- Data from October 2011, most recent data: Further Eurostat information, Main tables and Database.
This article analyses recent statistics on social protection in the European Union (EU). Social protection encompasses all interventions from public or private bodies intended to relieve households and individuals of the burden of a defined set of risks or needs, provided that there is neither a simultaneous reciprocal nor an individual arrangement involved.
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(% of total receipts) - Source: Eurostat (tps00108)
Main statistical findings
Social protection expenditure in the EU-27 was equivalent to 26.4 % of gross domestic product (GDP) in 2008 (see Table 1). Among the Member States its share was highest in France (30.8 %) and Denmark (29.7 %), and was higher than 25 % in ten of the EU-15 Member States. In contrast, social protection expenditure represented less than 20 % of GDP in all of the Member States that joined the EU in 2004 or 2007 with the exceptions of Slovenia and Hungary.
The use of purchasing power standard (PPS) allows a comparison of social protection expenditure per inhabitant between countries, taking account of differences in price levels. The highest level of expenditure on social protection per inhabitant in 2007 was registered for Luxembourg (PPS 14 057 per inhabitant), followed some way behind by the Netherlands, Sweden, Denmark, Austria, France and Belgium – where social protection per inhabitant was between PPS 8 100and PPS 9 600 (see Figure 1). In contrast, expenditure in Latvia, Romania and Bulgaria was less than PPS 2 000 per inhabitant. These disparities between countries are partly related to different levels of wealth, but may also reflect differences in social protection systems, demographic trends, unemployment rates and other social, institutional and economic factors.
Among social protection benefits (the largest component of total expenditure), a majority of the EU-27’s expenditure was directed towards old age benefits (for example, pensions) or to sickness and healthcare benefits; together these two items accounted for 68.3% of total EU-27 benefits in 2008 (see Figure 2). Benefits related to family/children, disabilities, survivors and unemployment each accounted for shares of between 5 % and 8 % of total expenditure in the EU-27, while housing accounted for 2.1 %.
Expenditure on pensions across the EU-27 was equivalent to 11.7 % of GDP in 2008, ranging from 15% % in Italy to 6 % in Latvia (see Figure 3). Expenditure on care for the elderly accounted for 0.4 % of GDP in the same year, although Sweden reported a rate that was almost six times as high; expenditure on the elderly fell to less than 0.1 % of GDP in Greece, Estonia, Belgium, Bulgaria, Romania, Cyprus and Luxembourg (see Figure 4).
Average (median) pension levels of 65 to 74 year olds were generally lower than average earnings of those aged 50 to 59 in 2009 (see Figure 5). This was particularly the case in Latvia, Cyprus and Bulgaria where pensions represented around one third of the earnings among those aged 50 to 59. The aggregate replacement ratio was highest in France, Austria, Luxembourg and Hungary, where it was above 60 %. It should be borne in mind that relatively low ratios may reflect low coverage and/or low income replacement from statutory pension schemes and maturing pension systems, as well as incomplete careers or an under-declaration of earnings.
A breakdown of social protection receipts across the EU-27 in 2008 shows that the majority of receipts could be attributed to general government contributions (38.2 %) and employers’ social contributions (37.1 %); around one fifth (20.4 %) of all EU-27 receipts were funded by contributions made by protected persons (see Figure 6).
Data sources and availability
Data on social protection expenditure and receipts are drawn up according to the European system of integrated social protection statistics (ESSPROS) methodology; this system has been designed to allow a comparison of social protection flows between Member States. In April 2007, a legal basis was established for the provision of ESSPROS with the delivery of data to start from reference year 2006, as provided by a European Parliament and Council Regulation 458/2007; this was later supplemented by two European Commission implementing Regulations (1322/2007 and 10/2008).
Expenditure on social protection includes: social benefits, administration costs (which represent the costs charged to the scheme for its management and administration) and other expenditure (which consists of miscellaneous expenditure by social protection schemes, principally, payment of property income).
Social protection benefits are direct transfers, in cash or in kind, by social protection schemes to households and individuals to relieve them of the burden of one or more of the defined risks or needs. Social benefits are paid to households by social security funds, other government units, NPISHs (non-profit institutions serving households), employers administering unfunded social insurance schemes, insurance enterprises, or other institutional units administering privately funded social insurance schemes. Benefits are classified according to eight social protection functions (which represent a set of risks or needs):
- sickness/healthcare benefits – including paid sick leave, medical care and the provision of pharmaceutical products;
- disability benefits – including disability pensions and the provision of goods and services (other than medical care) to the disabled;
- old age benefits – including old age pensions and the provision of goods and services (other than medical care) to the elderly;
- survivors’ benefits – including income maintenance and support in connection with the death of a family member, such as survivors’ pensions;
- family/children benefits – including support (except healthcare) in connection with the costs of pregnancy, childbirth, childbearing and caring for other family members;
- unemployment benefits – including vocational training financed by public agencies;
- housing benefits – including interventions by public authorities to help households meet the cost of housing;
- social exclusion benefits not elsewhere classified – including income support, rehabilitation of alcohol and drug abusers and other miscellaneous benefits (except healthcare).
The pensions aggregate comprises part of periodic cash benefits under the disability, old age, survivors and unemployment functions. It is defined as the sum of the following social benefits: disability pension, early-retirement benefit due to reduced capacity to work, old age pension, anticipated old age pension, partial pension, survivors’ pension, and early-retirement benefit for labour market reasons.
