REPORT FROM THE COMMISSION TO THE COUNCIL MEDIUM-TERM PROJECTIONS OF SOCIAL PROTECTION EXPENDITURE AND ITS FINANCING 1987 PROJECTIONS - SUMMARY REPORT

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COMMISSION OF THE EUROPEAN COMMUNITIES
C0M(86) 304 f ina l
Brussels, 30 May 1986
REPORT FROM THE COMMISSION TO THE COUNCIL
MEDIUM-TERM PROJECTIONS OF
SOCIAL PROTECTION EXPENDITURE AND ITS FINANCING
1987 PROJECTIONS - SUMMARY REPORT
COMÎ86) 304 f i n a l
CONTENTS
1. Introduction
2. Receipts
3. Expenditure
1. Share of the rece ipts in the national product
2. Nature of receipts
3. Social contributions in more de ta i l
4. Sector of origin
1. Social protection expenditure and benef i ts
2. Social expenditure and gross domestic product
3. Functions of social protection benef i ts
4. Health
5. Old age and survivors
6. Maternity/Fami ly
7. Employment
8. Fiscal benef i ts
9. Capital t ransact ions
Appendices : A - Detailed tables
B - Economic assumptions
C - "Social benefits" and "
D - Social protection funct
E - Retirement ages used in
Social protection benefits"
ions - content
caleu lat i ons
NOTE
Contents of separate volume containing national reports :
Data for 1982 and 1987 : rece ipts
expendi ture
demographics
CHAPTER ONE
INTRODUCTION
On 28 July 1978 the Commission sent the Council a report on 1980
project ions of social expenditure and i t s financing, together with the national
reports on which i t was based.
The Council expressed i t s s a t i s f a c t io n with the work accomplished
and acknowledged the value of the document submitted. The Council went on to
request the Commission, in cooperation with governmental exper ts, to evaluate
the experience gained during the preparation of the report and to come back with
proposals for a fur ther stage of the work.
The Commission services submitted proposals for ^^four-year work
programme, which were accepted by the Council in December 1982
This programme is designed to provide those responsible - at
Community and at nat ional level - with regular information on medium-term trends
in social expenditure and i t s financing, par t icu la r ly i t s major component :
social secur i ty , including the cost implications of Community proposals in th is
f i e ld , especial ly those designed to improve the employment s i tua t ion (such as
f lex ib le ret irement) .
The programme consis ts of :
1. Annual summary reports
2. P r io r i t y policy analyses
to be drawn up by Commission services . The resu l t s of the analyses will be
examined notably in the framework of concertat ion in the social securi ty f i e l d ,
set up by Council reso lu t ion in January 1974.
. . .This document consis ts of the annual summary report on 1987
p r o j e c t i o n s ^ compared to 1982. (The nat ional reports on which th is document is
based may be obtained on request from the Commission, subject to budgetary
cons t ra in ts ) . The economic assumptions underlying the 1987 projections were
developed in 1985 by the Commission's econometric model (COMET). Demographic and
other assumptions were developed at national level. The project ions in th is
report do not necessar i ly r e f lec t o f f i c i a l national views, which may be based
for example on other economic or social assumptions. Certain differences for
1982 between the data in th i s report and those published by the S t a t i s t i c a l
Office of the European Communities are largely due to the inclusion of capi ta l
expenditure or f i s c a l benef i ts here. Finally i t has not been possible to attempt
explanations of a l l the changes noted in th i s repor t , for reasons of space.
(1) COM(81) 661 f i n a l . .(2) Based on leg i s la t io n at 1st January 1985. The use of constant leg is la t ion
implies tha t the 1987 data are project ions rather than attempts at r e a l i s t i c
forecasts .
CHAPTER 2
RECEIPTS
The continuing high level of unemployment in the Community, the deter iora t ing
age pat tern of the population, a trend which will continue in the future , and
the special problems in the area of health care have led in the past to high
ra tes of increase in socia l protect ion expenditure. This also has repercussions
on social secur i ty r e c e ip t s . If no attempt is made to combat th is development by
cutting back benef i ts then e i the r a larger proportion of general budget
resources of a country must be used for th is purpose or social security
contributions must be increased.
In th i s paper, as in the previous pro jec t ions , a d is t inc t ion wil l be made on the
one hand according to the nature of the financing ( i . e . mainly government funds
and contributions) and on the other according to the sector of origin (enter ­
p r i s e s , government, p r iva te households). At the same time i t should be pointed
out tha t what is presented here are overal l figures for a l l the functions of
social secur i ty . Dis t inct ions are only made by country and not by individual
funct ion. The figures quoted therefore represent in each case only an average
for the country concerned, while within the individual branches of the social
securi ty system financing can be organized in very d i f fe ren t ways (e.g. the
almost complete financing from taxation of the health service in the United
Kingdom is in no way expressed here. I t is concealed by the financing from
contr ibutions usual in other sec to rs ) .
2.1. Share of the rece ip ts in gross domestic product
The following table 2.1. shows how the development of expenditure referred to
at the beginning a f fec t s the rece ip ts . The table expresses the receipts as a
percentage of the gross domestic product and th i s shows clearly that part of the
GDP used to finance socia l protect ion expenditure.
Table 2.1. : Receipts as percentage of GDP
1981
1982
1987
EEC B
29.0 29.7
28.9 30.8
28.8 29.0
DK D F GR I RL I L NL UK
32.3 30.6 30. 1 16.9 23.9 25.8 29.3 37.9 26.4
32.9 .6 28. 6 19.2 24.2 26.8 30.2 39.0 27.3
30.6 29.3 28. 1 21.4 23.9 28.6 29.4 39.9 26.4
In order to make the trend clear the (actual) figures for 1981 are incLuded. I t
is apparent that from 1981 to 1982 in most of the Member States was a further
increase in the percentage. On the other hand, the projections for 1987, with
the exception of Greece, I ta ly and the Netherlands, show a f a l l , in most cases
below the 1981 level . However, th i s f a l l can also be p a r t i a l ly the result of
more opt imist ic assumptions concerning the future development of the gross
domestic product.
Thus in 1982 between 19.2% (GR) and 39% (NL) was used to finance social pro­
tec t ion , and for 1987 figures ranging between 21.4% (GR) and 39.9% (NL) are
expected.
The following sections give de ta i l s of the composition of the financial
resources involved.
2.2. Nature of receipts
At the beginning of th i s section i t should once again be pointed out that the
present projections for 1987 were undertaken on the basis of constant national
leg is la t ion (reference date: 1st January 1985). This is important, since the
s t ruc ture of receipts has recently been increasingly the subject of discussion
and within the period under review changes could take place which cannot be
foreseen at present .
a) Structure
A breakdown of rece ipts according to th e i r nature shows that in 1982 over the
average of the Community two-thirds of funds continued to be obtained in the
form of contribut ions (by employers and insured persons). In 1987 too th is will
have changed very l i t t l e . About 30% comes from government subsidies while the
rest comes from various other rece ip ts . More informative than these overall
f igures , however, are th e i r nat ional composition as shown in the following chart
2 . 1 . :
Chart. 2 .1 . - Nature of receipts : percentage s t ruc ture
1987
NATURE (1)
Social
contributions
Funds from
government
Other rece ip ts 5.1
B OK
59.0
58. ;
15.* 74,
75.0 22,
77,8
2.8
19. 2
47.4
49.6
F GR IRL I
35.1 73,9
64.0 24,5 35.2
L NL UK (3)
58.3| 63.2 48.7
19.2
— j..
42.6
9.6 3.4 3,0 3.0 0 .9 1-6 6.5 17.6 8.7
1982
Social
contributions
Funds from
government
Other receipts
59.5 ! 11.7
36.1
71 .7
82.9
- 4 -
77.2
19.3 19.7
51 .2 35.1
42.6
70.1
63.6
57.2 6 6 .6
27.5 33.3
— —i— I
20.2
48.1
43.2
4 - i
5.2 4.4 5.4 9.0 3.2 6.2 1-3 2-4 9.5 13.2 8.7
(1) The c l a s s i f i c a t io n s in th i s report are defined in the "European system of integrated
socia l protect ion s t a t i s t i c s : Methodolgy - par t I " , Eurostat , 1981
(2) The EEC data is an addi tion of each country 's amount in ECUs. For 1987 the l a te s t
avai lable exchange rates were used (August 1985).

In 1982 the importance of the other receipts was s l ig h t , and by 1987 (with the
exception of Denmark and the Netherlands) i t will tend to reduce fur ther . On the
other hand, well over 90% of to t a l rece ipts come from ei ther social security
contributions or government funds. If we compare country with country the
balance between the two varies sharply.
Most of the countries base themselves primarily on social security
contr ibutions. Up to 75% of resources come from th i s quarter (Germany, France,
I t a ly ) . There are s ign i f ican t d if ferences , however, only in the figures for
Ireland (35.1% in 1987) and above a l l for Denmark (15.4%). Over the period in
review there wil l be very l i t t l e change in these two countries in the
t r a d i t i o n a l ly prevelant method of financing social protection from general
budget funds. In 1987 in I reland, the government subsidies amount to about
two-thirds and in Denmark to about threequar ters of to ta l rece ip ts . Only in
Greece and the United Kingdom is social protect ion financed more or less equally
from contribut ions and government subsidies .
