Social protection statistics - overview

Highlights

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This article analyses recent ^[1] statistics on social protection in the European Union (EU). These encompass interventions from public or private bodies intended to relieve households and individuals of the burden of a defined set of risks or needs, provided that there is neither a simultaneous reciprocal nor an individual arrangement involved. The most common risks and needs are those associated with sickness/healthcare, invalidity and disability, old age, parental responsibilities, the loss of a spouse or parent, unemployment, housing and social exclusion.

Developments in social protection expenditure

In 2022, expenditure on social protection relative to gross domestic product (GDP) was 27.9% in the EU. Across the EU countries, this ratio was highest in France (34.0%). By contrast, social protection expenditure represented less than 17.0% of GDP in Hungary, Lithuania, Romania, Estonia and Malta, with the lowest ratio registered in Ireland (11.4%).

In Latvia, expenditure on social protection relative to GDP was 4.1 percentage points (pp) higher in 2022 than it was in 2012 (3 years after the low point of the global financial and economic crisis). This was the largest increases recorded among any of the EU countries during this period, ahead of an increase of 2.2 pp in Bulgaria.

By contrast, 13 EU countries recorded lower ratios of social protection expenditure relative to GDP in 2022 when compared with 2012. The largest decrease was in Ireland, down 12.5 pp, reflecting in part GDP developments related to globalisation effects. Elsewhere, there were decreases of 5.6 pp in Denmark, 4.8 pp in Greece, 4.5 pp in Hungary (in part reflecting a break in series), 4.2 pp in Malta and 4.0 pp in the Netherlands. In the other EU countries which recorded a decrease, the change was smaller than 2 pp.

Table 1: Expenditure on social protection, 2012-22
Source: Eurostat (spr_exp_type)

Social protection expenditure and GDP rates of change

The time series in Figure 1 starts in 2012, 3 years after the low point of the global financial and economic crisis. From 2012, the rate of change in GDP (in current prices) in the EU started to rise, while the rate of change in social protection expenditure was more stable. In 2012, the ratio of social protection expenditure to GDP was 28.5%; this ratio remained between 27.7% and 28.9% between 2012 and 2019.

• the highest ratio during this period was recorded in 2013, as the rate of change of social protection expenditure exceeded that of GDP by more than 1.0 pp for the 2nd year running
• the lowest ratio was recorded in 2018, as the rate of change of GDP exceeded that of social protection expenditure for the 5th consecutive year: the ratio of social protection expenditure to GDP fell by a total of 1.2 pp between 2013 and 2018
• in 2019, the increase in social protection expenditure was greater than that of GDP for the 1st time since 2013, resulting in a slight increase in the ratio; social protection expenditure was equivalent to 27.8% of GDP

By far the largest annual changes between 2012 and 2022 in the ratio of the EU’s social protection expenditure to GDP were observed in 2020, 2021 and 2022. The ratio increased by 3.6 pp in 2020 to 31.4%, as GDP contracted and social protection expenditure increased. The ratio decreased in 2021 and again in 2022 to stand at 27.9%. These changes reflect the impact of the COVID-19 crisis. The ratio in 2022 was (based on unrounded data) 0.7 pp below the ratio 10 years earlier.

Figure 1: Social protection expenditure, EU, 2012-22
Source: Eurostat (spr_exp_type) and (nama_10_gdp)

Comparison of gross and net social protection benefits

The specific characteristics of national tax and benefit systems may explain some of the differences in levels of social protection benefits between EU countries, for example, the taxes and social contributions paid on benefits by beneficiaries and the extent to which social benefits are provided in the form of tax rebates or tax reductions (see the section on Data sources below for more details).

In 2022, the gap between gross and net expenditure on social protection benefits in the EU averaged 2.4% of GDP. There were notably greater gaps in some of the EU countries (see Figure 2): in the Netherlands, the gap between gross and net expenditure was 4.7 pp, while the gap was 4.0 pp in Denmark and 3.7 pp in Italy.

Figure 2: Gross and net expenditure on social protection benefits, 2022
Source: Eurostat (spr_net_mean)

When social protection expenditure is expressed in relation to GDP, the difference between the highest and lowest spending EU countries was 21.0 pp for gross expenditure (France 32.0% and Ireland 11.0%) compared with 19.7 pp for net expenditure (France 30.1% and Ireland 10.4%).

The ranking (order) of EU countries also varied somewhat, depending on whether gross or net expenditure was being considered. For example, the Netherlands had the 10th highest level of gross expenditure (relative to GDP) in 2022 but moved to 13th place when ranked on net expenditure.

