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French welfare spending 'not sustainable'

Ben McPartland · 25 Nov 2014, 18:00

Published: 25 Nov 2014 18:00 GMT+01:00

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Nearly a third of France’s GDP goes on its welfare system, making it the country with the highest social expenditure in the world, new figures revealed this week.

France spends some 32 percent of its GDP on its welfare state, well ahead of the global average of 22 percent, according to a new report from the Paris-based economic think-tank the OECD.

Finland, Belgium, and Denmark are the only other countries whose spending tops 30 percent of the GDP. In the UK it stood at 22 percent and in the US 19 percent.

One of the authors of the report Maxime Ladaique told The Local that French levels of spending on pensions, health care and the like are no longer sustainable.

“We have to keep in mind the population is getting older,” said Ladaique. “When France introduced its social security system there were seven workers for every one retired person, now there are only four workers and there are estimates that say in 30 to 40 years there will only be two people working for every one retiree.

“The system is already in deficit. If nothing is done about it, then the welfare system won't be sustainable. There needs to be reforms,” he said.

When it comes to France’s social spending, almost half of it goes on pensions, Ladaique says, and when health care is thrown in that accounts for almost three quarters of the bill.

The rest of the outgoings go on unemployment benefits and social services.

One of the reasons why France’s spending differs so greatly from the OECD average is that in other countries like the UK and Greece and Germany the spending on welfare has dropped much more significantly than in France, which only saw a minor fall compared to last year’s figure of 33 percent of GDP.

However the attitude of both the government and the public in France seems to be changing.

Some of the more controversial elements of next year’s budget are cuts to social spending including the previously untouchable family allowances, which form part of the overall €21 billion savings plan for 2015.

Earlier this year the PM announced a freeze on pensions, which caused anger among his party.

Story continues below…

Opinion polls also suggest the French public accepted that cuts needed to be made.

“France is going in the right direction. Obviously if there was growth, this level of welfare spending wouldn’t be a problem.

“The French are very attached to this social model, but they seem to realize now, that something needs to be done. But it’s difficult to reform. This is France,” he said.

On the plus side Ladaique pointed out that France benefited from good life expectancy rates, a high fertility rate and less inequality than in other OECD countries.

Ben McPartland (ben.mcpartland@thelocal.com)

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