Social Protection Expenditure in Ireland 2022

Social protection expenditure

The preliminary estimates for 2022 show that €58.4 billion was spent on social protection measures. This is equivalent to 12% of Gross Domestic Product (GDP) or 21% of Modified Gross National Income (GNI*)^[1]. Compared with 2021 there was a small decrease of €0.8 billion. Of the Member States that have submitted early estimates to Eurostat, Malta is the only other country to show a decrease (5% lower). More information on international comparisons is presented later.

Figure 1.1 presents a comparison of 2017 to 2022. This chart excludes administrative costs, which are shown in Table 1.2.

^{[1] GNI* is a measure of the size of the Irish economy which, by excluding globalisation effects, can be useful for international comparison}

Comparing 2022 with 2021, the profile of expenditure was similar with the notable exception of the unemployment function and the sickness function.  As could be expected, expenditure on the unemployment function decreased by 59% (€3.6 billion) from €6.1 billion in 2021 to €2.5 billion in 2022. This is predominantly due to the cessation of the Pandemic Unemployment Payment (PUP). Expenditure on the sickness function saw an increase of 7% from €23.6 billion to €25.3 billion from 2021 to 2022. Combined with increases in other functions the ending of PUP was almost entirely offset, with the resulting small decrease already noted. The profile of expenditure across the functions has returned to pre-COVID-19 distribution.  Expenditure on sickness and old age functions represents the largest proportion across all years, reaching almost three-quarters of expenditure in 2022.

Social protection schemes in Ireland

By convention, the European System of Social Protection Expenditure Statistics (ESSPROS) organises data not only by function but also by “scheme”. ESSPROS defines a scheme as a distinct body of rules, supported by one or more institutional units, governing the provision of social benefits and their financing. Schemes are specific to each country while the functions enable comparison across countries and time.

In Ireland, social protection receipts and expenditure are organised into seven schemes: -

• Housing
• Private Occupational Pensions
• Department of Social Protection Voted Expenditure
• Public Health
• Government Employment
• Social Insurance Fund
• Child Protection

See background notes for more information on the data sources for and coverage of these schemes. By structuring the data by scheme, an analysis of how social protection expenditure is funded is possible.

In Ireland, social protection expenditure is, for the most part, funded either by government or by social contributions. The largest source of financing is general revenue from the Government, i.e. exchequer funding. This accounted for 57% of scheme receipts in 2022. However, this can vary across schemes with Department of Social Protection (DSP) voted expenditure fully funded by government while Government Employment is just 23% government funded.

Social contributions cover over 37% of receipts. This can be further sub-divided by:

• Employer social contributions accounted for 25% of receipts of all schemes in 2022; this type of receipt varies across schemes making up the majority of receipts for the Social Insurance Fund (70%) and just under half for Private Occupational Pensions (43%) and Government Employment (47%).
• Household social contributions make up 11% of receipts.
• Self-employed social contributions equate to 1% of the total.

Other receipts account for approximately 5% of receipts.

Table 1.2, Figure 1.2 and Figure 1.3 present data on the receipts and expenditure of social protection schemes in Ireland in 2022.

Social Protection expenditure is made up of administrative costs and expenditure on social benefits. Social benefits consist of transfers to households and individuals to relieve them of the burden of a defined set of risks or needs as categorised into the eight functions. These can be "in cash", for example, the payment of unemployment benefits and pensions or "in kind", for example, health care services free at the point of delivery. Non-means-tested cash benefits account for the largest proportion (38%) of social protection expenditure, followed by non-means-tested benefits-in-kind (35%). Means-tested benefits (i.e. benefits that are explicitly or implicitly conditional on the beneficiary’s income and/or wealth falling below a specified level), both cash and in-kind, accounted for 23% of expenditure. Administration costs account for 4% of expenditure.

