In 2018, public social spending was just over 20% of GDP on average across the 36 OECD countries ( 6.10). Public social spending-to-GDP ratios are highest in France at just over 30% of GDP, while Austria, Belgium, Denmark, Finland, Germany, Italy and Sweden devoted more than a quarter of their GDP to public social spending. At the other end of the spectrum are mostly non-European countries such as Chile, Korea, Mexico and Turkey, which spend less than 13% of GDP on public social support. Social spending in the emerging economies in the early 2010s was lower than the OECD average, ranging from around 3% of GDP in India to about 17% in Brazil.
At its peak during the Great Recession, public social expenditure amounted to 22% of GDP on average across the OECD. Spending has edged downwards since 2009. 6.10 suggests that it takes some time for social protection systems to develop into comprehensive welfare states. Although still low in international comparisons, since 1990 public social expenditure-to-GDP ratios more than tripled in Korea and Turkey. In a small number of OECD countries (Canada, Israel, New Zealand, the Slovak Republic, Slovenia and Sweden) the public social spending-to-GDP ratio is the same now as it was in 1990, or is even lower. The Netherlands is the country with the biggest drop: a health care reform in 2006 led to a shift away from public spending; since then, compulsory basic health insurance is being financed through private funds.
On average in the OECD, pensions and health services account for two-third of total expenditure. In a majority of OECD countries, pensions are the largest expenditure area ( 6.11). In Anglophone countries and most other countries outside Europe, health makes up for the bulk of public social expenditure. In a few countries, such as Denmark and Ireland, the largest share is devoted to income support for the working-age population.
Accounting for the impact of taxation and private social benefits leads to some convergence of spending-to-GDP ratios across countries ( 6.11). Net total social spending is 20‐27% of GDP in about half of countries. It is even higher for the United States at 30% of GDP, where the amount of private social spending and tax incentives is much larger than in other countries. It remains highest in France at 32% of GDP.
Cash social benefits are not always tightly targeted to the poorest. In 2016, on average only 23% of public cash transfers received by working-age individuals went to households in the bottom 20% of the income distribution, while 19% went to households in the top 20% of the income distribution ( 6.12). These shares vary across countries. On the one hand, more than 40% of cash benefits go the poorest 20% in Australia, Finland and New-Zealand, countries with various income-tested benefits. On the other hand, less than 15% of cash benefits go the poorest 20% in Mediterranean European countries (Greece, Italy, Portugal, Spain) and Luxembourg, countries with a strong social insurance dimension where most benefits are related to past earnings.
