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MEASURING SOCIAL PROTECTION EXPENDITURE
THE OECD SOCIAL EXPENDITURE DATABASE (SOCX)
SEMINARIO-TALLER
“INVERSION/GASTO EN PROTECCION SOCIAL”
SANTIAGO, 3 AL 4 DE JUNIO DE 2015
CEPAL, Comisión Económica para América Latina y el Caribe
Pauline Fron
Statistician, OECD Social Policy Division SOCX via www.oecd.org/social/expenditure.htm
Outline of the presentation
1.The OECD SOCX Methodology: Sources, Scope & Structure
2. Latest OECD Social Expenditure Update
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2. Latest OECD Social Expenditure Update
3. Main challenges for data collection
THE OECD SOCIAL EXPENDITURE DATABASE• Aim : SOCX was develloped in the 1990s to analyse trends in
social spending and facilitate cross-national social policyanalysis
• SNA provides comprehensive framewok but do not allow fo r data at sub category/ programme level.
• SOCX records data on social protection expenditures since
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• SOCX records data on social protection expenditures since 1980s, except for countries that joined the OECD in the 1990s and 2000s data may only be available for shorter pe riods.
• Designed to be compatible with the System of National Accounts and inter alia the System of Health Accounts
• SOCX detailed level programme Database is updated every 2 years
SOCX: Sources
24 European OECD countries: EUROSTAT ESSPROS ,European System of Integrated Social Protection Statistics, Social Protection Satellite Accounts
10 non-European OECD countries: SOCX questionnaires (AUS CAN CHL ISR JPN KOR MEX NZL TUR USA)(AUS CAN CHL ISR JPN KOR MEX NZL TUR USA)
ie. throught the services of the delegates to the Working Party on Social Policy
All (34) OECD countries: use of 3 OECD databases:
• OECD Health data (4. Health)• OECD Active Labour Market Programmes database (6.ALMP)• OECD Education database (pre-school spending within 5.2.1
childcare)
THE OECD SOCIAL EXPENDITURE DATABASE: SCOPE
OECD records social expenditure as
The provision by public and private institutions of benefits to, and financial contributions targeted at, households and individuals in order to provide support during circumstances which adversely affect their welfare.
By definition since only benefits provided by institutions are included in the social expenditure definition, transfers between households – albeit of a social nature, are not in the social domain.
Social benefits include
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Social benefits include -cash benefits (e.g., pensions, income support during maternity leave and social assistance payments), -social services (e.g., childcare, care for the elderly and disabled) and -tax breaks with a social purpose (e.g., tax expenditures towards families with children, or favourabletax treatment of contributions to private health plans).
There are two main criteria which have to be simultaneously satisfied for an expenditure item to be classified as social.First, the benefits have to be intended to address one or more social purposes.Second, programmes regulating the provision of benefits have to involve either a) inter-personal redistribution of resources among participants programmes , or b) compulsory participation.
Public social expenditure : Public social expenditure: social spending with financial flows controlled by General Government (different levels of government and social security funds), as social insurance and social assistance payments.
For example, sickness benefits financed by compulsory employer and employee contributions (receipts) to social insurance funds are by convention considered public. In line with SNA9311, SOCX records pensions paid to former civil servants through autonomous funds as a private spending item (Australia (partially), Canada, Denmark, the Netherlands, Sweden and the United Kingdom).
All social benefits not provided by general government are considered ‘private’.
SOCX: Public/ Private Social Expenditure
All social benefits not provided by general government are considered ‘private’.
Mandatory Private: Social support stipulated by legislation but operated through the private sector, e.g., direct sickness payments by employers to their absent employees as legislated by public authorities, or benefits accruing from mandatory contributions to private insurance funds. Ex: Chile: Monthly benefit paid to members of the Defined Contributions pension scheme (managed by Pension Fund Administrators, Pension Schemes (AFP y Rentas Vitalicias).
Voluntary private : Benefits accruing from privately operated programmes that involve the redistribution of resources across households and include benefits provided by NGOs, and benefit accruing from tax advantaged individual plans and collective (often employment-related) support arrangements, such as for example, pensions, childcare support, and, in the United States, employment related health plans. Ex: Voluntary private health insurance.
THE OECD SOCIAL EXPENDITURE DATABASE: SCOPE
Mandatory Voluntary Mandatory Voluntary
Redistribution Means-tested benefits, social Voluntary participation in public Employer-provided sickness Tax-advantaged benefits, e.g.,
Public Private
Categorisation of benefits with a social purpose 1, 2
Redistribution Means-tested benefits, social insurance benefits
Voluntary participation in public insurance programmes. Self-
employed ‘opting in’ to obtain insurance coverage.
Employer-provided sickness benefits, benefits accruing from mandatory contributions, to, for example, pension or disability
insurance.