Expenditure on care for the elderly is defined as the percentage share of social protection expenditure devoted to old age care in GDP. These expenditures cover care allowance, accommodation, and assistance in carrying out daily tasks.
Pension systems can also play a key role in allowing retirees to maintain living standards they previously enjoyed in the later years of their working lives. The aggregate replacement ratio measures the difference between gross retirement benefits and gross earnings. It is defined as the median individual gross pensions of those aged 65 to 74 relative to median individual gross earnings of those aged 50 to 59, excluding other social benefits; it is expressed in percentage terms.
The schemes responsible for providing social protection are financed in different ways. Social protection receipts comprise social security contributions paid by employers and protected persons, contributions by general government, and other receipts from a variety of sources (for example, interest, dividends, rent and claims against third parties). Social contributions by employers are all costs incurred by employers to secure entitlement to social benefits for their employees, former employees and their dependants; they can be paid by resident or non-resident employers. They include all payments by employers to social protection institutions (actual contributions) and social benefits paid directly by employers to employees (imputed contributions). Social contributions made by protected persons comprise contributions paid by employees, by the self-employed and by pensioners and other persons.
Context
Social protection systems are highly developed in the EU: they are designed to protect people against the risks and needs associated with unemployment, parental responsibilities, sickness/healthcare and invalidity, the loss of a spouse or parent, old age, housing and social exclusion (not elsewhere classified). The main challenge that is likely to face social protection systems in the coming years is that of demographic change, in particular the ageing of Europe’s population.
The organisation and financing of social protection systems is the responsibility of each of the Member States. The model used in each Member State is therefore somewhat different, while the EU plays a coordinating role to ensure that people who move across borders continue to receive adequate protection. This role also promotes actions among the Member States to combat poverty and social exclusion, and to reform social protection systems on the basis of policy exchanges and mutual learning. This policy is known as the social protection and social inclusion process – it underpins the Europe 2020 strategy and will play an important role as Europe seeks to become a smart, sustainable and inclusive economy.
Further Eurostat information
Publications
- European Social Statistics - Social protection Expenditure and receipts - Data 1997-2005
- In 2006, gross expenditure on social protection accounted for 26.9% of GDP in the EU-27 - Statistics in focus 40/2009
- In 2008 gross expenditure on social protection in EU 27 accounted for 26.4 % of GDP - Statistics in focus 17/2011
Main tables
- Total expenditure on social protection (tps00098)
- Total expenditure on social protection per head of population. ECU/EUR (tps00099)
- Total expenditure on social protection per head of population. PPS (tps00100)
- Total expenditure on social protection by type (tps00101)
- Total expenditure on social benefits (tps00102)
- Total expenditure on administration costs (tps00104)
- Other expenditure on social protection (tps00105)
- Social benefits by function (tps00106)
- Social benefits per head of population by function (tps00107)
- Expenditure on pensions (tps00103)
- Expenditure on care for elderly (tsdde530)
- Social protection receipts by type (tps00108)
Database
- Social protection (spr), see:
- Social protection expenditure (spr_expend)
- Expenditure: main results (spr_exp_sum)
- Pensions (spr_exp_pens)
- Expenditure - Tables by functions, aggregated benefits and grouped schemes, in currency (spr_exp_cur)
- Tables by functions, aggregated benefits and grouped schemes - in MIO of national currency (spr_exp_nac)
- Tables by functions, aggregated benefits and grouped schemes - in MIO of EUR (spr_exp_eur)
- Tables by functions, aggregated benefits and grouped schemes - in MIO of PPS (spr_exp_pps)
- Tables by functions, aggregated benefits and grouped schemes - in PPS per head (spr_exp_ppsh)
- Tables by functions, aggregated benefits and grouped schemes - in % of the GDP (spr_exp_gdp)
- Expenditure - Tables by benefits, by function (spr_exp_func)
- Tables by benefits - sickness/health care function (spr_exp_fsi)
- Tables by benefits - disability function (spr_exp_fdi)
- Tables by benefits - old age function (spr_exp_fol)
- Tables by benefits - survivors function (spr_exp_fsu)
- Tables by benefits - family/children function (spr_exp_ffa)
- Tables by benefits - unemployment function (spr_exp_fun)
- Tables by benefits - housing function (spr_exp_fho)
- Tables by benefits - social exclusion n.e.c. function (spr_exp_fex)
- Tables by benefits - all functions (spr_exp_fto)
- Social protection receipts (spr_receipts)
- Receipts by type (spr_rec_sumt)
- Receipts by sector of origin (spr_rec_sums)
- Receipts - Tables by sector of origin and type, in MIO of national currency (including 'euro fixed' series for euro area countries) (spr_rec_nac)
- Receipts - Tables by sector of origin and type, in MIO of EUR (spr_rec_eur)
- Receipts - Tables by sector of origin and type, in % of the GDP (spr_rec_gdp)
- Social protection expenditure (spr_expend)
Dedicated section
Methodology/Metadata
- Social protection (ESMS metadata file - spr_esms]
Other information
- Regulation 10/2008 of 8 January 2008 implementing Regulation 458/2007 as regards the definitions, detailed classifications and updating of the rules for dissemination for the ESSPROS core system and the module on pension beneficiaries
- Regulation 458/2007 of 25 April 2007 on the European system of integrated social protection statistics (ESSPROS)
- Regulation 1322/2007 of 12 November 2007 implementing Regulation 458/2007 as regards the appropriate formats for transmission, results to be transmitted and criteria for measuring quality for the ESSPROS core system and the module on pension beneficiaries