Once again here i t must be s t ressed that these figures are in each case national
averages based on the pat tern for the whole system of social protect ion. In
individual sectors very considerable var ia t ions can be found, as shown by the
example quoted above of the national health service in the United Kingdom.
The pic ture given in chart 2.1. shows the f inal percentage breakdown in 1987,
but i t does not show whether the change in comparison with 1987 is a t t r ibu tab le
to the fact that one proportion is increasing and another decreasing or whether
both are increasing or f a l l i n g , with, at the same time, one element stronger
than the other.
A complete survey of the l ikely changes in 1987 is given by the following chart
which makes i t possible to compare the average annual changes during the period
under project ion. In the process the varying rates of in f la t ion in the
individual countries (using the consumer Drice index) are taken into account.
Since the yardstick for each receipt component is the same for each country
comparisons can also be es tabl ished between individual kinds of rece ipt .
b) Trends
Chart 2.2 - Nature of receipts - Average yearly changes 1982 - 1987
(adjusted for projected inflation)
0 OK 0 f G« IRL I L ML UK
Soc i a l
contributions
funds from
government
0.2
Total
rece ipts
0.6 17.1 1.2 1.5 4 . 3 2.2 5 . 0 1.2 1.9!
r ~ s
1.8
- O . f - 1 .5
0.8 £ • 1 12.3 1 .5 1.9 ! :
1.2 ' 0.7 ■ 1.4 ,_CL5.- 1.3
F
5.9 2. 2
l. . -J
3 .9 0.8 1.41 1.6
For the average of the Community an annual real growth rate of to ta l receipts of
1.2% is expected with social contribut ions at 1.6% predominating over funds from
government at 0.2%. However, i t is impossible to discern any such uniform trend
I at national level . In Denmark, France, I ta ly and the United Kingdom the growth
in socia l contributions predominates, thus in both the country where, at 77%,
t o t a l rece ipts or ig ina te from th i s source to the g rea tes t extent (FR) and in the
country which at about 15% least resorts to th is source of funds (DK). On the
other hand, in Belgium, Greece and Luxembourg the probable increase in funds
from Government predominates.
The highest average growth is projected for Greece (5.9%), I ta ly (3.9%) and
·; I reland (2.2%). In Greece, the main increase stems from funds from government,
in I t a ly from socia l contribut ions while Ireland both types of receipt increase.
In cer tain countries the growth of receipts is less dependent on social
contributions or funds from government and more on "other receipts" (not
indicated in the cha r t ) . This is the case for Luxembourg and the Netherlands
where the development of to ta l rece ipts is less affected by the two main
headings quoted, but resu l t s from the somewhat marked annual real change in
"other receipts" (Luxembourg: -6.4%; Netherlands: +7.5%). Details concerning the
(nominal) level of the d i f fe ren t kinds of receipt for 1982 and 1987 can be taken
from tables 1 and 2 in the Annex.
2.3. Social cont r ibutions in more de ta i l
Social contributions divide into two main groups depending on whether they are
contribut ions paid by employers or those paid by protected persons. The f i r s t
group is further subdivided according to th e i r nature i . e . according to actual
or imputed contr ibut ions, and the second group according to the posit ion of the
contributor in re la t ion to working l i f e , i . e . according to whether they are
employees, self-employed or others (pensioners, e t c . ) . In th i s connection, both
the pr iva te sector and the government are to be regarded as employers.
Actual contributions cover those payments which the insured persons or their
employers pay d i rec t ly or via a col lec t ing point to the in s t i tu t io n s which grant
social benef i t s , in order to obtain enti t lement to these social benef i ts and/or
to obtain the benef i ts themselves. Imputed social contributions are the
counterpart or value of benef i t s , p a ^ d i rect ly by employers to past or present
employees and other e n t i t l e d persons. '
On average for the Community jus t over 60% of social contributions are provided
by the employers and ju s t under 40% by the insured persons. In th e i r turn the
employers" contributions consist about 3/4 from actual and 1/4 from imputed con­
t r ib u t io n s . In the case of the contr ibutions provided by the protected persons
over 3/4 of these are employees.
During the period under review very l i t t l e change taices place as regards these
basic f igures .
(1) EUROS:AT: European system of integrated social protection s t a t i s t i c s
methodology - Part 1, chapter 7.
Table 2.2 : Nature of social contributions - Percentage Structure
1987
EEC B DK D F
Social contributions % % % % %
GR IRL I L NL UK
% % % % % %
Employers
Actual
Imputed
65.0 67.8
47.8^ 52.8
16.7B 15.0
72.3
38.8
33.4
57.7
37.6
20.1
68 .0
56.0
12.0
47.6 64.3
42.9
21 .4
78.4 56.5
56.1 42.0
22.3 14.5
46.8 64.6
40.7 47.3
6.1 17.3
Protected persons
Employees
Self-employed
Pensioners or
others
35.0 32.2
26.6^ 25.3
4 .4C 6.0
3.4 0.9
27.7
27.7
42.3
31 .6
1.5
9.2
32.0
25.4
6.6
52.4 35.7 21.6 43.5
13.7 37.7
7.9 5.3
53.2 35.4
38.1 33.3
4.6 1.5
0.5 10.4 0.6
Total 100 100 100 100 100 100 100 100 100 100 100
1982
EEC B DK D F GR IRL I L NL UK
Social contributions % % % % % % % % % % %
Employers 64. 7r 68..6 78. 7 57..1 69.,7 49.7 66. 2 78..7 59..1 49. 6 65. 9
Actual 66. 8 53..3 29. 6 36..5 57..0 - 43. 3 53..7 44..3 42. 9 47. 2
Imputed 17. 5B 15..3 42. 2 20..6 12..7 22. 9 25..0 14..7 6. 7 18. 6
Protected persons 35. 3r 31 .4 21 . 3 43..0 30..3 50.3 33. 8 21 .3 40..9 50. 4 34. 1
Employees 27.
°f 23..9 21 . 3 31 .7 23..9 -
- 15,.0 35..4 36. 9 32. 2
Self-employed 3. 8C 6,.6 - 1..5 6 ..4 - - 6 ,.3 5..0 3. 9 1. 3
Pensioners or
o th e r s ' 3. 9L 0 ,.9 9..8 A 0,.5 9. 6 0. 7
Total 100 100 100 100 100 100 100 100 100 100 100
B Excluding Greece
C Excluding Greece and Ireland. In the case of France, "pensioners or other
includes under "self-employed".
A Included under "self-employed".
i s
This development is once again ref lec ted in the national figures given in table
2 . 2 , With the exception of the Federal Republic of Germany, in a l l the countries
there is a more or less sharp f a l l in the proportion of the social contributions
borne by employers with a corresponding increase in the part to be borne by the
protected persons. This sh i f t is most marked in Denmark 6.4 percentage points.
At the same time, there is also a sharp red is t r ibu t ion in the re lat ionship
between the actual and the imputed employers' contr ibutions. At the same time,
in the case of Denmark in pa r t i cu la r , these figures should not be interpreted
without consulting chart 2.1. In 1982 only 11.7% and in 1987 probably 15.4% of
to t a l social securi ty rece ipts are financed in Denmark from social insurance
cont r ibut ions. In absolute terms therefore the changes shown in table 2.2.
remain within s t r i c t l imits .
2.4. JSector of origin
a) Structure
In the following breakdown of rece ipts according to sector of origin a
d is t in c t io n is made between en te rp r i ses , general government, pr ivate households
and other sectors (The enterpr ise sector in principle includes both private and
public en te rp r ises , but in cer ta in countries some a c t iv i t i e s are s t i l l
c l a s s i f i ed as government). In i t s turn the government sector is only recorded
in the form of a global f igure and more deta i led information can be found in the
Annex in tables A-1 and A-2, which subdivides data fur ther into central
Government, local government and social insurance. Under other sectors reference
is primarily to private organizations and the rest of the world. Quantitively
speaking, they are of s l ig h t importance.
The main burden (more than 99%) is borne by the three sectors en te rpr ises ,
general government and private households, with the general government
accounting for about 2/5, the en terpr ises for 1/3 and the private households
1/4.
i l
Chart. 2.3. - Receipts by sector of origin: percentage s t ructure
1987
EEC DK GR IRL NL UK
Enterprises
Government
HousehoIds
Other sectors
33. 9
33.5
26.9
0 . 7
32.5
47.0
20.3
'4.1
89.1
4.3
36. t
30.1
32.8
40.:
31
26.3
0.2 2.5 0.5 1.8
4.0 32.1 27.3
72.4
12.
35.8 46.4
32.6 29.4
33.0
31.81 26.2 33.7
53.3
17.4
1.1 0.3 0.1 0.6 0
1982
Enterprises
Government
HousehoIds
Other sectors
3
40.0
25.9
33.5
45.5
20.6
3.1 34.9 41 .0
93.1
2.5
--1--
52.4
32.;
52.1
24. 7
0.8 0.4 1.2 0.5 2.2
14.21 29.9 27.9 32.1 29.7
7 2 .