The Public Health scheme is the largest scheme in terms of expenditure (€22 billion or 38% of total), followed by the Social Insurance Fund (€12 billion or 21%), DSP Voted Expenditure (€11.4 billion or 20%), Government Employment (€5.8 billion or 10%) and Private Occupational Pensions (€4.1 billion or 7%). The remaining two schemes are small in comparison; the housing scheme accounts for €2.2 billion or 4% of expenditure and the Child Protection scheme €0.9 billion or 1.5% of expenditure.

Table 1.3 and Figure 1.4 present data on social protection schemes by function (excluding administration costs) in 2022 in Ireland. The sickness function accounts for the largest proportion of expenditure on social benefits (€25.3 billion or 45%) and, unsurprisingly, the majority of this expenditure falls under the Public Health scheme (€22 billion). However, other schemes provide protection benefits within the sickness function such as the government employment scheme in the form of paid sick leave.

The old age function is the next largest category of expenditure at €15.9 billion or 28% and is mainly comprised of pension payments. Contributory State Pension payments at €8.0 billion were paid by the Social Insurance Fund; €3.8 billion were paid in public sector pensions; and a further €2.7 billion was paid by private occupational pensions.

The family and children function is the third largest category of expenditure at €5.3 billion. The majority (€3.8. billion) of which falls under DSP Voted Expenditure and relates to child benefit payments. Social protection benefits in relation to family and children are also provided by the Social Insurance Fund and the Government Employment Scheme in relation to parental benefits and paid maternity and paternity leave.

The unemployment function follows family and children, accounting for €2.5 billion or 4.5% of expenditure on social benefits; the largest portion (€1.8 billion) of which falls under DSP Voted Expenditure and related predominantly to Job Seeker’s Allowance.

The majority of social benefits protecting against disability comes under the DSP Voted Expenditure and the main payment is Disability Allowance. The payment of the Invalidity Pension accounts for the majority of protection against disability under the Social Insurance Fund.

In the context of social benefit expenditure on housing, this primarily relates to the provision of social housing by Local Authorities and Approved Housing Bodies, and RAS and HAP^[2] payments.

Social Exclusion not elsewhere classified accounts for less than 1% of expenditure on social protection benefits.

^[2] RAS: Rental Accommodation Scheme, HAP: Housing Assistance Payment

International comparison

Data on Social Protection expenditure are collected under the 'European System of Integrated Social Protection Statistics' programme (ESSPROS) which facilitates an international comparison of data on the expenditure and receipts of social protection within European countries (see Background Notes). At the time of publication, 2021 was the latest year for which there was a complete set of comparable data for all EU Member States. Member States begin to report provisional data for 2022 at this time and this is included where available.

Figure 1.5 presents data on social benefits expenditure per inhabitant in EU Member States for the years 2019 to 2022. The graph shows that for most EU countries there was a peak in expenditure in 2020 related to the COVID-19 pandemic.  In subsequent years, there has generally been a drop in social protection expenditure but not back to pre-pandemic levels.

The average expenditure on social benefits per inhabitant for European Union 27 Member States for 2019 was €8,771.  This increased to €9,636 in 2022 but this represented a drop of 2%  on 2021 from €9,805. Ireland spent €11,143 per person on social protection in 2022 which is 5% lower than the €11,743 spent in 2021 but still 12% higher than the €9,909 per inhabitant spent in 2019.

From the data available, 10 Member States reported a drop in social expenditure per inhabitant in 2022; while 14 reported an increase, varying from 0.2% in Finland to 32% in Bulgaria.

Luxembourg has by far the largest expenditure on social protection benefits per capita at over €25,667 per inhabitant and Bulgaria has the lowest expenditure per inhabitant at €2,581 per inhabitant in 2022.

Expenditure per inhabitant on the sickness/healthcare function varies considerably across the EU.  The average expenditure within the EU in 2022 was €2,887 per inhabitant.  Luxembourg had the highest expenditure at two and half times the EU average (€7,211), followed by Ireland at over one and half times the EU average (€4,582).  Ten countries reported expenditure of less than half the EU average with Romania the lowest at less than €500 per inhabitant (in 2021, the latest year available).