8/13/2019 Session 1 (Adema) - OECD Social Expenditure
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Willem AdemaSenior Economist, Social Policy Division, OECD
Social Spending in the OECD:
Concepts, indicators and trends
Workshop on Measuring Social Protection
Statistics Indonesia - Badan Pusat Statistik,
Jakarta, 14 - 16 May 2013
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This presentation covers:
1. Background to the OECD Social Expendituredatabase (SOCX)
2.Trends in social expenditure
3. Social spending after tax
4. Re-distribution
5. The ageing challenge
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The OECD Social Expenditure database (SOCX)
SOCX was developed in the 1990s to monitor trends in social
spending and analyse changes in its composition in line with the
SNA
cross-nationally comparable statistics on public and private social spending at the detailed
programme level to facilitate reclassification where required.
Data on the effect of fiscal measures is often of a more aggregate nature.
SOCX covers 34 OECD countries with data from 1980: shorter
time-series for countries which have joined since the mid-1990s.
Sources: national correspondents and ESTAT for EU countries andother OECD databases: OECD Health data; OECD Database on
Labour Market Programmes; the OECD Education database; and
a Questionnaire on fiscal measures via the OECD Centre for Tax
Policy and Administration
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What is social expenditure?
The provision by public and private institutions of benefits to and
contributions targeted at households and individuals during circumstances
which adversely affect their welfare, provided that the provisions of the
benefits and financial contributions constitutes neither a direct payment
for a particular good or service nor an individual contract or transfer.
Social spending involves redistribution and/or compulsion:
Public : financial flows controlled by General Government (central + local
governments + social security funds)
Private
mandatory: stipulated by legislation (i.e. employer provided sickness
benefits)
voluntary: stipulated by collective agreement (i.e. occupational
pensions funds, private health)
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Categorisation of benefits with a social purpose
Public Private
Mandatory Voluntary Mandatory Voluntary
Redistribution
across households
Means-tested
benefits, social
insurance benefits
Voluntary participation
in public insurance
programmes. Self-employed opting in
to obtain insurance
coverage.
Employer-provided
sickness benefits,
benefits accruing frommandatory contributions,
to, for example, pension
or disability insurance.
Tax-advantaged benefits,
e.g.,individual retirement
accounts, occupationalpensions, employer-
provided health plans
No redistribution
across households
Benefits from
governmentmanaged
individual saving
schemes
Non tax-advantaged
actuarially fair pensionbenefits
Exclusively private:
Benefits accruing frominsurance plans bought at
market prices given
individual preferences.
The shaded cells reflect benefits that are NOT classified as social.
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OECD Social Expenditure database SOCX -
structure
1. Old Age
2. Survivors
3. Incapacity-related benefits
4. Health 5. Family
6. Active labour market programmes
7. Unemployment
8. Housing
9. Other social policy areas
5
45
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Trends in public social protection
Pub lic s oc ial spend ing , in percen tage o f GDP, 1960-2009
Source: OECD Social Expenditure database (SOCX, www.oecd.org/els/social/expenditure).
http://www.oecd.org/els/social/expenditurehttp://www.oecd.org/els/social/expenditure8/13/2019 Session 1 (Adema) - OECD Social Expenditure
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Social spending and the crisis
Annu al growth in real publ ic soc ial spending and real GDP,
Index 2007= 100 (left sc ale and pu blic soc ial spen din g as a % GDP (right scale), 2007-2012
Source: OECD Social Expenditure database (SOCX, www.oecd.org/els/social/expenditure).
Australia France
Greece United States
5
10
15
20
25
30
35
70
80
90
100
110
120
130
140
150
2007 2008 2009 2010 2011 2012
%
5
10
15
20
25
30
35
70
80
90
100
110
120
130
140
150
2007 2008 2009 2010 2011 2012
%
5
10
15
20
25
30
35
70
80
90
100
110
120
130
140
150
2007 2008 2009 2010 2011 2012
%
5
10
15
20
25
30
35
70
80
90
100
110
120
130
140
150
2007 2008 2009 2010 2011 2012
%
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Public spending on family benefits and labour
market programmes went up during the crisis
1.Due to reform in 2007/8, public spending on home-help services decreased in the Netherlands.
2. Available indicators underestimate the extent of public spending on childcare for Federal countries (e.g.
the United States), as relevant spending by local governments is not fully reported to Federal authorities.
United Kingdom
France
Sweden
GermanyAustralia
OECD
Netherlands1
Japan
Greece
United States2
Korea
3.6
3.7
3.4
2.72.5
2.3
2.8
1.3
1.1
1.2
0.7
0.6
0.3
0.4
0.30.3
0.3
0.2
0.3
0.0
0.3
-0.3
-1 0 1 2 3 4
Public spen ding on family benefits in percentage of GDP, 2007
Increase 2007-2009
0.5
2.3
1.8
2.10.7
1.2
2.2
0.5
0.6
0.4
0.4
0.3
0.2
0.1
0.60.2
0.5
0.4
0.7
0.3
0.7
0.6
0 1 2 3 4
Public spen ding on labour market programmes in p ercentage of GDP, 2007
Increase 2007-2009
Source: OECD Social Expenditure database (SOCX, www.oecd.org/els/social/expenditure).
