Reducing cost of social security

Welfare systems in OECD countries have been under increasing pressure to enhance the efficiency of public services and to align social spending with available resources. To reconcile the costs of social programmes with budgetary constraints, two well-known but unpopular options are available: increase in direct or indirect taxation, or/and cuts in social benefits in absolute or relative terms, as compared to economic trends. There are only rare examples, in recent years, of across the board cuts in public spending: Netherlands did for disability and unemployment benefits between 1983 and 1987, and Ireland and Belgium for unemployment benefits in 1983 and 1987, respectively. Most other countries have achieved similar results through indirect means such as restricting entitlements to benefits, as in many southern European countries but also in Belgium and Denmark. Since the mid 1980s, efforts to curb social expenditure have been common in all western market economies in the ECE region and included the reorganization of state-provided services, stricter controls on public expenditure, privatization and the introduction of market mechanisms.