11 . 8
39.3
30.4
47.6
24.2
33.4
54.0
53.8
16.5
1 .5 0.4 0.4 0.6 0
As chart 2.3. shows, the national f igures , diverge in part considerably. In
Germany and in the Netherlands for example, the d is t r ibu t ion is very even, in
each case about 1/3 of resources come from the sectors quoted. On the other hand
financing by the general government dominates in Denmark (about 90%) and in
Ireland (over 70%). Denmark is also the only country where within the government
sector local au tho r i t i e s play a considerable role in financing, covering about
36% of the share taken by the general government. In the case of other countries
th i s share is considerably lower (see tables A-1 and A-2 in the Annex).
b) Trends
Chart 2.3 shows trends in the sectors of or igin of the rece ip ts . The chart shows
a s l igh t increase in the burden on enterpr ises up to 1987 with a clearly
interpropor t ional increase in the burden in private households. I t is the
general government which will p rof i t from th is trend, since i t s share of
financing wil l f a l l from 40.0% to 38.5% o r 1.5 percentage points. The share of
the "other sectors" hardly changes. Chart 2.4. makes th is clear on the basis of
average ( inf la t ion-adjus ted) annual rates of increase over the period under
review. While to t a l receipts within the Community wi l l increase in real terms by
a probable 1.2% annually, for the sector "general government" the figure is only
0.6% while for enterpr ises and private households i t is 1.6% and 2.0%
respect ively.
Chart 2.4 - Sector of origin - Average yearly -changes 1982 - 1987
EEC B DK D
Enterprises 1 .6 0.1 7.2
(adjusted for inflation)
F GR IRL I L
r - - 1.
NL UK
1.4 1.1 1.9 5.4 0.4 î 1-8 1-4
State
0.6 1.4 5 -1.0 0 . 8 2.2 1 .9 0.3 1 "> I · t_ 1.4
Households
0.4
s
12.9
0.9
2.6 i.3 4.9 i 2.4 L ! *1.3 ! ! 2.7
Total receipts 1.-2 1.4 0.5 .3 5.9 2.2 3.9 3.8 1.4 1 .6
This also corresponds to the trend at national level. With the exception of
Belgium and Ireland the sector "Government" shows the lowest rates of increase
in a l l countries; in Germany a real annual decrease of 1% is to be expected.
This discrepancy is clearest in the development in Denmark where the burden on
enterprises and private households will increase annually by 7.2% and even 12.9%
respectively. At the same time i t should once again be pointed out by way of
caution that these two sectors together in Denmark account for less than 10% of
overall financial provision. Nevertheless as a result the share of the
Government in financing social security goes down from 93.1% in 1982 to 89.1% in
1987.
Taking al l three sectors together the average highest rates of increase are
shown for I taly and Ireland, which at the same time together with Belgium is the
only country in which the enterprises sector shows the lowest rate of increase
of a l l the sectors analysed here, (in this connection Greece is not taken into
account since no figures are available on the sectorial origin of receipts).
CHAPTER THREE
EXPENDITURE
3.1 Social protection expenditure and benefits
Before examining each function covered by social protection, i t is
appropriate to note that not a l l social protection expenditure goes directly on
benefits received direct ly by persons. The reasons are, f i r s t l y , that
expenditure on capital equipment takes place as well as expenditure on current
needs, this sum making up the to ta l of social protection expenditure :
current expenditure
+ capital expenditure
= social protection expenditure
The available information on capital expenditure is discussed
later in this chapter.
Current expenditure may be further subdivided into :
social protection benefits
administration costs
other current transactions.
Social protection benefits may be divided into :
social benefits
other benefits in the form of goods and services
f iscal benefits.
The difference between "social benefits" and "other benefits in
the form of goods and services" is discussed in Appendix C of this report.
The relat ive importance of social protection benefits in the 1987
projections is shown in the following table :
I t
Table 3.1 Current expenditure on social protection : percentage structure
1987
1 —
1
1
1 EEC
! %
B
%
DK
%
D
%
F
%
GR
%
IRL
%
I
%
L
%
NL
%
r
uk |
% I
1|Social protection | benefits j 96.2 94.9 97.3 96.5 95.3 95.3 96.4 93.4 96.1 95.9
I
I
96.4 |
I1| Administration
j costs and other | current | expenditure
i
1 3.8
I
5.1 2.7 3.5 4.7 4.7 3.6 6.6 3.9 4.1
I
I
I
I
3.6 |
I
ijTotal current | transactions(i
T '
|100 100 100 100 10C 100 100 100 100 100
I
I
100 |
I
Table 3.1 shows that administrative costs made up around 5 % of
to ta l current expenditure, ranging from 6.6 % to 2.7 % according to the country.
I t should be remembered that this to ta l of administrative costs may embrace very
different percentages according to the type of scheme, with social aid schemes
generally requiring much greater administrative costs than insurance schemes, as
a percentage of benefits.
"Other current expenditure" makes up a residual item of amounts d i f f icu l t to
classify elsewhere, usually less than 1 % of to ta l current expenditure.
3.2 Social protection expenditure and gross domestic product
Direct comparisons of to ta l expenditure are not very revealing
because of differences in population size, and in the purchasing power of money
sums. These problems can be partly overcome by expressing social protection
expenditure as a ra t io of gross domestic product (GDP) as in table 3.2 below.
Fiscal benefits are excluded from the table , since only certain countries
provided such data (see table 3.15).
Table 3.2 Social protection expenditure as a percentage of GDP
EEC B DK D F GR IRL I L NL UK
1987 27.0 28.1 26.4 28.5 29.2 20.9 22.7 25.5 27.2 32.5 22.2
1982 27.4 30.5 30.3 29.8 28.5 19.0 22.8 26.1 28.9 33.2 23.5
The figures show that the EEC percentage of 27.4 % in 1982 is
projected for 1987 to f a l l s l ight ly to 27.0 %.
Appreciable differences occur among Member States. Falls in the
percentage are projected for a l l countries except France and Greece. I t should
be noted that expenditure data for Ireland do not include occupational pensions
or sick pay.
The above comparisons do not separate benefits in cash from
benefits in kind such as health care and social work. Such a separation is given
in the following table , which indicates considerable differences between
countries :
Table 3.3 Soci al protection benefits in cash and in kind as % of GDP
EEC
Cash
1987
1982
Ki nd
1987
1982
B DK D GR IRL L NL
18.0
18.0
7.5
8.0
20.7
22.8
6.0
6.1
15.4
18.1
10.4
11.5
18.4
18.5
9.1
9.7
18.9
18.4
8.9
8.6
n/a
n/a
n/a
n/a
15.2
14.6
7.4
8.3
18.2
17.8
5.3
6.4
19.4
20.2
6.7
6.4
25.1
25.4
6.1
6.6
UK
15.5
15.6
6.4
7.1
The table shows that a fa l l is projected only in benefits in kind
for the EEC. France, Italy and Ireland project a slight increase in the
percentage of GDP for cash benef i ts , with reductions in other countries,
part icularly Belgium and Denmark. The reduction in the percentage for benefits
in kind is part icularly marked in Denmark, Ireland, Italy and the United
Kingdom.
3.3 The functions of social protection benefits
The d ifferent iat ion of benefits into separate "functions" or
"r isks" , in insurance terms, is based on a comparable methodological framework
which serves as the basis for nat ion^J^stat is t i cs and projections. Certain over­
a l l headings may be distinguished :
Health
Old age (including survivors)
Maternity/Fami ly
Employment ( incl . promotion of employment and
unemployment)
Housing
Miscellaneous
a. Structure
The following chart shows the relat ive importance of these
functions in the to ta l of social protection benefits :
(1) See Appendix D *or. de f in i t ion of functions.
C hur L .5.1 :; o c i
s t r u c t u r e .
1987
Heal th
Old age and
survivors
Maternity/
Fami ly
Employment
EEC
35,5
/
9,2
Mi seel laneousi-----
( inc l . housing)
DK D 6R IRL NL UK
33,3
38,1

40,8
48,0
/
7,5
,8 3,1 f 3L0,3
43,7
/
43,7
8,1
to7
42,1
32,0
/ /
10,1
\ \
.12,6
\ \
/
42,3
11,3
11,2
N 1_
■3,2
1982
EEC NL UK
Health
Old age and |
survivors i 7 40,9
Maternity/
Family
\ '' ~ \
Employment \ 9,6 s·
Mi seel laneous-----
( inc l . housing)
It can be seen that the two functions "Health" and "Old age" are
the two most important functions of social protection benefits, taking between
just over two-thirds and just over four-f i f ths of the total depending on the
country.
If the 1987 projections are compared to 1982, for the EEC there
are increases in the share of "Old age" and "Employment", with a fa l l in that of
Maternity/Family". At national level, certain countries show larger changes in
the share of functions between the two years : for "Health", Ireland, I taly and
the Netherlands; for "Old age", Denmark, I taly and Greece; for "Maternity/
Family" Belgium with a fa l l in share and the Netherlands with a r ise ; and for
"Employment" Belgium, Ireland and the Netherlands with a rise and Denmark with a
f a l l .
b. Trends
The following chart gives perhaps a more vivid i l lus t ra t ion of the
projected trends by attempting to show rates of change shorn of the differing
rates of inf la t ion , using constant prices by reference to the consumer price
index. I t should be noted that functions having a relat ively small share can be
influenced much more strongly by policy and legis lat ive changes than programmes
involving a much greater commitment of trained personnel and other resources.
