Transcript A Comparative Analysis of the Welfare State in OECD Countries

Social Expenditure across OECD
countries: concepts and indicators
Presentation:
Joint OECD/Korea Regional Centre on Health
and Social policy
July 2006, Seoul
Willem Adema
(www.oecd.org/els/social/expenditure)
Presentation outline
• Background to the OECD Social Expenditure
Database (SOCX)
• What is social expenditure?
• What is in SOCX?
• How do OECD countries compare?
• The impact of the tax system
• The future of SOCX
Background to SOCX
• Indicators on aggregate spending data
published during 1980s.
• For 1980 onwards the OECD has detailed
social expenditure data at programme level:
– Analysis of programme development
– Re-categorisation of items by users
– Improve data quality
• Aggregates by broad social policy area,
mandatory private social expenditure and
(from 2006 onwards) estimates on voluntary
private social spending.
Programme data are the building blocks of SOCX
What is social spending?
• Provision of support (cash, in-kind, fiscal) by
public and private institutions to households
during circumstances which adversely affect
their welfare.
• Individual and employer payments to soc. sec.
funds are ‘financing items’
• For broad social policy areas, as old age,
survivors, incapacity-related spending, health,
family support, unemployment, labour market
programmes, housing, other contingencies (e.g.
low-income), etc.
What is social spending (continued)?
• Social spending involves compulsion and/or
interpersonal re-distribution: payments for
services bought at market prices at individual
risk-profiles are not social.
• No transfers between individuals and
households
What is public and private social?
• 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 (voluntary) private social, and
when legally stipulated, it is labelled
‘mandatory private social spending’.
Delineation of public, mandatory and
voluntary social expenditure
Overall trends: public social spending in
Korea is well below OECD-average
40
40
Sweden
Norway
Canada
Korea
35
Denmark
OECD
United States
35
30
30
25
25
20
20
15
15
10
10
5
5
0
0
1960
1965
1970
1975
1980
1985
1990
1995
2000 2003
France and Germany focus public social
support on senior citizens
Public social expenditure by broad social policy area, in percentage of GDP, in 2003
Cash benefits
Services
7.4
8.0
9.5
5.3
6.0
France (26.3)
7.6
9.6
Germany (25.2)
8.0
7.8
5.4
Norway (24.8)
6.5
5.2
7.9
United Kingdom (22.1)
6.7
5.3
6.7
OECD-20 (21)
6.0
6.8
5.1
Netherlands (20.3)
5.8
Income support to
the working age
population
Pensions (old age
and survivors)
18
16
14
12
10
5.3
Canada (16.8)
6.8
1.9
6.2
United States (15.6)
6.7
Korea (5.7)
2.9
8
6
4
2
0
5.6
1.8
1.9
4.4
1.8
2.2
1.5
Health
3.0
0.91.3
7.5
5.6
Denmark (27.6)
9.8
4.6
20
7.1
Sweden (31.3)
0
2.6
All social services
except health
0.6
0.4
2
4
6
8
Note: Countries are ranked by decreasing order of total public social expenditure as a percentage of GDP.
10
12
14
16
18
20
Public spending on incapacity-related benefits
is high in Sweden and the Netherlands
0
Australia
France
Japan
Korea
Netherlands
New Zealand
Sweden
United Kingdom
United States
OECD-30
1
2
3
4
5
6
In France public spending on income
support for the unemployed is high…
0.0
Australia
France
Japan
Korea
Netherlands
New Zealand
Sweden
United Kingdom
United States
OECD-30
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
…as is spending on active labour market
policies (also in the Netherlands, Sweden)
0.0
Australia
France
Japan
Korea
Netherlands
New Zealand
Sweden
United Kingdom
United States
OECD-30
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
Private social spending is important in the US
35
Private
30
Public
20
15
10
5
Av
er
ag
e
SA
U
BR
G
R
O
N
LD
N
EU
D
K
N
D
A
FR
E
0
SW
% GDP
25
Governments also use tax systems to claw
back spending, provide and stimulate 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 paid over benefit income is high in
Denmark and Sweden compared to UK and Korea
on Private transf ers
4
on Public transf ers
3
2
1
ra
ge
A
ve
G
B
R
S
A
U
A
FR
E
U
D
LD
N
O
R
N
S
W
E
N
K
0
D
Direct taxes in 2003, % GDP
5
Indirect tax rates are high in Europe
30
Average Implicit Indirect Tax Rates, 2003
25
20
15
10
5
ve
ra
ge
A
A
U
S
O
R
K
U
D
E
R
G
B
FR
A
N
LD
W
E
S
R
N
O
D
N
K
0
German and US policy makes extensive use
of the tax system to deliver social support
Tax Breaks with a social purpose (excluding pensions), 2003
2.5
2.0
1.5
TBSPs similar to cash benefits
1.0
0.5
ve
ra
ge
A
W
E
S
K
D
N
R
N
O
R
G
B
N
LD
FR
A
U
D
E
A
0.0
U
S
% GDP
TBSPs tow ards current private benefits
Gross public spending overestimates public
social effort in many countries, but not in the US
Gross and Net public social spending, in 2003
40
Gross
Net
30
25
20
15
10
5
Av
er
ag
e
SA
U
LD
N
BR
G
R
O
N
EU
D
A
FR
K
N
D
E
0
SW
% GDP at factor costs
35
‘After tax’, total social spending levels are
similar in many OECD countries…
Social spending af ter tax, in %GDPf c, in 2003
35
Private
Public
25
20
15
10
5
A
ve
ra
ge
R
N
O
K
N
D
LD
N
S
A
U
B
R
G
E
S
W
E
U
D
R
A
0
F
% GDP at factor costs
30
…, but redistributive nature of tax/benefit
systems differ, e.g. Australian and French
systems are effective in reducing child poverty
Difference between market and disposable income poverty, percentage points
20
15
10
5
Fr
an
ce
us
tr
al
ia
A
K
U
en
w
ed
S
Ze
al
an
d
D
N
ew
O
EC
d
Ir
el
an
ds
et
he
rla
n
SA
N
-5
U
Ja
pa
n
0
Concluding remarks
• Public expenditure data give a good view of the nature of
national social protection systems
• Information on effect of tax systems on social effort is
needed to improve quality of international comparisons
• Next release later in 2006 with 2003 data, including
information on ‘after tax’ spending, manual, and country
notes on social systems
• The release could well include data on benefit-recipients
• The RCHSP is working on data for Asia Pacific region
which may be included in future issues of SOCX
Future of SOCX
• Next release later in 2006 with 2003 data, including
information on ‘after tax’ spending, preparation of
Manual and country notes on social systems
• The release could well include data on benefitrecipients
• The RCHSP is working on data for Asia Pacific
region which may be included in future issues of
SOCX