Public social spending has remained at approximately 21% of GDP on average since 2009 across 34 member nations of the Organization for Economic Cooperation and Development. Public spending in the United States amounts to 19.3% of the U.S. economy, which is the world’s largest.
24/7 Wall St. reviewed OECD data published in the OECD Social Expenditure Database. According to the October 2016 update, “Social spending stays at historically high levels in many OECD countries.” France leads the world with annual public social expenditure equivalent to 31.5% of its GDP. Mexico trails every other OECD member nation with public social spending at just 7.5% of GDP.
Public spending as a percentage of GDP grew or remained high after the global financial crisis in many European nations. This was not because of any actual major increases in social spending, but because of GDP contractions in these countries.
Notably, Greece is among the top 10 countries worldwide for its social spending not because of abundant resources but because the country’s economy contracted by almost 20% from 2009 through 2014.
Generous public assistance programs are also found in the world’s wealthiest and most prosperous nations. Germany, in particular, is able to provide its generous welfare programs because of its economic strength. After expanding faster in recent years than almost every other country, the German economy is the third largest in the world with a GDP of $3.8 trillion. Germany’s per capita GDP of $46,347 is ninth largest in the OECD.
Old-age and health expenditures make up the majority, about two-thirds, of public social spending in OECD countries. The largest expenditure, at 8.7% of GDP on average across the OECD, is spending on the elderly, which includes pensions. This is often especially the case in countries that spend a great deal overall on social programs. A high share of elderly residents in many of these countries likely helps explain their greater social spending on senior citizens. In the United States, 14.5% of the population is at least 65 years old. In many of these countries, the share of the elderly population is around 20% or higher.
The official poverty rate in each of these nations is calculated after taxes and transfers. This means that with larger pensions, fewer elderly residents fall under the poverty threshold; with more help from a country’s generous welfare program, financial constraints are less likely to push individuals into poverty. As a consequence, the countries with the largest social nets tend to have relatively low poverty rates.
To identify the countries with the most generous social programs in the world, 24/7 Wall St. reviewed public social expenditures as a percentage of GDP from “Social Spending Stays at Historically High Levels in Many OECD Countries,” a report published in 2016 by the Organization for Economic Cooperation and Development (OECD). The ranking is based on preliminary 2016 estimates. The latest year of official expenditure data for OECD nations is 2013. Supplementary data from the OECD, including public spending for old-age support programs, health-related programs, family spending, incapacity, and labor market programs as a percentage of GDP are for 2013 — also the latest year for which detailed data are available. GDP (PPP), and GDP per capita is from the International Monetary Fund (IMF).
These are the countries with the world’s most generous social welfare programs.