Long-term trends

In 2003, on average, public social expenditure amounted to 21% of GDP, although there are significant cross-country variations. In Sweden, public social spending is about 31% while it is 5-6% in Mexico and Korea.

Changes in gross public social expenditures over time are also significant. Since 1980, gross public social expenditure has increased from about 16% to 21% of GDP in 2003 on average across 28 OECD countries. Experiences differ across OECD countries, but on average public social spending-to-GDP ratios increased most significantly in the early 1980s, early 1990s and, again in the beginning of this millennium, when the average public spending-to-GDP increased by 1% of GDP from 2000 to 2003. In between these decennial turning points spending-to-GDP ratios changed little; during the 1980s the average OECD public social spending to GDP ratio oscillated just below 20% of GDP while during the 1990s it trended downwards after the economic downturn in the early 1990s, but nevertheless remained above 20% of GDP.

It is convenient to divide expenditures according to their social purposes to better analyse policy focus and trends. Broadly speaking, the three biggest groups of social transfers are pensions (on average 8% of GDP), health (6%) and income transfers to the working-age population (5%). Public spending on other social services only exceeds 5% of GDP in the Nordic countries, where the public role in providing services to the elderly, the disabled and families is the most extensive.

Public support for families with children is nearly 2% of GDP on average, but this has increased in most countries since 1980. Family support exceeds 3% of GDP in the Nordic countries and Austria, as they have the most comprehensive public system of child allowances, paid leave arrangements and childcare. Moreover, governments also help families through the tax system; examples include the "quotient familial” in France and "income splitting” in Germany.

Social insurance spending related to work incapacity (disability, sickness and occupational injury benefits) has declined in as many countries as it has increased since 1980. Particularly large declines were found in Belgium and in the Netherlands.