Transcript A Comparative Analysis of the Welfare State in OECD Countries

Social Policy : Trends in spending,
recipiency and policy focus
Seminar presentation:
Korea Institute for Health and Social Affairs
11 October, 2007, Seoul, Korea
Willem Adema
Head, Asian Social and Health Outreach, OECD
(www.oecd.org/els/social/expenditure)
Presentation outline
•
•
•
•
•
•
What is social spending?
What is it spent on?
How do countries compare?
Who receives social support?
The impact of the tax system.
Future policy challenges and options.
What is social spending?
• The OECD Social Expenditure database defines
social expenditure as:
– Provision of support (cash, in-kind, fiscal) by public
and private institutions to households during
circumstances which adversely affect their welfare.
– Social spending involves compulsion and/or
interpersonal re-distribution: payments for services
bought at market prices at individual risk-profiles are
not social.
– Does not include transfers between individuals and
households
What is social spending (continued)?
Social policy areas:
• Old age
• Survivors
• Incapacity related
• Health,
• Family
• Unemployment,
• Active Labour
Market Programmes
• Housing
• Other contingencies
(e.g. low-income)
Recent SOCX-work focused on civil servant
pensions, long-term care and family support.
Most spending is on pensions and health care
Cash benefits
Public social expenditure, per cent of GDP, 2003
8.0
7.4
4.8
5.5
4.8
4.7
5.3
Income support to the
working age
population
1.5
2.2
Pensions (old age and
survivors)
7.6
Denmark (27.6)
5.6
11.5
Germany (27.3)
8.0
8.6
EU-19 (23.3)
6.1
7.1
OECD (20.7)
5.9
5.6
United Kingdom (20.6)
6.7
3.4
Australia (17.9)
6.2
8.2
Japan (17.7)
6.1
1.6
6.2
United States (16.2)
6.7
0.9
Korea (5.7)
2.9
0.91.3
20
18
16
14
12
10
8
6
4
2
2.7
France (28.7)
5.3
8.8
7.4
7.1
Sweden (31.3)
12.0
5.4
Services
0
6.3
1.9
2.4
2.3
3.2
2.5
Health
0
All social services
except health
0.4
2
4
6
8
10
12
14
16
18
20
Public family benefits include cash transfers,
(childcare) services and fiscal support
Public spending on family benefits, per cent of GDP, 2003
Cash
Services
Tax breaks towards family
OECD
2.0
2.0
1.5
1.5
1.0
1.0
0.5
0.5
0.0
0.0
Ca
na
Ja
St
at
Un
ite
d
Ge
rm
tri
Au
s
Ne
the
rl
Un
ite
d
Ki
ng
do
m
lia
tra
Au
s
Sw
ed
e
Fr
an
ma
De
n
Public support included here only concerns items that are 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 assist families, but not exclusively, and is not included here.
Ko
rea
2.5
da
2.5
pa
n
3.0
es
3.0
an
ds
3.5
an
y
3.5
a
4.0
n
4.0
ce
4.5
rk
4.5
Non-health related social spending contributes
to reducing poverty across the OECD
Poverty rate and non-health related public social expenditure, per cent of GDP, 2000
MEX
20
USA
TUR
Poverty rate (%)
15
JPN
ITA
IRL
PRT
GRC
GBR
AUS
DEU
CAN
POL
OECD-25
AUT
HUN
10
CHE
5
NZL
LUX
NOR
FRA
NLD
FIN
SWE
CZE
DNK
0
0
5
10
Non-health public social spending towards working-age population (%GDP)
15
Public support included here only concerns items that are 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 assist families, but not exclusively, and is not included here.
What is public and private social spending?
• In line with the System of National accounts,
social spending by General Government
(different levels of Government and social
insurance institutes) is regarded as public
social expenditure.
• Social spending by employers, individuals,
and NGOs is private social expenditure:
– when legally stipulated, it is ‘mandatory’
– Otherwise, it is voluntary private social spending’.