The advantage of this presentation is that i t not only enables
comparisons between countries, i t also shows up for the same country the d i f f e r ­
ences in rates of change among the main functions.
An increase is projected in "Health", a s l ight ly greater one for
"Old age", with the largest increases projected for "Employment", except in
Denmark. Certain countries project decreases for "Maternity/Family", except
Ireland, I ta ly , the Netherlands and the United Kingdom.
Chart 3.2 : Main functions of
percentage change
social pro tect ion benef i ts
(adjusted for in f la t ion )
average yearly
EEC
Health 1,0
Old age and
survivors 1,5
B DK D GR IRL I
0,7 0,2 t [075- 2,4
0,3
r z i z i
1,5 3,2
NL UK
■ 1,1 1,3 • 1,2 2 ,0
2,3 3,6
■0^5·, -0t-6i 1,8
Maternity/
Fami ly
employment
-0,9 -5,0 -0,3 -3,1 -0,3
2,4

5,0 -4,1 -1,2 2,5
2,7 1,1 -1,7 3,5 0 , 8
7,8 2,5
>
10,7 3,5 1,9
3.4 Health
a. The risks covered
This main function is subdivided into three categories of
benefit :
sickness
invalidi ty/di sab i l i ty
occupational accidents and diseases.
(For detailed def in i t ions, see Appendix D).
Chart 3.1 in Chapter 3.3 showed a marginal decline in the share of
health benefits from 35.6 % (in 1982) to 35.5% (in 1987) of the to ta l . I t is
perhaps re lat ively d i f f icu l t to exercise s t r i c te r control over expenditure on
invalidity or d isabi l i ty and changes in the larger sickness function are likely
to occur only slowly, leaving aside the occurrence of epidemics.
Table 3.4 Health benefits : component functions in % (1987)
EEC B DK 0 F 6R IRL I L NL UK
% o/ 0 / 0 / 0 / 0/ 0/ 0/ O/ 0/ 0//e /o /e /e /o /e /o /o /o /s
69.6 65.0 65.3 67.0 75.3 63.3 78.3 48.1 56.9 55.6 66.1
24.3 28.1 32.6 25.0 16.3 26.5 20.0 44.4 33.9 44.4 31.1
6.2 6.9 2.1 8.0 8.4 10.2 1.7 7.5 9.2 2.8
100 100 100 100 100 100 100 100 100 100 100
The table shows the larger share of health benefits classif ied as
invalidi ty in I ta ly and the Netherlands. Relatively more is spent on
occupational accidents and diseases in the Federal Republic of Germany, France,
Greece and Luxembourg than in other countries.
b. Cash and kind
An important d is t inct ion to be made when looking at health
benefits is the difference between benefits in cash and those in kind - health
care. Almost two-thirds of health benefits are in kind, and the preponderance of
benefits in kind for sickness contrasts with the opposite situation for
invalid i ty /d isab i l i ty and occupational accidents and diseases where around
three-quarters of expenditure goes on cash benefits .
Sickness
Invalidi ty/
di sab i l i ty
Occupational
accidents
and diseases
Table 3.5 Health benef i t in cash and in kind : % s tructure in EEC, 1987
Cash Ki nd Total
Sickness 18.8 81.2 100
Inval id i ty /d isabi l i ty 74.5 25.5 100
Occupational accidents
and diseases 74.0 26.0 100
Total, health 35.5 64.5 100
c . Amounts per person
A comparison of amounts per person for the different functions can
give an indication of the relat ive levels of coverage provided by the social
security and health schemes. For more precise comparisons, i t is important to
compare aspects such as conditions of e l i g i b i l i t y , duration of benef its , e tc . ,
which for "general" schemes of social security are given in the Commission
publication "Comparative Tables of Social Security schemes in the Member
States of the European Communities" . The comparisons are in current prices
for the year in question.
d. Sickness
For sickness benefits in cash, the to ta l amount of benefit
adjusted for differences in purchasing power has been compared to the population
aged 20 to 59, as an indicator of amounts received per person. A similar
comparison has been made for sickness benefits in kind, compared to the to ta l
population. Great differences exist in these indicators for different
countries : for example, France would seem to pay out one of the lowest amounts
in cash benefits, but is projected in 1987 to spend the highest in benefits in
kind. The Federal Republic of Germany and the Netherlands pay out on average
much higher sickness cash benefits than other countries.
(1) Published every two years. Latest ed i t ion refers to s i tua t ion on 1st July
1984.
Table 3.6 Sickness benef i ts per person (EEC = 100 %)
In Cash EEC B DK J> £ GR JRL 1_ L NL UK
1987 (1) 2 100 103 100 155 63 n/a 104 60 - 166 91
In Kind
1987 100 87 102 118 143 n/a 56 82 - 90 65
e. Invalidity/Disabi Lity
The amount of benefit was adjusted for differences in purchasing
power and compared to the population aged 20-59, except for I ta ly , where such
benefits remain payable af te r retirement age. As with sickness benefits, great
differences appear from country to country with the Netherlands and Luxembourg,
together with I ta ly to a lesser extent, paying high cash benefits.
Table 3.7 Invalidi ty/Disabi l i ty benefits per person (EEC = 100 %)
In Cash EEC B DK
1987 100 82 108
In Kind
1987 100 121 107
D F GR IRL I L NL UK
79 59 n/a 25 194 - 193 57
94 91 n/a 93 71 - 100 138
3.5 Old age and survivors
a. The risks covered
The two separate functions "old age" and "survivors" have been
combined, since in cer tain countries, survivors include not only "young" widows
but also war survivors, many of whom are older than the normal retirement age.
The differences can be seen in the following table , where amounts for survivors
are part icularly high in Belgium, the Federal Republic of Germany and
Luxembourg, while being low in Denmark and the United Kingdom.
(1) Adjustment for purchasing power based on most recently available s ta t i s t i c s
(1984).
(2) In view of the Large number of "front ier" workers who are ent i t l ed to
benefits from Luxembourg but who live outside i t , no indicator is provided
here.
Table 3.8 Copponents of old age and survivors - 1987 (In %)
EEC
%
B
%
DK
%
D
%
F
%
GR
%
IRL
%
I
%
L
%
NL UK
%
Old age
.Surv.iva rs
80.2
19.8
69.4
30.6
99.7
0.3
67.1
32.9
83.1
16.9
93.5
6.5
77.2
22.8
77.4
22.6
62.3
37.7
88.8
11.2
95.9
4.1
TOTAL 100 100 100 100 100 100 100 100 100 100 100
b. Cash and kind
Only in Denmark are benefits in kind over 10 % of the total :
27 % in 1982, projected to be 28.5 % in 1987. (Mainly social work care in
special accommodation).
c. Amounts per person
In comparing amounts per person, the cautionary remarks made in
the previous section on health benefits should be borne in mind.
The amounts discussed here are the addition of old age be i^ | i t s
and survivors benef i ts , compared to the population of legal retirement age
The table below indicates major differences between countries,
much less however than the differences seer, for sickness and invalidity benefits
in cash. Old age benefits in Denmark, France, Greece and the Netherlands would
seem to be greater than in other countries, with Belgium, Ireland, I ta ly and the
United Kingdom significantly lower (although the Ir ish figures omit private
occupational pensions).
A further report is planned which examines the net amounts of old
age pensions received by "model" household types, compared to previous net
earnings.
Table 3.9 Old age and survivors benefits per person (EEC = 100 %)
EEC B DK D F GR IRL I L NL UK
1987 1Ö0 85 124 103 125 123 81 88 - 126 86
(1) As given in the "Comparative Tables of the Social Security Schemes in the
Member States of the European Communities", 13th edit ion. See Appendix E.
(2) See note 2 to Table 3.6.
(3) See note 1 to Table 3.6.
z s
3.6 Maternity/Family
a. the ri sks covered
Maternity benefits include both benefits in cash and in kind,
although i t could be argued that the la t te r are more appropriately class if ied
under health benefits (as is the case for I ta ly) . Family benefits are in most
countries child benefits , the exception being Italy where payments are also made
for a spouse, dependent parents and grandparents.
The table below shows the relative share of maternity benefits
compared to family benefits projected for 1987.
Table 3.10 Maternity and family benefits : percentage in 1987
EEC
%
B
%
DK
%
D
%
F
%
GR
%
IRL
%
I
%
L
%
NL
%
UK
%
Maternity 12.7 4.9 16.2 15.3 15.6 15.6 18.7 9.5 20.0 3.7 12.0
Family 87.3 95.1 83.8 84.7 84.4 84.4 81.3 90.5 80.0 96.3 88.0
TOTAL 100 100 100 100 100 100 100 100 100 100 100
The differences between countries may be explained either by
different birth rates or different levels of maternity benefits in cash, or
different levels of child benefit , as will be examined further below.
b. Cash and kind
For maternity benefits, three patterns can be seen: in one group
of countries, cash benefits predominate (DK, D, F, I , L), in another group
benefits in kind do so (IRL, B, UK), while in the Netherlands the sp l i t is about
equa l.
