Wednesday, 28 November 2012

Costs of Social Protection for EU27: 29.4% of GDP

According to figures released today by Eurostat, the costs of social protection (includes social benefits, administration costs and other expenditure linked to social protection schemes) for 2010 (yes, 2010), reached 29.4% of GDP (quick note: publishing these figures almost two years following year end 2010 misses a fundamental principle of effective reporting: timeliness. If the central planning machine that is the EU can't collect and publish important data quicker than this it only serves to highlight the inefficiency of the EU. Furthermore, the figures reported for both 2009 and 2010 are "provisional").

 In Eurostats own words (my bold),
Over recent years, social protection expenditure in the EU27 rose from a low of 26.1% of GDP in 2007 to reach 29.6% in 2009 and 29.4% in 2010, according to data from Eurostat, the statistical office of the European Union. This increase in the ratio is in large part a result of the economic crisis, as in nominal terms total social protection expenditure in the EU27 grew by around 10% between 2007 and 2010, while GDP remained nearly stable. While expenditure on main categories of benefits (pensions, health care, family) all rose by about 10%, expenditure on unemployment increased by a third. In 2010, the two main sources of funding of social protection at EU27 level were general government contributions from taxes, making up 40% of total receipts, and social contributions at 56%.
The EU27 average continued to mask major disparities between Member States. Social protection expenditure as a percentage of GDP was above 30% in 2010 in France (33.8%), Denmark (33.3%), the Netherlands (32.1%), Germany (30.7%), Finland (30.6%), Austria and Sweden (both 30.4%), and below 20% in Romania (17.6%), Latvia (17.8%), Bulgaria and Estonia (both 18.1%), Slovakia (18.6%), Poland (18.9%), Lithuania (19.1%) and Malta (19.8%). These disparities reflect differences in living standards, but are also indicative of the diversity of national social protection systems and of the demographic, economic, social and institutional structures specific to each Member State.

This increase in social protection costs financed with debt and combined with a faltering economy is, as should be no surprise, a recipe for economic disaster. Look forward to seeing the figures for 2011 in one years time...

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