a payment: s ocial contributions, general government contributions, transfers from other schemes and other receipts; the origin specifies the institutional sector from which the payment is received: All resident institutional units (Corporations, General government, households, Non-profit institutions serving households) and Rest of the world.

The expenditure of social protection is classified by type, indicating the nature of, or the reason for, the expenditure: social protection benefits, administration costs, transfers to other schemes and other expenditure.

Social protection benefits are transfers to households, in cash or in kind, intended to relieve them from the financial burden of a number of risks or needs. The risks or needs of social protection included in ESSPROS are disability, sickness/health care, old age, survivors, family/children, unemployment, housing and social exclusion not elsewhere classified. The modules contain supplementary statistical information on particular aspects of social protection: they relate to pensions' beneficiaries and to net social benefits.

The annual data collection for the module on pensions' beneficiaries has been launched in 2008.

The pilot collection, with a view to introducing a module on net social protection benefits from 2010, has also been launched in 2008.

Further Eurostat information

Publications

Main tables

Living conditions and welfare , see:

Social protection

Total expenditure on social protection

Total expenditure on social protection per head of population. ECU/EUR

Total expenditure on social protection per head of population. PPS

Total expenditure on social protection by type

Total expenditure on social benefits

Total expenditure on administration costs

Other expenditure on social protection

Social benefits by function

Social benefits per head of population by function

Expenditure on pensions

Expenditure on care for elderly

Social protection receipts by type

Database

Living conditions and welfare, see: