Some Indicators on Social Protection in OECD countries

Inception Workshop on SPI Update, Asian Development Bank, Manila, 3-4 April 2014

Willem Adema
Senior Economist, Social Policy Division, OECD

This presentation discusses:

Socialprotectiontrends, Pensions,pasttrendsandprojections Healthexpenditure,pasttrendsrecent

developments

SomeindicatorsontheWelfareStateand
thecrisis

Historical trends in public social protection spending across OECD countries

Public social spending, in percentage of GDP, 1960-2013

Source: OECD Social Expenditure database (SOCX, www.oecd.org/els/social/expenditure).

Public social cash transfers: pensions are the main spending item, often increasing in size
Social expenditure, cash transfers, in % of GDP, early 1990s and 2009
A. Cash pensions, old age and survivors 15 2009 10 5 0 Early 1990s

B. Income support to the working age 15 2009 10 5 0 Early 1990s

Source: OECD Social Expenditure database (SOCX, www.oecd.org/els/social/expenditure).

Populations are ageing and the old-age support ratio will halve in the OECD

Source: OECD (2011), Pensions at a Glance, OECD Publishing, Paris (www.oecd.org/els/social/pensions/PAG); United Nations, World Population Prospects - 2008 Revision.

Projections of public expenditure on pensions, 2010-2050

As a % of GDP

Greece France Germany OECD-28 Netherlands Sweden United Kingdom Korea Australia United States

13.6 14.6 10.8 8.4 6.8 9.6 7.7 0.9 3.6 4.6 0 2 4 6 8

2010 Difference 2010-2050

10 12 14 16

Source: OECD (2012), OECD Pensions Outlook 2012, OECD Publishing, www.oecd.org/daf/pensions/outlook.

Public spending on in-kind benefits: health is the main area but other services have expanded
Social expenditure, in percentage of GDP, early 1990s and 2009
A. Health
15 2009 10 Early 1990s

B. Other social services

5 2009 Early 1990s

Source: OECD Social Expenditure database (SOCX, www.oecd.org/els/social/expenditure).

Health spending in % GDP increased, most notably around 2008/9, but it has stabilised
Total health expenditure as a % of GDP

Source: OECD Health Statistics, 2013

Health expenditure growth stalled in 2009, especially public health spending

Real annual growth rates - average across the OECD

Source OECD Health Statistics, 2013Source: OECD Health Statistics 2013

There has been some shift towards private financing.

Source OECD Statistics, 2013Source: OECD Health Statistics 2013 Source: Health OECD Health Statistics 2013

and largest cuts were concentrated in pharma and prevention

Real annual growth rates - average across the OECD

Source OECD Health Statistics, 2013Source: OECD Health Statistics 2013

 SomeindicatorsontheWelfareStateand
thecrisis

The impact of the crisis on social spending trends varies across countries
Annual growth in real public social spending and real GDP, Index 2007= 100 (left scale and public social spending as a % GDP (right scale), 2007-2013
% Australia Public social spen ding as a % GDP (right scale) Real GDP France Real public social spending GDP Deflator

150 140 130 120 110 100 90 80 70

Korea

35 30 25 20 15 10 5

150 140 130 120 110 100 90 80 70 2007 2008 2009 2010 2011 2012 2013

35 30 25 20 15 10 5

2007 2008 2009 2010 2011 2012 2013

United States %

150 140 130 120 110 100 90 80 70 2007 2008 2009 2010 2011 2012 2013

35 30 25 20 15 10 5

150 140 130 120 110 100 90 80 70 2007 2008 2009 2010 2011 2012 2013

35 30 25 20 15 10 5

Source: OECD Social Expenditure database, (SOCX, www.oecd.org/els/social/expenditure).

and Greece and Ireland were among the countries most affected
Annual growth in real public social spending and real GDP, Index 2007= 100 (left scale and public social spending as a % GDP (right scale), 2007-2013

Source: OECD Social Expenditure database, (SOCX, www.oecd.org/els/social/expenditure).

Family spending went up most in countries with income-tested child benefits

Public spending on family benefits in percentage of GDP, 2010

Ireland United Kingdom France Denmark Sweden Germany Australia Israel United States Korea

3.0 3.6 3.7 3.5 3.4 2.7 2.5 2.1 0.0 1.2 0.4 0.7 0.3 0.3 0.2

1.5 0.9 0.3 0.3 0.3

Public spending on family benefits in percentage of GDP, 2007 Increase 2007-2010

Note: Public support accounted here only concerns public support that is exclusively for families (e.g. child payments and allowances, parental leave benefits and childcare support). Spending recorded in other social policy areas as health and housing support also assists families, but not exclusively, and is not included here. In Federal countries, as for example Canada, Switzerland and the United States, childcare spending by local governments is not necessarily reported to Federal governments. For these countries indicators underestimate the extent of public spending on childcare. Source: OECD Social Expenditure database, preliminary data (SOCX, www.oecd.org/els/social/expenditure).

The number of recipients of primary out-of-work benefits have increased during the crisis
Panel A. Participation: Number of recipients of cash transfers as a percentage of the 15-64 population
Unemployment insurance
6 5 4 3 5.6 4.7 4.6
4.4

Panel B. Percentage point change between 2007 and 2010

Unemployment insurance Unemployment assistance
1 2

Unemployment assistance
2 1 0 -1 0

France Spain United States Australia Ireland

3.2 2.9 2.4 2.4 2.3
2.2

4.1

Portugal Canada Czech Republic Netherlands Sweden New Zealand Italy Germany
1.3 0.9 0.8

2.0 1.9

Chile Korea Japan

Source: OECD, 2014, Society at a Glance, http://www.oecd.org/els/societyataglance.htm.

 As did the number of recipients of secondary out-of-work benefits in most countries

Panel A. Participation: Number of recipients of cash transfers as a percentage of the 15-64 population
Unemployment assistance
12 11 10 2.1 2.1 0.6 2.6 3.7 3.3 5.1 0.1 3.4 2.1 1.9 3.0 1.5 0.8 1.4 1.1 9 8 7 6

Panel B. Percentage point change between 2007 and 2010

Unemployment assistance Social assistance Lone parents
-2 -1 0 1 2 3 4 5 6 7 8

Social assistance
5 8.9 8.7 6.4 4.2 2.3 2.3 4 3 2 1

Lone parents
0

United States Ireland Germany Spain New Zealand Australia Sweden France Portugal Czech Republic Netherlands Japan Chile Italy

Source: OECD, 2014, Society at a Glance, http://www.oecd.org/els/societyataglance.htm.

Fiscal space for greater social investment is narrowing in countries with high unemployment

Notes: See notes to Figure 9. Averages for 2007/8 and 2011/12 are used as the timing of the downturn and the beginning of any fiscal consolidation efforts varied across countries. Consolidation effort: change in underlying primary government balance, percentage points of GDP. Source: OECD, 2014, Society at a Glance, http://www.oecd.org/els/societyataglance.htm.

Concluding remarks

SocialspendingtoGDPratioshaveincreasedwiththeoutbreak
ofthecrisis,withoutmarkeddeclinesofar.

Pensionsandhealthexpendituretrendshavecontributedtoa
structuralupwardincreaseinsocialspendingovertime. However,

Pensionreformwillmitigatetheupwardpressureonsocialspendingdue
topopulationageing

Cutsingovernmenthealthspendinghavecontributedtoalmostall
OECDcountriesexperiencingafallionhealthspendinggrowthsince2009

Allsectorsexperiencedsignificantreductions;especiallypharmaceuticals
andprevention

Fiscalspaceforgreatersocialinvestmentisnarrowingin
countriesthatsawasteepriseinemploymentduringthecrisis.

Thank you and further information

OECD,2014,SocietyataGlance,
http://www.oecd.org/els/societyataglance.htm

TheOECDSocialExpendituredatabase isaccessiblevia
www.oecd.org/els/social/expenditure

OECDSocial,EmploymentandMigrationWorkingPapers,No.124:Isthe
EuropeanWelfareStateReallyMoreExpensive?IndicatorsonSocialSpending, 19802012;andaManualtotheOECDSocialExpenditureDatabase(SOCX). http://www.oecd.org/els/listofsocialemploymentandmigrationworkingpapers.htm

OECDHealthPoliciesandData
http://www.oecd.org/health/healthsystems/healthstatistics.htm

TocometheOECDSOCRRecipiency database OECDWorkonIncomeDistributionandPoverty

http://www.oecd.org/social/inequality.htm