OECD

Social Safety Nets in OECD Countries
Architecture of OECD Social Protection Systems
Types of OECD Social Safety Nets Programs

Social Safety Nets in OECD Countries

Social Safety Nets (SSNs) are programs that provide non-contributory benefits, in-cash or in-kind, for the poor and vulnerable.  The majority of countries in the world, irrespective of their level of development, implement SSN programs.  This section of the website focuses on SSN programs from OECD countries, a group of 30 developed economies that include Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States.  SSN programs are commonly referred to as welfare programs in the United States or social assistance programs in the European Union.

With the exception of Turkey and Mexico, OECD member countries have high levels of GDP per capita, in excess of $10,000 in 2003.  Two thirds of these countries have per capita GDP higher than $25,000.  However, despite this high level of economic development, poverty, inequality and social exclusion figure prominently in the policy debate in OECD countries.  These concerns resulted in the development of an extensive net of social policies or “welfare state,” covering public provision of health insurance or services, education and social protection.

Social Protection covers policies that redistribute income, or provide social services for the weak and vulnerable (Barr 2004).  Typically, the largest social protection programs are contributory, social insurance programs like old-age pensions or unemployment benefits.  Non-contributory SSN programs play a residual, complementary role.  In 2001, spending for social protection averaged 21% of GDP across 30 OECD countries, ranging from 29% in Sweden and Denmark to only 6% in Korea (graph: Total public social expenditure as a percentage of GDP, 2001, OECD Factbook 2005).

Social protection benefits consist of cash transfers or in-kind provision of goods and services.  On average across OECD countries cash transfers are twice as large as spending on in-kind services. Most statistics group social protection expenditure along the following broad spending categories:

• pensions (old-age cash benefits and survivors);
• income support to the working-age population at risk from illness or loss of earnings (disability cash benefits, occupational injury and disease, sickness benefits, family cash benefits, unemployment benefits, housing benefits and other contingencies);
• public health expenditure and other social services (services for the elderly and disabled people, family services and active labor market policies).