Brdo, 07/04/2008 (Agence Europe) - Ensuring effective and efficient welfare spending is a priority for EU member states, which are facing several common challenges. Demographic ageing, sustainable public finance, the future of public services, changes in lifestyles and working patterns are encouraging reforms to improve the impact of public welfare expenditure. 'There are differences in welfare systems but Europe has a distinct welfare model - which we would like to make even more efficient,' said Slovenian finance minister Andrej Bajuk on Saturday 5 April after the ECOFIN meeting in Slovenia. Progress has been made over the past decade but 'forging a more pro-poor and pro-efficiency pattern of outlays,' explains a document submitted to the finance ministers and drawn up by Economic Policy Committee (EPC) based on work by the European Commission. The document lists several proposals, aware that there is no one-size-fits-all solution across Europe.
The scale and composition of welfare spending differs widely from one member state to another, ranging from 13.1% to 32.7%. Welfare spending is relatively weaker in the new member states but there are also differences due to national traditions and demographic differences. Public welfare spending comprises pensions (60% of total welfare spending and 12% of GDP), healthcare (36% of total welfare spending, 9.5% of GDP), family and children's allowances (2.1% of GDP) and unemployment benefit (1.7% of GDP on average). The steps considered by the Commission's document to boost the effectiveness of welfare spending are: 1) reconsidering the nature of the social objectives to be achieved and they are achieved (promoting equal opportunities or ensuring equal outcomes); 2) redirect rather than increase public expenditure (to improve the quality of social services); 3) revisions in the pension systems and unemployment benefit schemes should be implemented in parallel (revision of the incentive structure); 4) moving away from subsidising inactivity, shifting the focus onto 'active inclusion'; 5) encouraging people to work longer and be more active in order to cope with the social, economic, fiscal and other challenges posed by ageing populations; 6) making work pay through appropriate incentives by shifting focus to security in the labour market; 7) pursuing further the ongoing efforts to improve cost-effectiveness and long-term financial sustainability of healthcare; and 8) evaluate and screen regularly the efficiency of social policies (developing a stronger 'evaluation culture'). (A.B.)