Tax-advantaged benefits, e.g., individual retirement accounts,
occupational pensions, employer-provided health plans
No redistribution Benefits from government managed individual saving schemes
Non tax-advantaged actuarially fair pension benefits
Exclusively private : Benefits accruing from insurance plans bought
at market prices given individual preferences.
1. Definition transfers betw een individuals, even w hen of a social nature, are not considered to be w ithin the social domain.
2.The shaded cells ref lect benefits that are NOT classif ied as social.
Public and Private social spending, in % of GDP, 2013 or latest available year
15
20
25
30Voluntary PrivateMandatory PrivatePublic
0
5
10
15
Mexico Chile Canada United States OECD
Source: OECD (2014), OECD Social Expenditure database, (www.oecd.org/social/expenditure.htm).
SOCX: Structure
1.0.0.0 OLD AGE1.1.0.0 Cash benefits1.1.1.0 Pension1.1.2.0 Early retirement pension1.1.3.0 Other cash benefits1.2.0.0 Benefits in kind1.2.1.0 Residential care / Home-help services1.2.2.0 Other benefits in kind
2.0.0.0 SURVIVORS2.1.0.0 Cash benefits2.1.1.0 Pension
5.0.0.0 FAMILY 5.1.0.0 Cash benefits5.1.1.0 Family allowances5.1.2.0 Maternity and parental leave5.1.3.0 Other cash benefits5.2.0.0 Benefits in kind5.2.1.0 Early childhood education and care (ECEC)5.2.2.0 Home help / Accomodation5.2.3.0 Other benefits in kind
6.0.0.0 ACTIVE LABOUR MARKET PROGRAMMES6.0.1.0 Employment service and administration6.0.2.0 Labour market training6.0.3.0 Youth measures6.0.4.0 Subsided employment2.1.1.0 Pension
2.1.2.0 Other cash benefits2.2.0.0 Benefits in kind2.2.1.0 Funeral expenses2.2.2.0 Other benefits in kind
3.0.0.0 INCAPACITY-RELATED BENEFITS3.1.0.0 Cash benefits3.1.1.0 Disability pensions3.1.2.0 Pensions (occupational injury and disease)3.1.3.0 Paid sick leave (occupational injury and disease)3.1.4.0 Paid sick leave (other sickness daily allowances)3.1.5.0 Other cash benefits3.2.0.0 Benefits in kind3.2.1.0 Residential care / Home-help services3.2.2.0 Rehabilitation services3.2.3.0 Other benefits in kind
4.0.0.0 HEALTH4.1.0.0 Cash benefits4.2.0.0 Benefits in kind
6.0.5.0 Employment measures for disabled
7.0.0.0 UNEMPLOYMENT7.1.0.0 Cash benefits7.1.1.0 Unemployment compensation / severance pay7.1.2.0 Early retirement for labour market reasons7.2.0.0 Benefits in kind
8.0.0.0 HOUSING 8.1.0.0 Cash benefits8.1.1.0 Housing allowances8.1.2.0 Other cash benefits8.2.0.0 Benefits in kind8.2.1.0 Housing assistance8.2.2.0 Other benefits in kind
9.0.0.0 OTHER SOCIAL POLICY AREAS9.1.0.0 Cash benefits9.1.1.0 Income maintenance9.1.2.0 Other cash benefits9.2.0.0 Benefits in kind9.2.1.0 Social assistance9.2.2.0 Other benefits in kind90.0.0.0 TOTAL SOCIAL EXPENDITURE90.1.0.0 Cash benefits90.2.0.0 Benefits in kind
• The OECD Social Expenditure Database groups benefits with a social purpose in nine policy
• areas (see also section II.3.1 for more detail):
• • Old-age – pensions (see Box II.2), early retirement pensions, home-help and residential services
• for the elderly;
• • Survivors – pensions and funeral payments;
• • Incapacity-related benefits – care services, disability benefits, benefits accruing from
• occupational injury and accident legislation, employee sickness payments;
SOCX: Structure
• • Health – spending on in- and out-patient care, medical goods, prevention;
• • Family – child allowances and credits, childcare support, income support during leave, sole
• parent payments;
• • Active labour market policies – employment services, training, employment incentives,
• integration of the disabled, direct job creation, and start-up incentives;
• • Unemployment – unemployment compensation, early retirement for labour market reasons;
• • Housing – housing allowances and rent subsidies; and,
• • Other social policy areas – non-categorical cash benefits to low-income households, other
• social services; i.e., support programmes such as food subsidies, which are prevalent in some
• non-OECD countries.
