Dáil Éireann debate -
Wednesday, 2 May 2001

Vol. 535 No. 2

Written Answers - Social Welfare Budget.

Frances Fitzgerald

Question:

183 Ms Fitzgerald asked the Minister for Social, Community and Family Affairs the way in which the Irish social welfare budget compares to those of the other 14 EU Nations in terms of the percentage of GDP; the percentage of GDP in the years 1990 to 2001; and if he will outline the most recent information, the source of this information and the impact of budgets 2000 and 2001 on this percentage. [12511/01]

Minister for Social, Community and Family Affairs (Mr. D. Ahern):

Eurostat, the statistical office of the EU, publishes comparisons of social protection expenditure across the different EU member states. However, as well as encompassing social welfare expenditure, social protection expenditure, as defined by Eurostat, also covers expenditure in other areas such as health care, social housing, employment support programmes, e.g. certain FÁS programmes and other social exclusion programmes. This is clearly a very different definition to "social welfare" as is understood in this country and for this reason it is not possible to provide the comparative data requested.

The latest year for which comparative data on social protection expenditure has been published by Eurostat is 1998, and so it does not take into account the very substantial increases in social welfare payments which the Government introduced in 1999 and 2000. Neither, of course, does it take account of the record social welfare increases which have been introduced this year.

Table 1 sets out the comparative data on social protection expenditure, published by Eurostat for the years 1990 to 1998.

In making any comparisons, a number of important points must be taken into account – firstly, we have a relatively young population compared to most of our EU neighbours. Not alone does this mean our pension costs are lower, but we also have lower costs on health care and caring generally.

Second, while occupational pensions and benefits play an important role in the overall social protection system in Ireland, information on the significant amount of expenditure involved is not currently available for Ireland. Accordingly, the figures provided by Eurostat for social protection expenditure seriously understate the actual level of expenditure involved in this country as compared with other EU member states. The Pensions Board in its National Pensions Policy Initiative estimated that expenditure on occupational pensions alone would be in the region of 4% to 5% of GDP.

Third, the Eurostat figures are based on GDP, but it is recognised that in Ireland GNP, rather than GDP, is the better measure of the income available to society. The figures based on GDP therefore understate the proportion of our income that is spent on social protection.

Fourth, the higher levels of social security expenditure in some countries are financed by considerably higher rates of social security contributions – in some cases three times higher than the Irish rates. For instance, the current rate of PRSI in Ireland is 18%, as compared with rates ranging between 42% and 48% in Germany, France and Italy and 69.6% in the Netherlands. Any increase in the Irish PRSI rates up to these levels would have significant competitiveness and labour market implications.

It should be noted that the Government is also setting aside a portion of the benefits of the current economic success to underpin the future viability of our pensions system. This will ensure the living standards of our older population in the years to come. To this end a National Pensions Reserve Fund has been established. More than £5 billion has already been allocated, with further annual statutory contributions of 1% of GNP going towards the fund.

This significant investment in social protection is not reflected in the data published by Eurostat. Social welfare expenditure as a proportion of both GDP and GNP over the period from 1990 to 2001 is set out in Table 2. Following increases in the early 1990s, the proportion of GNP-GDP going towards social welfare provision has been declining in recent years, reflecting the country's strong economic performance and the fall in unemployment since the mid 1990s. This is a trend that has been mirrored in many of the other EU member states. However, it is estimated that social welfare expenditure as a percentage of GNP-GDP will increase this year.

Table 1

Expenditure in EU member states on Social Protection as a percentage of GDP

Country	1990	1991	1992	1993	1994	1995	1996	1997	1998
Austria	26.7	27.0	27.6	28.9	29.8	29.7	29.6	28.8	28.4
Belgium	26.4	27.0	27.3	29.5	29.0	28.2	28.8	28.1	27.5
Denmark	28.7	29.7	30.3	31.9	32.9	32.2	31.4	30.5	30.0
Finland	25.1	29.8	33.6	34.6	33.8	31.8	31.6	29.3	27.2
France	27.6	28.4	29.3	30.9	30.4	30.7	31.0	30.8	30.5
Germany	25.4	26.2	27.6	28.4	28.4	28.9	30.0	29.5	29.3
Greece	23.2	21.9	21.5	22.3	22.3	22.6	23.1	23.6	24.5
Ireland	18.7	19.8	20.5	20.5	20.3	19.6	18.5	17.2	16.1
Italy	24.3	24.8	26.0	26.2	26.0	24.6	25.2	25.7	25.2
Luxembourg	22.6	23.5	23.7	24.5	24.1	24.9	25.2	24.8	24.1
Netherlands	32.4	32.5	33.0	33.5	32.4	30.9	30.1	29.4	28.5
Portugal	15.8	17.0	18.9	21.3	21.4	21.3	22.0	22.5	23.4
Spain	20.5	21.8	23.0	24.7	23.5	22.7	22.5	22.0	21.6
Sweden	33.1	34.3	37.1	38.6	37.2	35.2	34.5	33.6	33.3
United Kingdom	22.9	25.5	28.0	29.1	28.4	27.9	28.0	27.3	26.8
EU Average	25.4	26.4	27.8	28.9	28.5	28.3	28.6	28.1	27.7

Source: European Social Statistics, 2000 edition, published by Eurostat

Table 2

Social Welfare Expenditure as a Percentage of GNP/GDP

Year	Total Social Welfare Expenditure (£000)	Total Expenditure as % of GNP	Total Expenditure as % of GDP
1990	2,808,903	11.1%	9.8%
1991	3,092,461	11.7%	10.4%
1992	3,431,547	12.3%	10.9%
1993	3,628,227	11.9%	10.7%
1994	3,761,072	11.4%	10.3%
1995	4,198,828	11.4%	10.1%
1996	4,377,351	10.8%	9.6%
1997	4,524,000	9.7%	8.6%
1998	4,763,000	9.0%	7.9%
1999	4,948,088	8.4%	7.2%
2000*	5,326,816	7.9%	6.6%
2001†	6,136,137	8.0%	6.7%

*Estimated

†Projected