Dáil Éireann debate -
Tuesday, 26 Feb 2002

Vol. 549 No. 3

Written Answers. - EUROSTAT Figures.

Michael Bell

Question:

71 Mr. Bell asked the Minister for Social, Community and Family Affairs if his attention has been drawn to the EUROSTAT figures published on 25 January 2002 which showed that the Government's spending on social protection was just half the EU average and the lowest of all 15 member states; his plans to bring spending on social protection into line with the EU average; and if he will make a statement on the matter. [6595/02]

Thomas P. Broughan

Question:

308 Mr. Broughan asked the Minister for Social, Community and Family Affairs if his attention has been drawn to the EUROSTAT figures published on 25 January 2002 which showed that the Government's spending on social protection was half the EU average and the lowest of all 15 member states; his plans to bring spending on social protection into line with the EU average; and if he will make a statement on the matter. [6865/02]

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

I propose to take Questions Nos. 71 and 308 together.

Social protection, as defined by EUROSTAT, 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.

The EUROSTAT report does not in fact say that Ireland's spending on social protection was just half that of the EU average but that Ireland's spending, as a percentage of its GDP, was below the EU average. This is due to Ireland being different from other EU countries in a number of areas which have a major bearing on this indicator.

This can be illustrated firstly by the situation of the EU as a whole. In the three year period 1990 to 1993 EU social protection expenditure as a percentage of GDP rose on average by over 3% from 25.4% to 28.9%. This was the result during that period of the slower rate of economic growth and as a result, a slower rise in GDP, and rising unemployment resulting in higher social protection expenditure on unemployment. Over the five year period 1994 to 1998 the percentage for the EU actually 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 developments 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. The sizeable increase in Ireland's GDP was far above that of any of our EU neighbours, and the EU as a whole, where growth averaged at approximately 2% for the same period.

However, there was no reduction in the level of actual social protection expenditure in Ireland during this period, but a substantial increase. Expenditure on social protection in Ireland per head of population rose by 50% in real terms between 1990 and 1999, the second highest in the EU over this period. This fact is acknowledged in the report, which also shows that this expenditure was more than double that of the average increase of 24% for the EU15 as a whole. The indicator masks this substantial increase in social protection expenditure in Ireland because of the high level of the growth in GDP.

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. In most developed countries, the highest single item of social protection expenditure is on pensions for 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 64% in Italy. This means that a much bigger proportion of social protection expenditure is available for other categories of claimants than is the case in most other EU countries.

Other factors which have a significant 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 also gives the situation in 1999, and does not take account of the increases in expenditure since then particularly in relation to child benefit and pensions.

Over the past ten years Ireland has been different than the EU average in terms of its high rates of economic growth and its low level of unemployment. This, coupled with the lowest elderly population in the EU and the fact that it relies less on State provision in a number of key areas such as supplementary pensions and child and elder care services, inevitably results in Ireland's social protection expenditure as a percentage of GDP being below the EU average. This will change in time as economic growth and unemployment levels fluctuate and the population ages.

The policy of improving the standard of living of all those dependent on social protection will continue as resources permit guided by the national anti-poverty strategy and the new EU process of 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.