HEALTH Expenditure data in SOCX are taken from the OECD Health Database in line with SHA 1 (System of Health Accounts)
• http://www.oecd.org/els/health-systems/sha2011.htm
• http://www.oecd.org/els/health-systems/health-data.htm
Health – spending on in- and out-patient care, medical goods , prevention;
• Health –All public expenditure on health is included (not total health expenditure): current expenditure on health (personal and collective services and investment).
SOCX: HEALTH
current expenditure on health (personal and collective services and investment). Expenditure in this category encompasses, among other things, expenditure on in-patient care, ambulatory medical services and pharmaceutical goods.
• Individual health expenditure, insofar as it is not reimbursed by a public institution, is not included. Cash benefits related to sickness are recorded under sickness benefits.
• Voluntary private social health expenditure are estimates on the benefits to recipients that derive from private health plans which contain an element of redistribution (such private health insurance plans are often employment-based and/or tax-advantaged).
SOCX Classification
• Education is not considered as part of the Social Domain in SOCX. Recorded separatly in the OECD Education Databasewww.oecd.org/education/eag.htm
Expenditure on educational institutions as a percentage of GDP, from public sources, all levels of education: 5.3% GDP av in OECD. FromDEN: 7.5% to Japan 3.6%. ARG: 6.2, BRA: 5.9, COL: 4.3
• SOCX does not include administrative costs.
• Disaster/Emergency benefits
Small-scale, informal and incidental types of support that do not require regular management and accounting are conventionally excluded from the scope of SOCX. This is the case, for example, of whip-rounds, Christmas collections, ad-hoc humanitarian aid and emergency relief in the event of natural disasters.
2. Latest OECD Social Expenditure Update
• November 2014 : Release of the 2014 Edition of the OECD social expenditure Database www.oecd.org/social/expenditure.htm .
Online database Online database
• Social Expenditure Update - 8-page report (.pdf)
• Enlarged country coverage to Major Emerging Economies (BIICS, Colombia, etc..)
Online SOCX Database
Aggregated data (public and private social spending data in various units)
Ie. at current prices in national currency, in millions , at constant prices (2005) in national currency, in millions, per head, at current prices and current PPPs, in US dollars , per head, at constant prices (2005) and constant PPPs (2005), in US dollars , in percentage of GDP , in percentage of GNI , in percentage of NNI , in percentage of GOV
Reference series (GDP, NNI, governement spending, PPPs, population, etc.)(more reference series i.e. population, employment, unemployment, etc. can be found via OECD Social Indicators)Indicators)
Comprehensive social welfare systems were developed over a long period of time
Public social spending in selected OECD countries, in percent of GDP1, 1960-2014
Source: OECD (2014), OECD Social Expenditure database, (www.oecd.org/social/expenditure.htm).
Pensions and health expenditure are the main items of public social spending
Public social expenditure by broad social policy area, as a percent of GDP, in 2012 or latest year available1
France (31)Denmark (30.1)Belgium (29.4)Finland (28.3)Austria (27.7)
Italy (27.5)Sw eden (27.2)
Spain (26.8)Greece (25.7)
Germany (25.5)Portugal (24.8)Slovenia (24)
Netherlands (23.5)Japan (23.1)
United Kingdom (22.7)
Cash benefits Services8.66.78.05.76.77.06.76.86.68.06.36.47.97.77.7
3.07.0
2.14.8
1.91.0
7.52.2
1.32.4
0.61.1
2.62.7
3.9
13.86.2
10.210.313.215.87.4
10.514.510.613.011.45.5
10.25.6
4.77.9
8.26.5
5.13.3
4.56.5
3.03.8
4.24.8
6.42.3
5.1Hungary (22.6)
Luxembourg (22.5)Ireland (22.3)Norw ay (21.8)OECD (21.4)
New Zealand (21)Czech Republic (20.1)
Poland (20.1)Sw itzerland (19.3)United States (18.7)
Australia (18.3)Iceland (18.1)
Slovak Republic (18.1)Canada (17.4)Estonia (16.8)Israel (15.1)Turkey (12.2)
Chile (10.2)Korea (9.6)
Mexico (7.7)
7.74.95.85.85.66.28.46.24.56.58.06.15.65.67.24.53.94.23.44.12.8
3.92.4
2.22.1
4.92.4
2.11.1
1.01.6
1.43.55.0
1.00.9
0.92.3
0.11.9
1.72.2
0 2 4 6 8 10 12 14 16 18 20
Health
All social servicesexcept health
5.610.07.75.35.47.95.18.9
10.86.66.73.62.17.04.5
6.94.77.53.12.51.8
5.14.9
6.28.3
5.34.4
5.13.7
3.34.1
2.44.8
5.34.2
4.64.3
3.9
0.41.5
1.10.9
02468101214161820
Pensions (old ageand survivors)
Income support tothe working agepopulation
Note: 1. Countries are ranked by decreasing order of public social expenditure as a percent of GDP. Spending on active labour market programmes (ALMPs) cannot be split by cash/services breakdown; they are however included in the total public spending (shown in brackets). Income support to the working-age population refers to spending on the following SOCX categories: incapacity benefits, family cash benefits, unemployment and other social policy areas categories.