Analysis of the structure of social protection expenditure

Social protection benefits made up 96.1% of the EU’s social protection expenditure in 2022; the remaining share covered administration costs and other expenditure (see Figure 3).

• old age and survivors’ benefits together accounted for 44.4% of total social protection expenditure, with old age benefits the largest part (39.1% of all expenditure)
• sickness/healthcare and disability benefits together accounted for 35.7%, with sickness/healthcare the largest part (29.0% of all expenditure)

As such, the two largest items – old age and sickness/healthcare benefits – together accounted for 68.1% of all social protection expenditure.

Figure 3: Structure of social protection expenditure, EU, 2022
Source: Eurostat (spr_exp_type) and (spr_exp_func)

Expenditure on pensions

Expenditure on pensions across the EU was equivalent to 12.2% of GDP in 2022. Among the EU countries, expenditure on pensions relative to GDP was highest in Italy (15.5%), France (14.7%), Greece (14.3%) and Austria (14.2%).

At the other end of the range, ratios below 7.0% were recorded in Lithuania, Hungary and Malta, while the lowest ratio was recorded in Ireland (3.8%) – see Figure 4.

Figure 4: Expenditure on pensions, 2022
Source: Eurostat (spr_exp_pens)

Pension expenditure per beneficiary varies according to the different types of pensions (see Figure 5). In 2022, the estimated aggregate expenditure per beneficiary on pensions relating to old age was €16 100 across the EU. This was somewhat higher than the average expenditure recorded for anticipated old age pensions (€15 800 per beneficiary) but notably lower than for early retirement (due to a reduced capacity to work) where expenditure averaged €19 200 per beneficiary (excluding Belgium and Slovenia). Meanwhile, expenditure on partial pensions averaged €5 400 per beneficiary, much lower than for any other type of pension; this is to be expected, given that recipients of these types of pensions are also receiving income from employment.

Figure 5: Pension expenditure per beneficiary by type of pension, EU, 2022
Source: Eurostat (spr_pns_ben) and (spr_exp_pens)

It is important to note that data relating to pension expenditure per beneficiary do not necessarily reflect the level or adequacy of individual old age pensions. The figures are based on aggregate expenditure and the number of beneficiaries for a wide range of different types of pensions – granted under different circumstances and serving various distinct purposes – in each of the EU countries. Invariably, different pension schemes provide different levels of benefits, while the combinations of different pension schemes in each of the countries will have a significant influence on the figures recorded at an aggregate level. Furthermore, data on pensions refer to gross expenditure and do not take into account the effects of taxes and social contributions (where relevant), as these vary both between and within countries. For example, while in some countries all pensions may be tax free, taxes may be applied to particular types of pensions in others.

In 2022, pension expenditure per beneficiary for old age pensions (the most common type of pension) varied across the EU countries from an average of €31 800 in Luxembourg to €3 600 in Bulgaria – see Figure 5 in the article on pension expenditure and beneficiaries. Comparing the data in terms of purchasing power standards (PPS) adjusts for different price levels and generally reduces the differences between countries. Average expenditure per beneficiary was highest at 21 200 PPS in Austria, while the lowest level of old-age pension expenditure per beneficiary was recorded in Slovakia (6 000 PPS).

Social protection receipts

An analysis of social protection receipts across the EU in 2022 shows that the majority of receipts could be attributed to general government contributions (41.2%) and employers’ social contributions (34.5%), while around a fifth (21.3%) of social protection receipts in the EU were social contributions paid by protected persons (see Figure 6).

Figure 6: Social protection receipts, EU, 2022
Source: Eurostat (spr_rec_sumt)

Social protection receipts in the EU increased from €7 700 per inhabitant to €10 500 per inhabitant between 2012 and 2022, as overall receipts rose by a total of 38.2%. The biggest change in the structure of receipts over this period was in relation to the share of general government contributions. This share in total receipts rose from 38.7% in 2012 to 41.2% by 2022. By contrast, there was a decrease in the share of employers’ social contributions, from 36.4% to 34.5% over the same period.

The structure of receipts used to finance social protection varies amongst the EU countries and several groups could be identified (see Figure 7).

