Further Rise in Social Expenditure as a Ratio of GDP

In Austria, social expenditure (including social security, health and old-age care) by public authorities rose by 7.4 percent (at current prices) in 1994, to a level of Sch 668.6 billion. Their ratio to GDP went up from 29.4 percent in 1993 to 29.8 percent. On this indicator, Austria holds a near-average position among EU member countries. In Denmark, Sweden, Germany and France the social expenditure/GDP ratio is higher, in the U.K., Belgium and the southern EU countries lower. More than half of the outlays on social welfare is accounted for by the social security administration, one quarter by the Federal government and about one-fifth by the Federal states and the local authorities. Expenditures concentrate on two major items: retirement benefits and health costs. Retirement benefit expenditure (including social security pensions and old-age benefits of public sector employees) amounted to Sch 312.4 billion in 1994, of which Sch 217.2 billion were paid out by the social security bodies. Their annual increase by 4.1 percent was smaller than in previous years, suggesting that earlier dampening measures (like the cost-of-living adjustment now being linked to the rise of net – and no longer of gross – wages and salaries) have started taking effect. However, severe problems remain. The number of pensioners rises faster than that of insured persons paying contributions to the system, implying a deterioration in the ratio between beneficiaries and contributors (from 586 beneficiaries per 1,000 contributors in 1993 to 593 in 1994). According to projections by the Retirement Insurance Advisory Board, this ratio will reach 638 by the year 2000. Health care outlays constitute the other major item. Health insurance expenditure rose to a total of Sch 107 billion in 1994 (+6.6 percent). These are covered by insurance contributions to about 88 percent. The financing of hospitals (via insurance payments and transfers to the hospital fund) required Sch 32.5 billion. In addition, the Federal states and the municipalities as the major providers of funds for hospitals paid some Sch 61 billion (although some double-counting is included in this figure). Family support by the Federal government totaled Sch 57.6 billion in 1994 (+8.4 percent). It includes, apart from family cash benefits, subsidies for school transport and maternity benefits as a major item. Contributions are collected from the total wage and salary bill and redistributed via a special fund. Federal expenditure on unemployment insurance amounted to Sch 41.6 billion in 1994. Unemployment assistance payments (which may be claimed after the exhaustion of insurance benefits) rose particularly strongly, by 16.5 percent. The rise in outlays for unemployment insurance and maternity benefits remained subdued (+3.8 percent and +3.6 percent, respectively). In 1995, the increase in social expenditure is damped by measures taken in the context of the drafting of the 1995 Federal budget. On the other hand, earlier improvements in pension entitlements (like the honoring of raising children for women) continue to keep outlays on a fast pace.