Table 3.11 Maternity benefits in cash and kind : % in 1987
EEC
%
B
%
DK
%
D
%
F
%
GR
%
IRL
%
I
%
lL_T7/o
NL
%
UK
%
Cash
Kind
53.0
47.0
35.9
64.1
84.4
15.6
63.6
36.4
57.8
42.2
n/a
n/a
19.3
80.7
100
0
75.6
24.4
50
50
25.8
74.2
TOTAL 100 100 100 100 100 100 100 100 100 100 100
Family benefits are mainly cash benefits except in Denmark and
Ita ly .
Table 3.12 Family benefi ts in cash and kind : % in 1987
Cash
Ki nd
TOTAL
EEC
%
B
%
DK
%
D
%
F
%
GR
%
IRL
%
I
%
L
%
NL
%
UK
%
82.7 94.1 22.3 87.8 83.8 n/a 97.3 61.3 85.7 95.5 76.4
17.3 5.9 77.7 12.2 16.2 n/a 2.7 38.7 14.3 4.5 23.6
100 100 100 100 100 100 100 100 100 100 100
c. Amounts per person
The following comparisons are based on the number of children aged
19 or under.
Table 3.13 Family (EEC =100%)
EEC B DK 6R IRL (1) NL UK
Cash + kind
1987 100 111 135 93 125 16 55 82 129 106
The very low figure for Greece should be contrasted with Denmark,
France and the Netherlands. The inclusion of tax benefits in such a comparison
would increase the figures for certain countries : for example, the French
figure would go up by around a quarter, much higher than the EEC average.
3.7 Employment
a. The risks covered
This function is almost entirely made up of expenditure on cash
benefits received by the unemployed (including social aid benefi ts) . Exceptions
are the Federal Republic of Germany and Ireland, which spend around a f i f th of
employment benefits on job promotion and vocational guidance, and to a lesser
extent Belgium and the United Kingdom which spend just under one f i f th of the
to ta l in th is way. Some countries provided no data on promotion of employment.
(1) See note 2 to Table 3.6.
11
Table 3.14 Employment benef i ts : components (1987)
EEC B DK D F GR IRL I L NL UK
Promotion of
employment 10.0 16.3 5.0(2) 20.9 4.2 - 20.8 3.1 4.0 - 17.4
Unemployment 90.0 83.7 95.0 79.1 95.8 100 79.2 96.9 96.0 100 82.6
TOTAL 100 100 100 100 100 100 100 100 100 100 100
b. Cash and kind
Cash benefits count for practically a l l benefits under these
headings.
c . Amounts per person
In view of the differences from country to country in defining the
registered unemployed, an analysis of amounts per person runs the risk of
providing quite misleading comparisons. It was therefore not attempted,
part icularly since work at the S ta t i s t i c a l Office is proceeding on the
recipients of unempoyment benefits , compared to the numbers unemployed.
3.8 Fiscal benefits
In order to obtain comparable data for the different countries of
the Community, i t is important to take account of the different ways in which
social protection benefits are delivered to beneficiaries . Previous sections
have referred to social protection benefits in cash and kind (including other
benefits in the form of goods and services, essential i f a worthwhile comparison
is to be made in part icular between countries with a national health service and
those where consumers pay f i r s t before reimbursement). Taking cash benefits, i t
is only benefits directly paid which are included, but a person who pays taxes
may have his or her disposable income increased via a "fiscal" benefit, which
allows a reduction in the amount of taxes paid. Since this represents a loss in
receipts for the State rather than extra expenditure, i t would not be included
in data on expenditure and receipts. It was therefore necessary to create an
extra heading in order to include such means of increasing the disposable income
for reasons of social policy of certain persons or households.
I t is however a d i f f icu l t matter to obtain an accurate idea of the
amounts involved and there is much debate about the correct assumptions to use
in estimating individual f iscal benefits, as well as whether one can add any
such amounts to give a to ta l picture. Certain countries have provided estimates
(including to ta ls ) for many years where others are not prepared at present to
give a single indication. Further research would undoubtedly be useful and is
continuing at the S ta t i s t i c a l Office of the European Communities.
(2)Around 20 % of to ta l employment benefits may be considered as promoting
employment, using Danish national c lass if icat ions .
The present report can only give a patchy indication of the
amounts likely to be involved. No data was provided by Belgium, Denmark, Greece,
Luxembourg and the Netherlands; the United Kingdom, I ta ly , the Federal Republic
of Germany and Ireland provided both individual items and a to ta l . I taly and the
United Kingdom fe l t unable to give 1987 projection for the items estimated for
1982.
The available data is presented below, but should be considered
very much an approximate guide to the probable amounts involved. Even so, it
would seem that any comparison between countries as regards the "Family"
function should attempt to include fiscal benefits and the same may apply to the
"Housing" function.
Table 3.15 Fiscal benef i ts expressed as a % of a l l types of social protection
benefi ts for each function
Country 1987 1982
Federal Republic of Germany
Hea 1th
Sickness
Invalidity
Old Age
Fami ly
Promotion of employment
Housing
Total Social Protection Benefits
0.8
0.1
3.0
1.6
8.5
13.8
20.5
3.0
0 . 8
0.1
3.0
1.6
9.5
21 .9
24.6
3.2
France
Family 26.3 23.5
Ireland
Sickness
Old Age
Family
Unemployment
Housing
Total Social Protection Benefits
3.7
5.5
18.7
4.5
37.7
8 . 0
0.8
4.2
23.9
0.9
25.5
5.4
Italy
Health
Sickness
Invalidity
Occupational accidents
Maternity and family
Total Social Protection Benefits
n.a.
n. a.
n.a.
n.a.
n.a.
n.a.
2.0
0.4
1.7
22.1
35.0
3.7
United Kingdom
Health n.a.
Sickness n.a.
Invalidi ty n.a.
Occupational accidents and diseases n.a.
Old Age n.a.
Survivors n.a.
Maternity n.a.
Family n.a.
Promotion of employment n.a.
Unemployment n.a.
Housing n.a.
Total Social Protection Benefits n.a.
2.3
1.7
2.9
10.0
7.1
2.4
4.2
15.1
3.5
6.5
82.2
6.9
(1) Qualifiying interes t on loans for purchase of owner-occupied property
amounted to £2.15 b i l l ion in financial year 1982/1983, compared with £2.74
b i l l ion in housing benefit.
3.9 Capital t ransac t ions
Diff icul t ies in calculation also seem to have prevented most
countries from giving any data on capital transactions - although they were
requested not to do so if the amounts were less than 1 % of total expenditure.
I t was originally expected that countries with a national health service would
have significant amounts under this heading, reflect ing for example the
construction of hospitals or other social welfare f a c i l i t i e s . In most other
countries relying on reimbursement of costs or "prices" paid by the consumer,
such prices cover a l l costs incurred in providing the care, both current and
capital costs. It Ts possible that the present need to Limit expenditure on
health care has greatly reduced the amount of capital expenditure, but i t is
also likely that this heading, again a relat ively recently introduced item, has
not yet been fully defined in most countries.
As with f iscal benefi ts , the data available are presented below :
Table 3.16 Capital transactions expressed as a % of current transactions
Country 1987 1982
Federal Republic of Germany
Ireland
Italy
1.3
1.4
i .»
1.5
1.2
In the previous annual report (giving projections for 1986 and
s t a t i s t i c s for 1981) also the United Kingdom provided estimates.
The figures for Ireland and Italy above represent the amounts
spent on the hospital building and development programme. Those for the Federal
Republic of Germany may be sp l i t as follows :
DM million
Health-related expenditure 6 180
Social security 2 550
of which:
Sickness, maternity 330
Old Age, inva l id i ty , survivors 360
Unemployment 370
Family
Other 1 490
Total 8 730
APPENDIX A
DETAILED TABLES
Table A - 1 : Receipts - 1982 (mrd. nat. currency)
NATURE
EEC
(ECU)
1. social contribution
1.1. employers
1.1.1. actual
1.1.2. imputed
1.2. protected persons
1.2.1. employers
1.2.2. self-employed
1.2.3. pensioners or
others
2. general government funds
3. other receipts
A. total receipts
A 59.11
297.14
214.76 1)
80.46 1)
161.97
123.78 2)
17.64 2)
18.12 25
208.97
36.82
704.9
483.6
375.6
108.0
221.3
168.5
46.2
6 . 6
428.2
52.8
704.83
SECTORS OF ORIGIN
1. enterprises
2. general government
2.1. central govt.
2.2. local govt.