• The biggest group was composed of 20 countries where government contributions formed the largest component of receipts in 2022. In Denmark, Malta, Ireland and Sweden, government contributions accounted for more than half of all receipts, with this share peaking at 74.5% of total receipts in Denmark.
• Social contributions – from employers or from the protected persons – represented the largest component of receipts in
  • Estonia and Slovakia, where the contribution from employers to finance social protection accounted for more than half of all receipts (70.1% and 51.6%, respectively), while employers also made the biggest contribution to total receipts in Czechia, Poland and the Netherlands
  • Romania, where the contributions paid by protected persons (64.9%) accounted for more than half of all receipts, while protected persons also made the biggest contribution to total receipts in Slovenia

Note that in most of the EU countries other receipts tended to be relatively insignificant. They only contributed 5.0% or more of total social protection receipts in 7 countries, and only exceeded 10% in the Netherlands (13.3%).

Figure 7: Social protection receipts, 2022
Source: Eurostat (spr_rec_sumt)

Source data for tables and graphs

Data sources

Data on social protection expenditure and receipts are based on the European system of integrated social protection statistics (ESSPROS) methodology. This system has been designed to allow a comparison of social protection flows between EU countries.

In April 2007, a legal basis was established for the provision of ESSPROS with the delivery of data (for reference period t-2) to start from reference year 2007, as specified in Regulation (EC) No 458/2007. This was later supplemented by 4 European Commission implementing regulations: Regulation (EC) No 1322/2007, Regulation (EC) No 10/2008, Regulation (EU) No 110/2011 and Regulation (EU) No 263/2011.

In February 2024, an ESS agreement on early estimates for social protection expenditure main indicators was endorsed by the European Statistical System Committee (ESSC) with the purpose to improve the timeliness of a subset of social protection indicators (social protection benefits by function, provided for reference period t-1).

In 2023, Eurostat released an updated version of the ESSPROS manual and user guidelines, which provides information how to compile and use ESSPROS data.

Social protection expenditure

Expenditure on social protection includes social benefits, administration costs (which represent the costs charged to the scheme for its management and administration) and other expenditure (which consists of miscellaneous expenditure by social protection schemes, principally the payment of property income).

Social protection benefits are direct transfers, in cash or in kind, by social protection schemes to households and individuals. The purpose of these transfers is to relieve recipients of the burden of 1 or more of the defined risks or needs. Social protection benefits are paid to households by social security funds, other government units, non-profit institutions serving households (NPISHs), employers administering unfunded social insurance schemes, insurance enterprises, or other institutional units administering privately funded social insurance schemes. Social protection benefits are recorded without the deduction of taxes or other compulsory levies payable by recipients.

Social protection benefits are classified according to 8 social protection functions (which represent a set of risks or needs)

• sickness/healthcare benefits – including paid sick leave, medical care and the provision of pharmaceutical products
• disability benefits – including disability pensions and the provision of goods and services (other than medical care) to the disabled
• old age benefits – including old age pensions and the provision of goods and services (other than medical care) to the elderly
• survivors’ benefits – including income maintenance and support in connection with the death of a family member, such as a survivors’ pension
• family/children benefits – including support (except healthcare) in connection with the costs of pregnancy, childbirth, childbearing and caring for other family members
• unemployment benefits – including full or partial unemployment benefits as well as vocational training financed by public agencies
• housing benefits – including interventions by public authorities to help households meet the cost of housing
• social exclusion benefits not elsewhere classified (n.e.c.) – including income support, rehabilitation of alcohol and drug abusers and other miscellaneous benefits (except healthcare)

The pensions aggregate comprises part of periodic cash benefits under the disability, old age, survivors and unemployment functions. It is defined as the sum of the following social benefits: disability pensions, early retirement benefits due to reduced capacity to work, old age pensions, anticipated old age pensions, partial pensions, survivors’ pensions, and early retirement benefits for labour market reasons (see Social protection statistics – pension expenditure and pension beneficiaries for more information).

The formal data collection for net social protection expenditure started in 2012 for the reference year 2010. A so-called ‘restricted approach’ is used which means that it is strictly limited to measuring the impact of the fiscal system on gross cash benefits reported in the ESSPROS core system (benefits in kind are not covered). It therefore does not take full account of tax relief for social purposes which reduce the amount of taxes paid on other (non-benefit) income or which may be granted to people who do not receive any (cash) benefits. These types of relief are only taken into account to the extent to which they reduce the amount of taxes normally payable on cash benefits. Similarly, tax relief for social purposes which reduces indirect taxes is not accounted for. The full value of such tax relief would only be addressed by the ‘enlarged’ approach (enlarged because the population of beneficiaries is larger).

