EUROSTAT, the EU's statistics office, publishes comparisons of social protection expenditure as a percentage of GDP across the EU. It encompasses not only social welfare expenditure but also expenditure in other areas such as health care, social housing, employment support programmes and other social exclusion programmes.
The latest EUROSTAT figures on social protection expenditure were released in February 2003 and deal with developments up to and including 2000. Ireland spent 14.1% of its GDP on social protection expenditure in 2000. This figure does not take into account the developments in social protection expenditure in the past three years. No comparable figures are available for 2003.
When examining such data it is important to remember that gross expenditure measures can distort the real picture. They do not take account of social charges or taxes which may be levied on benefits. They do not include transfers made by means of tax concessions, as opposed to direct cash payments.
The level of expenditure is also significantly influenced by the age profile of the population. At present Ireland has one of the youngest populations in the EU. It needs to spend less on pensions and health care or care of the elderly than most other member states. The extent to which the State directly provides supplementary pensions and child care are also important factors.
Social protection expenditure as a percentage of GDP is significantly influenced by the pace of economic growth and the level of unemployment. For example, in the period 1990 to 1993, inclusive, overall EU social protection expenditure as a percentage of GDP rose on average by over 3% from 25.5% to 28.8%, as a result of the slower rate of economic growth and rising unemployment during that period. Conversely, over the period 1994 to 1998, inclusive, the percentage declined slightly to 27.7%, due to renewed economic growth and a decline in unemployment during that period.
For Ireland in 1990, expenditure on social protection as a percentage of GDP was 18.4%. This rose to 20.2% in 1993, and then declined to 14.7% in 2000. 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, compared to an average of 2.5% in the EU, while levels of unemployment declined from 14.3% to less than 4% over the same period.
This Government has granted sustained and substantial increases in social protection expenditure. The EUROSTAT report on social protection states that the increase in real terms expenditure on social protection in Ireland over the period 1993 to 1999, inclusive, was well above the average. EUROSTAT figures show a 21.4% increase in the per capita expenditure on social protection in the period 1995 to 2000, inclusive, compared with an EU average of 8.7%, and over the longer period of 1990 to 1999, inclusive, an increase of 50% in real terms, compared with an EU average of 24%.
This Government will continue to address the scope for further improvements in Ireland's social protection infrastructure, guided by the national anti-poverty strategy, while at the same time continuing to take the measures necessary to maintain economic growth and competitiveness.