Dáil Éireann debate -
Wednesday, 7 Nov 2001

Vol. 543 No. 3

Written Answers. - Social Protection.

Jan O'Sullivan

Question:

14 Ms O'Sullivan asked the Minister for Social, Community and Family Affairs his views on the findings of the report from the EU Commission, the Social Situation in the European Union, which found that Ireland spent less of its GDP on social protection than any other member state; the plans the Government has to bring spending on social protection up to the EU average; and if he will make a statement on the matter. [26821/01]

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

Social protection as described in EUROSTAT reports on "The Social Situation in Europe" covers not only the income support schemes administered by my Department, but also health care, supports with housing and other social and family services. I will just deal with the income support aspects.

It is acknowledged in these reports that changes in levels of social protection expenditure as a percentage of GDP are significantly influenced by the pace of economic growth and the level of unemployment. In the three year period 1990 to 1993, EU social protection expentiture as a percentage of GDP rose on average by over 3%, from 25.4% to 28.9%, as a result of the slower rate of economic growth and rising unemployment during that period. Over the five year period, 1994 to 1998, the percentage declined slightly to 27.7%, due to renewed economic growth and an actual decline in social protection expenditure in some countries, some of which would be attributable to the decline in unemployment.

For Ireland in 1990, expenditure on social protection as a percentage of GDP was 18.7%. This rose to 20.5% in 1993, and then declined to 16.1% in 1998. These changes mirrored the devel opments just described in other EU countries, except that the level of economic growth and the decline in unemployment were much greater in Ireland than in most other EU countries. Annual rates of growth ranged from 8% to 11% in the period 1994 to 2000 and levels of unemployment declined from 14.3% to less than 4% over the same period.

However, there was no reduction in the level of actual social protection expenditure during this period, but a substantial increase. The report shows that expenditure on social protection in Ireland per head of population rose by 44% in real terms, the third highest in the EU over this period. This significantly exceeded the average increase of 22% for the EU as a whole.

Levels of social protection expenditure are also affected by the numbers requiring benefits and services. I have already referred to the substantial fall in unemployment. With regard to the elderly, in 1999 those aged 65 and over in Ireland as a percentage of those in the working age group was just 17%, the lowest in the EU and a full 7% behind the EU average of 24%. As a result expenditure on old age and survivors' pensions in 1998 represented just 25% of total social protection expenditure in Ireland compared, for example, to an average of 46% for the EU15. This means that more of this expenditure is available for other categories than is the case in most other EU countries.

Other factors which have a bearing on the amount of expenditure are the extent to which the State provides supplementary pensions, childcare and elder care and the way benefits are taxed. Lower State involvement, as in Ireland, means lower social protection expenditure.

The EU report referred to by the Deputy only gives the situation in 1998, almost three full years ago. In the period since 1997 there have been major increases in expenditure notably on child benefit from £397 million – 504.1 million – annually in 1997 to £900 million – 1,143 million – currently and since 1997 on pensions amounting to between £18 – 22.86 – and £28 – 35.55 – per week or 36% to 43%.

The policy of improving the standard of living of all those dependent on social protection will continue as resources permit guided by the national action plans. But the degree of progress that can be achieved in this area in all countries is dependent on continuing to achieve economic growth and maintaining a low level of unemployment.