Special Report

Countries With the Most Generous Welfare Programs

Canals of Bruges, Belgium
Source: Thinkstock

3. Belgium
> Public spending as pct. of GDP: 29.0%
> GDP per capita: $43,105
> Poverty rate: 10.0%
> Avg. income tax rate: 28.1%

Belgium spends the equivalent of 4% of GDP on labor programs such as unemployment benefits, highest in the OECD. This is despite the fact that Belgium’s Q1 2015 unemployment rate of 8.9% is only slightly higher than the OECD average jobless rate and below that of the EU. The country also spends relatively high shares of GDP on family benefits, disability, and health spending.

The country is likely able to fund its generous social support system through high tax revenue. The country’s average income tax rate of 28.1% is third highest in the OECD. The U.S. average income tax rate, in comparison, is 18.0%.

Helsinki, Finland
Source: Thinkstock

2. Finland
> Public spending as pct. of GDP: 30.8%
> GDP per capita: $40,739
> Poverty rate: 6.8%
> Avg. income tax rate: 22.7%

Finland provides what many consider to be the best education system in the world. Perhaps as a testament to the country’s generous social programs, not only do Finnish students frequently report world-leading international test scores, but also the education system is famous for emphasizing equality over excellence.

Elderly Finland residents, particularly lower-income elderly residents, are major recipients of public resources. Elderly Finnish people in the bottom 20% of the income distribution receive 34.4% of annual public transfers, the highest such share of all OECD nations. Country residents 65 and older also make up approximately 20% of the population, the fourth largest proportion of countries reviewed.

Paris, France
Source: Thinkstock

1. France
> Public spending as pct. of GDP: 31.5%
> GDP per capita: $40,704
> Poverty rate: 8.0%
> Avg. income tax rate: 14.7%

France’s social security deficit was approximately $22 billion in 2012. According to the French government, policies enacted in recent years, including pension reforms and the promotion of generic medicines, have improved the deficit. Government officials expected in 2015 the deficit to reach a decade low this year.

Despite the cutbacks, France has the most generous social welfare spending, which amounts for 31.5% of its GDP. As is generally the case in Europe and other OECD member nations, the bulk of this spending goes to old-age support programs and health. In France, these policy areas account for 14.3% and 8.6% of GDP, the third and the largest such shares of all OECD member nations, respectively.

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