From Gross to Net SOCX
• Based on questionnaire to OECD-Tax delegates sent to all OECD member countries
• Gross (Public + Private) social expenditure
- Direct taxes and social contributions
- Indirect taxes on consumption (VAT)
+ Tax break for social purposes (TBSP)– Tax breaks similar to cash benefits
– Tax breaks to stimulate private social protection
= Net social expenditure17
Accounting for the impact of private spending and t he tax system reduces differences in spending ratios across countries
In most OECD countries total net social spending is around 20–25% of GDP
From gross public to total net social spending, as a percent of GDP at market prices
Source: OECD (2014), Social Expenditure (SOCX) via www.oecd.org/social/expenditure.htm
Public social expenditure Outlook: 2014 Nowcasting
• Context : Need for more up to date aggregated data on public social expenditure
• Cash benefits:
Aggregate estimations based on trends in Social security benefits paid by general government SSPG SNA (from OECD Economic Outlook database, No 95, May 2014)
• Service expenditure:
Aggregate estimations based on trends in Social transfers in-kind from the Ameco Database Aggregate estimations based on trends in Social transfers in-kind from the Ameco Database May 2014 : Ameco online >>General government
The annual macro-economic database of the European Commission
EU countries
• Other Source: Special requests have been sent to our delegates for non EU countries asking for public social expenditure at aggregate level based on national sources (Budget Data) till 2014 (AUS, CAN, CHL, IRS, JPN, KOR, MEX, NZL, USA)
• Next update of the aggregated Public social expenditure Outlook in Summer 2015
Public social spending is worth 22% of GDP on avera ge across the OECDPublic social expenditure as a percent of GDP, 2007, peak level after 2007, and 2014
Source: OECD (2014), Social Expenditure (SOCX) via www.oecd.org/social/expenditure.htm
Social spending in % GDP is falling in some countries, but in many others it remains at historically high levels
Public social expenditure (exc. Education) in % GDP
Great similarties between SOCX and CEPAL in level of public social expenditure
20
25
SOCX
CEPALSTAT
Brazil Federal social expenditure
For Brazil Data exclude social spending by local authorities, including on non-Federal civil servants.
0
5
10
15
Brazil 2009 Chile 2012 Colombia 2011 Mexico 2011
• Comparability– Underreporting of Local Government spending
Ex Coverage of spending on family and community services in SOCX may be limited as such services are often provided, and/or co-financed, by local governments. The latter may receive general block grants to finance their activities, and reporting requirements may not be sufficiently detailed for central statistical agencies to have a detailed view of the nature of local spending. In Nordic countries (where local government is heavily
3. Main Challenges in Social Expenditure Data reporting
the nature of local spending. In Nordic countries (where local government is heavily involved in service delivery) this does not lead to large gaps in measurement of spending, but it does for some countries with a federal structure, for example, Canada and Switzerland.
- Avoid Double Counting: Ex with Health Data and for some countries there is an issue with items recorded as spending on services for elderly and/or the disabled provided by institutions other than hospitals also being included under public expenditure on health. Adjustement needed.
• Timeliness: Lag of 2/3 years need for estimations
To remember
November 2014: Release of the 2014 edition of the OECD social expenditure Database www.oecd.org/social/expenditure.htm .
Social Expenditure Update - 8-page report (.pdf)
• Forthcoming Summer 2015: Social expenditure Outlook in OECD.stat online DataBrowser
• Next update of the OECD social expenditure Database at programme level: 2016 SOCX Edition planed in Fall 2016.
• SOCX Manual can be found in “Is the European welfare state really more expensive? Indicators on social spending, 1980-2012 and a manual to the OECD Social Expenditure database (SOCX)" (OECD Social, Employment and Migration Working Papers No. 124) via www.oecd.org/social/expenditure.htm
In It Together: Why Less Inequality Benefits All
(May 2015)
Chapter 7: Inequality and fiscal redistribution in emerging economies
Next Update of the OECD Income Distribution Database
June 2015 www.oecd.org/social/inequality -and-poverty.htm
Recent publications
June 2015 www.oecd.org/social/inequality -and-poverty.htm
Pensions at a Glance:
Latin America and the Caribbean
December 2014, 26 countriesChapter 1. Policy issues: Coverage and adequacy
Chapter 2. Key demographic indicators
Chapter 3. Key pension policy indicators
Chapter 4. Pensions at a Glance: Latin America and the Caribbean – Country profiles
