Social welfare protection: the EU, USA and China

Social welfare costs generally make up a large part of governments’ total budgets in developed countries. Although the share is lower in China, amounts are rising rapidly.

The most costly elements in many countries are healthcare and pensions. Both areas have required real increases in budgets for many years because of the ageing of populations: proportionately more people in retirement, using more costly advanced medical procedures and living longer. On the basis of demographic outlooks this trend will continue.

In a time of recession, other welfare costs such as unemployment benefits or guaranteed minimum resources are also cyclically higher, with greater stress in society affecting other budgets such as those covering invalidity.

At the same time, in the EU and the USA there is pressure to contain and even reduce costs, though the US benefits from an economically more favourable demographic profile.

China is not currently in the same situation. It has put in place the basic structure of its main welfare supports and is significantly increasing its spending. In particular, it is spreading benefits already enjoyed by public servants and, more recently urban employees, to give comprehensive coverage also to the 900 million rural dwellers (of 1 300 million total population). With universal healthcare and pension coverage the government aims to retain popular support and avoid instability.

Read the complete briefing here.

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