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Health and Pension spending are key social
policy areas in the OECD
Public soc ial expenditure by bro ad social pol icy area, % GDP, in 2009
Source: OECD Social Expenditure database (SOCX, www.oecd.org/els/social/expenditure).
http://www.oecd.org/els/social/expenditurehttp://www.oecd.org/els/social/expenditure8/13/2019 Session 1 (Adema) - OECD Social Expenditure
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Private social protection
Composit ion of p rivate social expenditure by c ategory, % GDP, 2009
Source: OECD Social Expenditure database (SOCX, www.oecd.org/els/social/expenditure).
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Tax systems and social spending
Gross and net social expenditure
Gross social expenditure
Direct taxes and social contributions
Indirect taxes on consumption (VAT)
+ Tax break for social purposes (TBSP)
= Net social expenditure
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Taxing benefits and associated consumption
Direct and in direct taxes paid by recipients o f publ ic/private benefi ts, % GDP, in 2009
A. Direct taxes paid by recipients of benefits
B. Indirect taxes paid by recipients of benefits
Source: OECD Social Expenditure database (SOCX, www.oecd.org/els/social/expenditure).
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Tax breaks with a social purpose
Revenue foregon e of Tax breaks with a social purpo se (excludin g TBSPs to p ensions), % GDP, 2009
Source: OECD Social Expenditure database (SOCX, www.oecd.org/els/social/expenditure).
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Similarity in spending totals
In many OECD countries net total social spending is around 20-25% of GDP
Gros s to n et soc ial expend iture, % GDP, 2009
Source: OECD Social Expenditure database (SOCX, www.oecd.org/els/social/expenditure).
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The redistributive nature of tax and (cash)
transfer systems varies across the OECD
Source: Calculations from OECD Income Distribution Database (www.oecd.org/social/income-
distribution-database.htm).
A. Average
ratio of
househlod
disposable
B. Share of
public
transfers paid
to lowest
C. Transfers
to lowest
quintile
(A*B/100)
D. Average
ratio of
househlod
disposable
E. Share of
taxes paid by
lowest quintile
F. Taxes from
lowest quintile
(D*E/100)
Gini
coefficient at
disposable
income
Around 2000s
Australia 12.0 42.7 5.1 18.1 0.4 0.1 0.334 29% 33%
France 30.1 17.1 5.1 15.1 2.3 0.4 0.303 40% 41%
Germany 26.7 22.0 5.9 35.8 2.6 0.9 0.286 42% 44%Greece 32.2 11.2 3.6 31.0 5.6 1.7 0.337 35% ..
Japan 23.6 13.9 3.3 22.4 5.1 1.1 0.336 31% 22%
Korea 5.0 24.3 1.2 8.9 5.6 0.5 0.310 9% ..
Netherlands 19.4 29.4 5.7 45.5 5.6 2.5 0.288 32% 31%
Sweden 27.3 27.0 7.4 32.2 5.4 1.7 0.269 39% 46%
United Kingdom 19.4 25.3 4.9 25.6 2.5 0.6 0.341 35% 31%
United States 12.6 21.9 2.8 24.8 1.3 0.3 0.380 24% 25%
OECD-31 23.6 21.7 4.7 26.8 4.3 1.2 0.306 35% ..OECD-18 .. .. .. .. .. .. .. 35% 33%
Gross public transfers
paid to househlods
Direct taxes and asocial security
contributions
Redistributive effect
Percentage difference through
transfers and taxes between
Gini at market income and
disposable income
Around 2010s
http://www.oecd.org/social/income-distribution-database.htm)http://www.oecd.org/social/income-distribution-database.htm)http://www.oecd.org/social/income-distribution-database.htm)http://www.oecd.org/social/income-distribution-database.htm)http://www.oecd.org/social/income-distribution-database.htm)http://www.oecd.org/social/income-distribution-database.htm)http://www.oecd.org/social/income-distribution-database.htm)http://www.oecd.org/social/income-distribution-database.htm)8/13/2019 Session 1 (Adema) - OECD Social Expenditure
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Populations are ageing and the old-agesupport 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.
http://www.oecd.org/els/social/pensions/PAGhttp://www.oecd.org/els/social/pensions/PAG8/13/2019 Session 1 (Adema) - OECD Social Expenditure
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Thank you and further information
The OECD SOCX database is accessible viawww.oecd.org/els/social/expenditure
November 2012:Social spending during the crisis: Social
expenditure (SOCX) data update 2012.
OECD Social, Employment and Migration Working Papers, No. 124:
Is the European Welfare State Really More Expensive? Indicators
on Social Spending, 1980-2012; and a Manual to the OECD Social
Expenditure Database (SOCX).
http://www.oecd.org/els/listofsocialemploymentandmigrationwor
kingpapers.htm
To come the OECD SOCR Recipiency database
http://www.oecd.org/els/social/expenditurehttp://www.oecd.org/els/soc/OECD2012SocialSpendingDuringTheCrisis8pages.pdfhttp://www.oecd.org/els/soc/OECD2012SocialSpendingDuringTheCrisis8pages.pdfhttp://www.oecd.org/els/listofsocialemploymentandmigrationworkingpapers.htmhttp://www.oecd.org/els/listofsocialemploymentandmigrationworkingpapers.htmhttp://www.oecd.org/els/listofsocialemploymentandmigrationworkingpapers.htmhttp://www.oecd.org/els/listofsocialemploymentandmigrationworkingpapers.htmhttp://www.oecd.org/els/soc/OECD2012SocialSpendingDuringTheCrisis8pages.pdfhttp://www.oecd.org/els/soc/OECD2012SocialSpendingDuringTheCrisis8pages.pdfhttp://www.oecd.org/els/social/expenditure