THE Public social spending has increased to 22% of GDP on average across the OECD in 2012, up from 19% in 2007. Rising spending-to-GDP ratios are due to a combination of governments increasing expenditure on social supports as unemployment and income support benefits but also because of GDP stagnating or declining in many countries.

A new OECD report, “Social Spending after the Crisis”, analyses how changes in prices show that real social spending has risen on average by around 10% since 2007/2008. In only two countries has real social spending fallen – by 14% in Greece and by 13% in Hungary. Spending rose most in Korea, by 29%, reflecting increasing spending on pensions and other benefits such as childcare. France spends most on social policy, at 32.1% of GDP, followed by Denmark (30.2%) and Sweden (29.8%).

Public spending on unemployment benefits has increased from an average of 0.7% of GDP in 2007 to 1.1% in 2009 and stayed at that level since. Highest rises from 2008 to 2009 were in Iceland (0.3% GDP to 1.7%), Ireland (1.4% to 2.6%) and Spain (2.2% to 3.5%). On the other hand, spending on active labour market programmes, such as job centres and training, has risen little across the OECD, from 0.5% in 2007 to 0.6% of GDP in 2009.

Spending on family benefits, such as childcare allowances and tax credits, has also increased slightly to 2.7% of GDP. Ireland and the United Kingdom, which have income-tested family benefits, now spend the most on family benefits, at around 4.2% of GDP each, ahead of France which spent the most before the crisis (3.7% of GDP) and 4% today.