2.3. social security funds
232.22 1)
3. households
4. other sectors
5. total receipts
279.13 1)
230.06 1)
45.55 1)
3.47 1)
1185.9
397.7
180.60 1)
5.55 1)
539.2
489.0
47.3
2.9
OK
244.7
704.83
4.3
1185.9
8.87
8.33
GR IRL
18.04 339.6
14.20 193.6
5.33 123.8
69.8
3.84 146.0
3.84 107.5
5.2
33.3
127.55 116.7
17.2
4.83 165.2
51.73
8.94
I L
(1000 Mrd)
NL UK
787.7 247.2
549.1 122.9
448.8
100.3
238.6
188.0
)
) 50.6
)
124.3
1.10
0.73
0.48
0.25
0.37
88.5
69.6
47.5
22.1
326.53 95.7 37.13
15.,67 47..5 24.46
11..76 41..0 17.54
3..91 6.4 6.91
18.9 10.85 48.2 12.67
13.3 9.38 35.3 11.95
5.6 1.34 3.7 0.48
0.14 9.2 0.25
201.7 205.6 2.00 34.8 15.47 29.0 33.34
33.3 30.2 0.04 3.1 4.39
18.9 6.72
153.92 473.6 1022.7 483.0 3.15 126.4
46.39 143.5 77.19
419.0 0.45 37.8 12.92 46.1
22.92
153..5 328. 4 2.28 49.7
22.08 47.9 41.55
120..9 285..8 2.16 43.2
19.91 39.3 34.98 ;
i
31..5 35..5 0.12 5.9
1.86 8.2 6.46 j
1.2 7.1 0 0.6
0.31 0.4 0.11 ;i
3.84 152.4 252.9 0.37 38.4
11.21 48.8 12.73
1.90 2.4 22.4 0.05
0.5 0.17 0 .8
153.92 473.5 1022.7 483.0 3.15
126.4 46.39 143.5 77.19
1> Except óreece 2> Except Ireland and Greece
Table A - 2: Receipts - 1987 (mrd. nat. currency)
EEC
( E C U )
C DK D F GR IRL I
(1000 Mrd)
L NL UK
" nature""’
1. social contributions 656.06 943.7 32.01 413. 4 1204 5 630.0 1 75
188.1 37 68 110 1 5' .24
1.1. employers 426.45 639. 5 23 13 238 4 819 6 300.0 1 12 147.4 21 28
51 6 33.10
1.1.1. actual 313.85 1) 497.8 12 43 155 6 675 4 0 75 105.5 15 82 44 8 24.23
1.1.2. imputed 109.72 1) 141 7 10 70 82 8 144 2 0 37 42.0 5 46 6 7 8.87
1.2. protected persons 229.65 304 2 8 87 175 0 384 9 330.0 0 62 40.7 16 41 58
6 13.15
1.2.1. employees 174.25 3) 239 1 8 87 130 9 305 6 25.9 14 20 42 0 IT.06
1.2.2. self-
employed
1.2.3. pensioners
or others
29.00
22.41
3)
3)
56
8
4
7 -
6
38
2
0
)
) 79
)
3
14.8 2
0
01
20
5
11
1
5
3.76
■3.33
2. general government funds 276.51 609 9 155 97 124 1 297 6 660.0 3 19 62.2 22 79 33 4 44.77
3. other receipts 50.22 44 9 19 90 18 7 46 2 40.0 0 04 4.1 4 23 30 7 Ç.18
4. total receipts 982.83 1598 5 207 88 556 3 1548 3 1330.0 4 98 254.5 64 70 174 .3 105.19
SECTORS OF ORIGIN
1. enterprises 328.74 1) 519 2 8.61 203 5 626 8 0 70 81.7 17 65 56 8 33.88
2. general government 373.52 1) 751 .5 185 .20 167 5 485 6 3 60 91.0 30 04 57 6 56.06
2.1. central govt. 251.44 2) 683 .0 97 .71 125 0 418 2 3 42 27 86 46 1 47.46
2.2. local govt. 55.98 2) 66.2 66 .70 41 1 56 9 0 18 1 98 11 0 8.45
2.3. social security funds 5.23 2) 2.3 20.78 1 4 10 5 0 0 20 0 5 C. 14
3. households 260.91 1) 324 .5 8.87 182 .5 407 4 0 62 81.0 16 93 58 8 18.26
4. other sectors 7.11 1) 3.3 5.20 2 7 28 5 0 05 0.7 0 08 1 1 - t
5. total receipts 982.83 1598 .5 207 .88 556 .3 1548 3 1330.0 4 98 254.5 64 70 174. 3 103.19 i
U>
1) Except Greece '2) Except Italy and Greece 3) Except Ireland and Greece
Table A - 3 : SOCIAL PROTECTION EXPENDITURE O) - 1982 (mrd. nat. currency)
EEC
(ECU)
B OK 0 F GR IRL I
(1000 Mrd)
L nl UK
I. CURRENT TRANSACTIONS 669.1 1174.0 141.73 467.6 1015.6 479.4 3.099 121.4 44.4 66.56
Ac Social protection benefits 639.5 1113.6 138.08 451.2 963.7 454.3 2.965 113.9 40.9 117.9 64.24
1. Health 235.3 364.5 45.20 178.7 321 „3 85.5 1,125 50.5 17.6 53.9 19.12
1.1. Sickness 154.6 232.6 3.3.21 119.8 237.6 47.6 0.915 26.5 9.7 3' .5 13.07
1.2. Invalidity, disability 66.0 100.7 11.09 44.6 54.2 27.7 0.195 21.6 6.2 2 2.4 5.42
1.3. Occupational accidents
and diseases
15.0 31.3 0.90 14.3 29.5 10.2 0.015 2.4 1.7 - 0.63
2. Old age 210.8 292.9 46.92 129.6 325.1 291.5 0.751 38.8 11.4 32.1 25.75
3. Survivors 53.5 135.7 0.61 62.5 66.2 24.8 0.205 11.6 7.0 3.3 1.21
4. Maternity/Family 61.4 120.4 14.51 34.4 111,6 13.8 0.359 9.0 3.7 1C.2 7.60
4,1. Maternity 7.6 3.3 1.64 4.2 18.6 2.0 0.076 0.9 0.6 C.4 0.92
4 Fatni ly 53.9 117.1 12.86 30.2 93.0 11.8 0.283 8.1 3.1 9.8 6.63
5 « tmoioyment 56.1 171.6 23.38 32.6 93.3 9.7 0.379 3.8 1.0 12.8 7.15
5.1. Placement, vocational
guidance, resettlement
5.4 20.4 1.05 5.5 3.7 - 0.034 0.1 0.1 - 1.09
5.2. Unemployment 50.6 151.2 22.33 27.2 89.6 9.7 0.345 3.7 1.0 12.3 6.06
6. Housing 11.6 - 1.99 3.9 25.8 2.6 0.102 0.1 0.0 1.4 2.74
7. Miscellaneous 10.6 3.8 5.48 9.5 20.4 26.4 0.044 0.2 0.0 2.2 0.67
B.Administration costs 23.4 55.8 3.66 12.7 42.4 17.1 0.129 4.2 1.3 4.0 2.59
C.Other current expenditure 6.0 4.6 - 3.7 9.5 8.0 0.005 3.3 2.2 G.3 0.03
II. CAPITAL TRANSACTIONS n.a n.a 8.7 n.a n.a 0.050 1.4 n.a - n.a
III. SOCIAL PROTECTION EXPENDITURE
___________________
476.4 3.149 122.8 126.9
Ci) Excluding fiscal benefits
C->
4T
Table A - 4 : SOCIAL PROTECTION EXPENDITURE (f) - 1987 (mrd. nat. currency)
EEC
(ECU)
B DK D F GR IRL I
(1000 Mrd)
L NL UK
I. CURRENT TRANSACTIONS 922.3 1550.9 179.8 541.1 1611.4 1300.0 4.911 223.3 59.8 91.27
A. Social protection benefits 881.4 1471.4 175.0 522.4 1533.9 1239.0 4.716 208.7 57.5 136.2 87.89
1. Health 317.6 490.1 57.3 210.6 512.9 245.0 1.512 85.2 25.1 57.4 26.59
1.1. Sickness 318.2 37.4 141.3 386.1 155.0 1.184 41.0 14.3 31.9 17.59
1.2. Invalidity,, disability 88.6 137.9 18.7 52.5 83.7 65.0 0.302 37.8 8.5 25.5 8.26
1.3. Occupational accidents and
diseases
2. Old age
20.4
298.8
34.0
395.8
1.2
64.1
16.8
151.0
43.1
540.4
25.0
840.0
0.026
1.177
6.4
77.6
2.3
15.7 38.7
0.74
35.63
3. Survivors 74.1 174.3 0.2 74.1 110.0 58.0 0.347 22.6 9.5 4.9 1.51
4„ Maternity/Family 77.8 129.6 18.0 33.7 156.2 36.0 0.583 15.8 4.7 13.7 9.97
4.1. Maternity 8.9 6.4 2.9 5.1 24.4 6.0 0.109 1.5 0.9 0.5 1.20
4.2. Family 67.9 123.2 15.1 28.5 131.8 30.0 0.474 14.3 3.8 13.2 8.76
5. Employment 80.5 258.7 23.9 35.2 149.9 22.0 0.784 7.2 2.3 17.1 9.88
5.1. Placement, vocational
guidance, resettlement
5.2. Unemployment
10.4
70.1
42.2
216.5
1.2
22.7
7.4
27.9
6.3
143.6 22.0
0.163
0.621
0.2
6.9
0.1
2.2 17.1
1.72
8.16
6. Housing 14.9 - 4.9 4.8 35.3 10.0 0.241 0.1 0.0 2.1 3.23
7. Miscellaneous 10.4 22.9 6.7 13.1 29.2 28.0 0.072 0.4 0.2 2.2 1.07
B. Administration costs 32.4 73.0 4.8 14.4 62.6 38.0 0.189 8.9 1.9 5.3 3.32
C. Other current expenditure 8.6 6.5 - 4.3 14.9 23.0 0.006 5.7 0.4 0.4 0.06
II CAPITAL TRANSACTIONS n.a n.a n.a n.a n.a 0.068 3.3 n.a - n.a
III SOCIAL PROTECTION EXPENDITURE 4.979 226.6 147.7
(i) Excluding fiscal benefits
C3
tn
APPENDIX B
ECONOMIC ASSUMPTIONS
table B - 1 i Economic Assumptions 1982 - 198?
