Social Expenditure Ratio Continues to Decline

Calculated on the basis of the European System of Integrated Social Protection Statistics (ESSPROS), social expenditures (including social security, health and old-age pensions) in Austria rose by 0.2 percent in 1997. The ratio of social expenditures to GDP, on the other hand, fell from 29.6 percent in 1996 to 28.8 percent in 1997. After levelling off in 1995, the ratio actually declined in the wake of the first and second austerity packages. In 1997, it was lower for the second consecutive year, and the trend appears to have continued in 1998 as a consequence of the economic upswing, which was, however, accompanied by an ongoing rise in the unemployment rate. Ever since 1995, real social expenditures have been growing at a lesser rate than the GDP. Social expenditures in 1997 concentrated on four major items: retirement benefits (social security pensions including survivors' pensions, 48.4 percent), health care (25.8 percent), family- or child-related benefits (10.5 percent) and invalidity benefits (8.3 percent). Above-average growth rates were registered for invalidity benefits granted to persons of working age and unemployment benefits, although the latter were declining from 1996 to 1997. Child-related expenditures showed substantial fluctuations (growth until 1995, cuts afterwards). As a proportion of GDP, social expenditures in Austria is slightly above the EU-15 average. But the structural composition of social outlays differs markedly from the EU average: in Austria retirement benefits (including survivors' pensions) are higher by 3.8 percentage points, and child-related benefits by 2.5 percentage points, than the EU average, whereas expenditures on unemployment benefits is 2.8 percentage points below the European average.