Examples of social benefits
• Public Social Expenditure:
– Social insurance support (pensions, unemployment,
medical benefits)
– Social assistance support, means-tested livelihood
protection
– Benefits for civil servants (except when through
autonomous funds)
• Mandatory Private Social Expenditure:
– Employer-provided sick-pay, severance payments
• Voluntary Private Social Expenditure:
– Tax advantaged employer-based health plans, occupational
pensions, NGO-provided social services.
Most social spending is publicly financed,
especially in Germany, Japan and Sweden…
Public, mandatory private and voluntary private, 2003
Germany
Sweden
Japan
30.2%GDP
34.3%GDP
21%GDP
…but private spending plays an important role
in Korea, the UK and the USA.
Public, mandatory private and voluntary private, 2003
Korea
Public
United Kingdom
Voluntary private
Mandatory private
United States
27.4%GDP
8.1%GDP
26.2%GDP
Publicly mandated social spending is increasing
in most OECD countries…
Publicly mandated social expenditure 1980 - 2003
Australia
France
Germany
Japan
Korea
35
30
25
20
15
10
5
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
0
…but not in the Netherlands and Sweden.
Sweden
UK
19
96
Netherlands
19
92
Publicly mandated social expenditure 1980 - 2003
US
20
02
20
00
19
98
19
94
19
90
19
88
19
86
19
84
19
82
19
80
40
35
30
25
20
15
10
5
0
Recipiency has increased since 1980 but cyclical
patterns are clearly visible…
Total recipients of social benefits as a percentage of the population aged 15-64, 1980 - 2004
Australia
Denmark
France
Germany
Japan
OECD-16
30
25
20
15
10
5
0
1980
1985
1990
1995
2000
2004
…while in Korea, the increase of the social
assistance caseload drives the upward trend in
benefit receipt
Total recipients of social benefits as a percentage of the population aged 15-64, 1980 - 2004
Korea
Sweden
United Kingdom
United States
OECD-16
30
25
20
15
10
5
0
1980
1985
1990
1995
2000
2004
When considered over the life course, Sweden
frontloads investment in families…
12000
10000
8000
6000
4000
2000
Cash benefits
Benefits in kind
ALMP spending
Education
Tax Breaks for Social Purposes
29
28
27
26
25
24
23
22
21
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
Pre-birth
0
…while the Korean spending profile reflects
education spending patterns.
12000
10000
8000
6000
4000
2000
Cash benefits
Benefits in kind
ALMP spending
Education
Tax Breaks for Social Purposes
29
28
27
26
25
24
23
22
21
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
Pre-birth
0
Net social spending: Governments claw back
money through taxation of benefits and also use
tax systems to provide and stimulate social support
• Taxation of cash payments differs across and
within countries and across types of transfers
• Taxation of benefit consumption varies across
countries
• Tax breaks that mirror cash payments : some
programmes include both elements
• Tax breaks that aim to generate more private
social provision.
Income tax and soc. sec. cont. paid over benefit income is
below OECD average in non-European OECD countries
Direct tax and social security contributions paid over benefit income, per cent of GDP, 2003
Direct taxes in 2003, % GDP
5
on Private transfers
on Public transfers
4
3
2
1
0
AUS
GER
JPN
KOR
NLD
SWE
UK
USA
OECD24
Indirect taxation of consumption out of benefit
income is higher than direct tax levied (previous
chart) and is highest in Europe.
Indirect tax paid over consumption out of benefit income, per cent of GDP, 2003
On consumption out of public transfers
On consumption out of private transfers
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
AUS
GER
JPN
KOR
NLD
SWE
UK
USA
OECD24
In Germany and the US tax systems play an
important role in delivering social support
Tax Breaks with a social purpose (excluding pensions), 2003
2.5
TBSPs towards current private benefits
% GDP
2.0
TBSPs similar to cash benefits
1.5
1.0
0.5
0.0
AUS
GER
JPN
KOR
NLD
SWE
UK
USA
OECD24
Net total social spending levels are similar in
across OECD countries…
35
Private
30
Public
per cent of GDP
25
20
15
10
5
0
AUS
GER
JPN
KOR
NLD
SWE
UK
USA
OECD24
The story so far
• Public social spending and benefit recipiency are on the
rise in most countries.