E U R B DK D F GR IRL I L NL UK
t J D P( M r d . n a t - c u r r e n c y )
. 1982 2455.0 3849.5 467 1597.9 3569.3 2517.9 12.989 471390 154 368.86 283.6
. 1987 3413.2 5509.7 680 1896.3 5513.9 6223.3 20.798 889041 220 436.5 398.5
E x c h a n g e r a t e s ( E C U )
. 1982 44.711 8.1569 2.3760 6.4312 65.342 0.6896 1323.8 44.711 2.6139 0.5605
. 1985
(Aug-28)
45.090 8.1013 2.2261 6.7974 105.985 0.7150 1495.95 45.090 2.5069 0.5733
P u r c h a s i n g P a r i t y S t a n ­d a r d s
. 1982 40.011 8.833 2.506 6.404 51.077 0.615 1018.130 39.534 2.746 0.567
, 1987
(1984)
40.064 8.830 2.367 6.791 64.595 '0.650 1179.674 40.519 2.547 0.559
P r i c e d e f l a t o r G D P ( a n n u a l a v e r a g e .1982- 1987) 5.5 4.7 2.8 8.0 15.8 8.0 11.6 6.3 2.5 5.1
U n e m p l o y m e n t r a t e
..1982 13.0 9.5 6.8 8.7 (1.4) 12.2 9.7 1.3 11.7 10.6 j
. 1987 16.3 8.5 8.0 12.2 9.7 19.3 13.7 1.7 16.8 11.5 J
O
- ’P
APPENDIX C
"Social benefits" and "Social protection benefits"
Is there a difference?
The term "Social benefits" in Community s t a t i s t i c s of national
accounts is a heading in the "Distribution of Income Account" of the European
system of integrated economic accounts (ESA), which records a l l transactions
relating to the production process and the generation of income, the
distr ibution and redistr ibution of income and i ts allocation between final
consumption at^ tjl^ saving, as well as capital formation and lending or borrowing
the Community
In national accounts, goods and services are recorded in widely
differ ing ways depending on the type of economic unit which consume them. In a
given country, if a private individual consi^l^s a doctor, buys medicines on a
prescription and then claims reimbursement for his expenditure from the
responsible social security in s t i tu t ion , the service provided by the doctor and
the goods represented by the medicines are described as "market" goods and
services, and as such are regarded as having been consumed by th^^sick person;
accordingly, they come under the aggregates "Social benefits" and "Final
consumption of households". On the other hand, in a neighbouring country with a
national health service which provides the sick person with a medical consult­
ation and medicines free of charge, the reasoning adopted is as follows :
since the doctor is remunerated and the medicines are purchased by a general
government department, the la t te r becomes the consumer of the goods and the
service, the cost of which then comes under the aggregate "general government
consumption" : at the same time, these general government departments set them­
selves up as producers of "Health services" which in the final analysis accrue
to the sick person but which, since they are "non-market" services, cannot be
regarded as "Social benefits".
Of course, for the sick person these accounting dis t inctions are
meaningless : he is treated by the same means - a doctor and medicines - regard­
less of the manner in which the former is remunerated or the la t te r purchased.
The fact that goods are always of the "market" type means that :
(a) social benefits other than cash benefits include goods, and market services
only;
(1) See EUROSTAT "National Accounts ESA" for definit ions.
(2) It does net matter whether the reimbursement is total or par t ia l ( i . e .
whether or not the insured person pays part of the cost of treatment).
(3) In order to be c lass i f ied under "Social benefits" , benefits in kind (goods
and services) must always be of the "market" type.
(4) In fact , in a l l countries - even those without a national health service -
there are goods and services which belong to both categories. The
dist inction made between these categories is ju s t i f ied solely by the
c lass i f ica t ion , def in i t ion, relat ions between sectors, etc. used by economic
accounting systems as needs dic ta te .
(b) other benefits in the form of goods and services provided by the social
protection system include goods, market services and all non-market
servi ces.
"Social protection benefits" , on the other hand, are defined to
measure what the person or beneficiary receives - for example, medical care or
medicines - irrespective of the conventional economic description of the methods
in which such goods or services are delivered. I t covers a wider f ield than the
narrow definition of "Social benef i ts", by including "Other benefits in the form
of goods and services". It will thus result in higher figures than those in an
apparently similar heading in the economic accounts.
The defin i t ion, even though it may seem open to the accusation of
"exaggerating" the amounts spent on the social services, does have the advantage
of providing more comparable figures, in particular between countries with a
national health service and those without.
APPENDIX D
Extract from " European system of integrated social protection
s t a t i s t i c s " Methodology - Part 1, published in 1981 by EUROSTAT
B-SOCIAL PROTECTION FUNCTIONS - CONTENT
Sickness function
511. Sickness must be understood in the strict sense as a more or less deep-seated alteration in the
health of the individual, affecting his physical or mental health in general.
512. This function includes:
(a) allowances intended as total or partial compensation for the loss of income resulting from the
suspension of an occupation;
(b) payments to all protected persons equivalent to all or part of the cost of medical care1 or a pre­
ventive or therapeutic nature; with regard to prevention, the main areas covered are medical
check-ups, vaccination campaigns, health education, preventive measures, etc.;
(c) expenditure of public health services, insofar as it relates to allowances or medical care;
(d) other forms of social assistance related to sickness.
513. The following are excluded:
(a) medical care given to an invalid or a disabled person (handicapped person, etc.) as specific
treatment for their invalidity or disability, i.e. in direct relation to the particular condition of the
person concerned;2
(b) medical care given to victims of occupational accidents or workers suffering from occupational
diseases, in so far as this care is directly related to the injury or disease in question;3
(c) prenatal, obstetrical and postnatal medical care;4
(d ) medical care given to conscripted military personnel during their compulsory military service;5
(e ) any payments made to supplement allowances granted on account of family responsibilities.6
1 Medical care includes the following goods and services:
(a) services provided by doctors (general practitioners or specialists) and other medical personnel, within or outside establishments (in out-patients'
departments, surgeries, and at home);
(b) stays in hospitals: medical treatment and maintenance;
(c) dental care;
(d) medicines and prostheses: medicines and pharmaceutical products, optical appliances (spectacles, lenses) and hearing aids, orthopaedic pro­
ducts and prostheses, dental products and prostheses;
le) other medical services: laboratory analyses, radiological and electro-physical examinations, hydrotherapy, salt-water and sea-air cures, functional
rehabilitation, transport o* sick persons, health education and disease prevention campaigns, vaccinations and immunizations, etc.
2 These benefits are classified under the 'Invalidity/disability' function.
3 These benefits are classified under the function 'Occupational accidents and diseases'.
4 These benefits are classified under the function 'Maternity''.
5 The cost of this care is not regarded as expenditure by the social protection system.
6 These payments are classified under the function 'Family'.
514-518
Invalidity / Disability function
514. Invatidity/disability (physical or mental) is the inability to engage in any activity to an extent pre­
scribed, orto lead a normal social life, which inability is likely to be permanent or persists beyond
a limited period, such as may be defined in legislation covering insurance against sickness. It can
be congenital or the result of a disease (with the exception of occupational diseases), of an
accident (with the exception of occupational accidents), or of a political event.
Comment
The above exclusions (occupational accidents and diseases) apply only to cases where the benefit
is granted under conditions (legal or other kinds) which make explicit reference to these two risks.
515. This function covers the following:
(a) pensions, allowances and other cash benefits granted to invalids and disabled persons because
of their condition;
(b) remuneration paid to disabled persons when they engage in an occupation adapted to their
handicap in sheltered workshops;
(c) the specific medical care granted to invalids or disabled persons as a result of their condition;
(d ) the functional, occupational and social rehabilitation of invalids and disabled persons;
(e) other forms of social assistance provided for invalids and disabled persons.
516. The following are excluded:
(a ) the medical care1 granted to members of the family of invalids and disabled persons;2 3
(b) the pensions, allowances, funeral expenses and death grants paid to the surviving dependants
of invalids and disabled persons*
(c) all increases in pensions, allowances, etc., granted on account of family responsibilities.4
Occupational Accidents and diseases function
517. An occupational accident is an accident which occurs in the process or work, or during work, or
while travelling between home and work.