Social protection receipts

Schemes responsible for providing social protection are financed in a variety of different ways. Social protection receipts comprise social security contributions paid by employers and protected persons, contributions by general government, and other receipts from various sources (for example, interest, dividends, rent and claims against 3rd parties). Social contributions by employers are all costs incurred by employers to secure entitlement to social benefits for their employees, former employees and their dependants; they can be paid by resident or non-resident employers. They include all payments by employers to social protection institutions (actual contributions) and social benefits paid directly by employers to employees (imputed contributions). Social contributions made by protected persons comprise contributions paid by employees, by the self-employed and by pensioners and other people.

Implementation of ESA 2010

The European system of national and regional accounts 2010 (ESA 2010) replaced ESA 1995. This change had consequences in relation to ESSPROS results which were indirectly affected by the implementation of ESA 2010. The revision of ESSPROS data to take changes to national accounts methodologies into account took place for a large majority of EU countries during the data collection for the 2013 reference period.

Context

Social protection systems are generally well-developed across the EU: they are designed to protect (to some degree) people against the risks and needs associated with unemployment, parental responsibilities, sickness/healthcare and invalidity, the loss of a spouse or parent, old age, housing and social exclusion (not elsewhere classified).

Pension systems can play a role in allowing beneficiaries to maintain the living standards they enjoyed in the later years of their working lives. However, as Europe’s population is becoming progressively older, a major challenge faced by social protection systems is related to their financing, as the proportion of older people continues to grow while the share of the population that is of working age decreases.

The organisation and financing of social protection systems is the responsibility of each EU country; the models used across countries are consequently different. The EU plays a coordinating role to ensure that people who move across borders continue to receive adequate protection. The EU seeks to promote actions among the countries to combat poverty and social exclusion, and to reform social protection systems on the basis of policy exchanges and mutual learning. This policy is known as the social protection and social inclusion process. The European Commission provides guidance to countries to modernise their welfare systems through the social investment package.

The main policy framework in this domain concerns the open method of coordination for social protection and social inclusion, which aims to promote social cohesion and equality, through adequate, accessible and financially sustainable social protection systems and social inclusion policies. A communication from the European Commission Working together, working better - A new framework for the open coordination of social protection and inclusion policies in the European Union (COM(2005) 706 final) outlines the objectives, which include

• making a decisive impact on the eradication of poverty and social exclusion
• providing adequate and sustainable pensions
• ensuring accessible, high-quality and sustainable healthcare and long-term care

The European Pillar of Social Rights sets out 20 key principles and rights to support fair and well-functioning labour markets and welfare systems. The pillar contains 3 main categories for action, 1 of which concerns social protection and inclusion and covers the following principles.

• childcare and support to children – children have the right to affordable early childhood education and care of good quality; children have the right to protection from poverty; children from disadvantaged backgrounds have the right to specific measures to enhance equal opportunities
• social protection – regardless of the type and duration of their employment relationship, workers, and, under comparable conditions, the self-employed, have the right to adequate social protection
• unemployment benefits – the unemployed have the right to adequate activation support from public employment services to (re)integrate into the labour market and adequate unemployment benefits of reasonable duration, in line with their contributions and national eligibility rules; such benefits shall not constitute a disincentive for a quick return to employment
• minimum income – everyone lacking sufficient resources has the right to adequate minimum income benefits ensuring a life in dignity at all stages of life, and effective access to enabling goods and services; for those who can work, minimum income benefits should be combined with incentives to (re)integrate into the labour market
• old age income and pensions – workers and the self-employed in retirement have the right to a pension commensurate to their contributions and ensuring an adequate income; women and men shall have equal opportunities to acquire pension rights; everyone in old age has the right to resources that ensure living in dignity
• health care – everyone has the right to timely access to affordable, preventive and curative health care of good quality
• inclusion of people with disabilities – people with disabilities have the right to income support that ensures living in dignity, services that enable them to participate in the labour market and in society, and a work environment adapted to their needs
• long-term care – everyone has the right to affordable long-term care services of good quality, in particular homecare and community-based services
• housing and assistance for the homeless – access to social housing or housing assistance of good quality shall be provided for those in need; vulnerable people have the right to appropriate assistance and protection against forced eviction; adequate shelter and services shall be provided to the homeless in order to promote their social inclusion
• access to essential services – everyone has the right to access essential services of good quality, including water, sanitation, energy, transport, financial services and digital communications; support for access to such services shall be available for those in need

A Eurostat social scoreboard is used to track the employment and social performances of participating EU countries. The scoreboard serves as a reference to monitor progress and to detect employment and social challenges.

Footnotes

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