• Information on the effect of tax systems is needed to
improve quality of international comparisons, and are
likely to revel reduced spending growth for most
European OECD countries.
• Next release of the Social expenditure database in
2008; including net spending and data on recipiency.
• Information on Asia countries that do not belong to the
RCHSP may well be included
Public pension spending increased by 1 per cent of
GDP from 1990 to 2003 and will increase further…
Public spending on pensions, per cent of GDP, 1990 - 2003
10
1990
2003
8
6
4
2
0
AUS
DNK
FRA
DE U
JPN
KOR
S WE
GBR
US A
OE C D
…and spending on health and Long-term care
has increase even faster over the same period
12
Public spending on health and services for the elderly and disabled, per cent of GDP, 1990 - 2003
S ervices for elderly and dis abled (2003)
H ealth (2003)
S ervices for elderly and dis abled (1990)
H ealth (1990)
10
8
6
4
2
0
AUS
D NK
FRA
DE U
JPN
KOR
S WE
GBR
US A
OE C D
Ageing will exert upward pressure on social
spending across the OECD, especially in Korea
Population aged 65 and over, relative to the population aged 20-64, 2000 and 2050
2000
80
OECD-2000
2050
OECD-2050
70
60
50
40
30
20
10
0
SWE
JPN
FRA
UK
Source: OECD (2007), Society at a Glance: OECD Social indicators.
DEU
NL
USA
AUS
KOR
Korea needs to better use its ‘female capital’ to
avoid a shrinking the labour force
130
Total labour force from 1980 to 2000, and projections from 2005 to 2030, in thousands
120
110
100
90
80
2005
2010
2015
2020
2025
‘Constant rates’: assumes constant labour force participation rates for men and women from 2000 to 2030; ’Gender equity in
participation rates’: assumes that female participation rates reach current male participation rates in each country by 2030.
2030
…which could also contribute to higher fertility
rates.
1980
Female employment rates, and total fertility rates
3.5
3.5
3.5
3.0
3.0
2.5
2.5
2005
IRL
3.0
PRT
GRC
2.0
ESP
AUS
NZL
ITA
TFR (2004)
TFR
2.5
BEL
USA
FRA
SWE
JPN
1.5
NLD
AUT
CHE
FIN
DEU
1.0
20
30
40
50
Employment rates of women
60
70
MEX
MEX
USA
USA
NZL
NZL
IRL
FRA
GBR NOR
GBR NOR
FIN DNK
FIN DNK
AUS
AUS
NLD
NLD
LUX
LUX
SWE
SWE
BEL
BEL
OECD
OECD
CAN
CAN
1.5
1.5
AUT
AUT
CHE
CHE
PRT
PRT
ESP
ESP
DEU
DEU
POL
POL JPN
ITA
ITA HUN
JPN
HUN
SVK CZESVK
CZE
GRC
GRC
KOR
KOR
1.0
1.0
40
40 50
50 60
6070
7080
EmploymentEmployment
rates of women
rates of women
2.0
GBR
TFR (2004)
KOR
2.0
ISL
IRL
FRA
NB Different scales on the horizontal axis of the panels; female employment has increased everywhere
8090
90
More information
OECD (2007), Social Expenditure database, 1980-2003,
www.oecd.org/els/social /pensions, in particular, see
the interpretative guide.
OECD (2007), Facing the Future, Korea’s Health,
Family and Pension Policy Challenges.
OECD (2007), Pensions at a Glance.
www.oecd.org/els/social/pensions