An occupational disease is one so defined by national legislation.
518. This function covers the following categories:
(a) pensions, allowances, compensation payments and other cash benefits granted to the victims;
(b) the specific medical care1 granted to victims on account of their condition; this includes in parti­
cular the supply, repair and replacement of prostheses or orthopaedic appliances required as a
result of the accident;
(c) the functional, occupational and social rehabilitation of victims;
1 See the first footnote under the function 'Sickness'.
2 These benefits are classified under the function 'Sickness'.
3 These benefits are classified under the function 'Survivors'.
4 These increases are Classified under the function 'Family'.
519-524
td) accident prevention (limited to expenditure made by the insurance, provident and social security
organizations);
(e) other forms of social assistance for victims.
519. The following are excluded:
(a) the medical care1 granted to members of the families of victims;2
(b) pensions, allowances, funeral expenses and death grants paid to the surviving dependants of
the victims;3
(c) all increases in pensions, allowances, etc., granted on account of family responsibilities.4 5
Old-age function
520. Old age is defined as the state of having reached a certain minimum age, beyond which, as a rule,
one's main occupation may cease.
521. This function covers the following:
(a) pensions, allowances, compensation payments and other cash benefits paid in the case of sur­
vival beyond a prescribed age;
(b) the cost of staying in nursing homes for the aged and old-people's homes;
(c) payments described as early retirement pensions and effected in accordance with laws or regu­
lations, in so far as the criteria for granting the benefits indicate that the objective is complete
and final retirement for reasons of age, i.e. that the measure taken may be interpreted as part
of a general tendency towards reducing the upper age-limit for employment;6
(d) other forms of social assistance for old people: home helps, benefits in kind, etc.
522. This function excludes:
(a) medical care1 given to old people;2
(b) all increases in pensions, etc. granted on account of family responsibilities.4
Survivors function
523. A survivor's benefit is a benefit granted on the basis of a derived right, i.e. a right originally acquir­
ed by another person whose death is a condition for granting the benefit. However, certain insur­
ance organizations treat this right as a direct one, i.e. there is no connection between the benefit
received and that which the deceased member of the family would have been able to claim.
524. Survivors in receipt of benefit may be the spouse or ex-spouse of the deceased person, his or her
children, grandchildren, ascendants or relatives. In exceptional cases (e.g. funeral expenses), the
benefit may be paid to a person outside the family.
1 See the first footnote under the function 'Sickness'.
2 These benefits are classified under the function 'Sickness'.
3 These benefits are classified under the function 'Survivors'.
4 These increases are classified under the function 'Family'.
5 These remarks are designed so that benefits may be classified under the functions 'Old age' or 'Unemployment' as appropriate.
525-530
525. This function covers:
(a) pensions, compensation payments and other cash benefits paid out to survivors in their capacity
as relatives of the deceased person;
(b ) pensions reverting to next-of-kin;
(c ) death grants, funeral expenses, etc.
526. The following are excluded:
(a) medical care1 given to survivors;2
(b ) any increases in pensions, etc., granted on account of family responsibilities.3
Maternity function
527. The maternity function includes all benefits awarded to cover expenditure resulting from pregnancy
and childbirth (live or still births), as well as those of a similar nature which are granted in the case
either of abortion or of adoption.
528. This function includes:
(a) allowances (including, where appropriate, continued payment of wages and salaries) intended
to offset in whole or in part the loss of income resulting from the suspension of one's occupa­
tion as a result of pregnancy and confinement;
(b) special allowances which may be granted either during pregnancy or after childbirth, in so far as
they are connected with this event (e. g. for prenatal or postnatal examinations);
(c) flat-rate allowances paid on the birth of the child;
(d ) the medical care1 given:
1 ) to the expectant mother during pregnancy,
2) during confinement,
3) to the mother and child after the birth and up to the time they leave the clinic, in so far as
the care has been given in an establishment, or for an equivalent period (approximately one
week in most cases) when the confinement takes place at home;
(e) other forms of social assistance given to expectant mothers or mothers of newborn children.
529. This function does not include medical care1 given beyond the period indicated above.2
Family function
530. The family function includes all benefits granted with a view to covering costs incurred in the
bringing-up of children, and possibly, if relevant provisions are contained in national legislation, care
of other members of the family (spouse, ascendant, etc.).
1 See the first footnote under the function 'Sickness'.
2 These benefits are classified under the function 'Sickness'.
3 These increases are classified under the function 'Family'.
531-534
531. This function includes:
(a) family allowances;
(b) allowances, compensation payments and other cash benefits granted for dependent children or,
if relevant provisions are contained in national legislation, for other members of the fami y,
(c) supplementary payments for children where the legal basis for these benefits is the cover of
another risk (sickness, invalidity, etc.);
(d) supply of food, clothing, holiday accommodation and assistance, in particular household assi­
stance (unless it is directly related to the 'Education' function);
(e) expenditure in the field of family planning;
(f ) other forms of social assistance for children and the family.
P la c e m e n t , v o c a t io n a l g u id a n c e a n d r e s e t t le m e n t fu n c t io n (now: "Promotion of
employment")
532. This function includes:
(a) administrative costs (compensation of employees, purchases of goods and services) incurred by
placement or vocational guidance offices;
(b) removal and installation allowances for unemployed persons who have agreed to move house
and work in another region;
(c) payments compensating for loss of earnings due to absence from work in order to receive voca­
tional training.1 2
533. This function excludes:
(a) the administrative costs of the agencies supervising placement offices;
(b) direct payments from employers not giving rise to a general government subsidy in compensa­
tion;
(c) the direct cost of vocational training (remuneration of training staff, supply of teaching mate­
rials, etc.);
(d) subsidies paid by the public authorities to enterprises in order to encourage the latter to retain
their employees.
Unem ploym ent function ___ —
534· This function includes all benefits designed to provide some income for
protected persons who have lost part or al l of their wages or salary as
a result of unemployment \
1 These payments may be made directly to beneficiaries by a general government agency. They may also be made by the employer himself (in an
enterprise) but in this case there must be a compensatory payment from the public authorities given in the form of a subsidy.
2 With the exception of removal and installation allowances for unemployed persons who have agreed to move house and work in another region.
These benefits are classified under the function 'Placement, vocational guidance, resettlement’.
535-538
535. This function includes:
a) basic or compensatory unemployment benefits;
b) allowances for short-time working ^ for operational, technical or
economic reason:;; /
c) allowances for- short-time working resulting from bad weather;
d) redundancy payments;
e) other expenditure to the benefit of unemployed persons.
535a. This function does not include:
a) medical sjare given to unemployed persons and -members of their
families
b) removal expenses and instal lation allowance for unemployed ^
persons who have agreed to move house and work in another region
c) various payments made, under specific conditions, to the elderly
unemployed
Housing function
536. This function includes payments made by general government on behalf of certain categories of
households — in particular, those with limited means — in order to help to pay for the use of their
accommodation.
It covers:
(a) cash benefits paid directly to households (tenants or owners);
(b) subsidies paid to private owners or to public bodies which own housing, in so far as they are
expressly intended to compensate for a loss of income due to the imposition of reduced rents
on behalf of tenant households.
537. This function does not include all those general measures (even if they are organized by general
government bodies) aimed principally at encouraging building construction, such as building subsi­
dies, bonus payments on savings for housing purposes, subsidies intended to compensate for
reductions in the interest rates on building loans, etc.
Miscellaneous function
538. This function includes:
(a) benefits which, as they are linked to several other functions at the same time, cannot be allocat­
ed to any one of these functions, even as estimates;
These benefits are classified under the Sickness function
These benefits are classified under the Promotion of employment function
These benefits are classified under the Old Age function
539
(b) benefits relating to areas other than those covered by the other functions but whose purposes
are similar to those of social protection in the wide sense:
1 ) assistance for destitute persons, in so far as the contingency responsible for their lack of
resources cannot be classified under another function (old age, family, etc.);
2) expenditure effected in the context of social assistance measures aimed at combating
poverty;
3) expenditure on behalf of children and of juvenile delinquents (reintegration, etc.), with the
exception of educational measures;
4) compensation payments and other benefits in cash or in kind not classified elsewhere, for
victims of political events or natural disasters;
5 ) legal aid and assistance to victims of criminal violence;
6) other forms of social assistance for persons without means, the homeless and the socially
handicapped (drug addicts, etc.).
N. B. — This is a limitative enumeration.
C-GROUPING OF FUNCTIONS
539. In the case of certain needs there may be no point in making two-digit breakdown of the benefits,
as appears in Table D. A less detailed subdivision is accordingly provided for, using the one-digit
headings and containing only the following broad areas: health, old age, survivors, maternity/fami-
....... |y, employment, housing and miscellaneous items.
L| b
APPENDIX E
RETIREMENT AGES used in the calculation of
benefits per person (Table 3.9)
Men Women
Belgium 65 60
Denmark (legal age 67) 65 65
Federal Republic of Germany 65 65
France 60 60
Greece 65 60
Ireland 65 65
Italy 60 55
Luxembourg 65 65
Netherlands 65 65
United Kingdom 65 60


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