Government spends 25% of its budget on social protection – NSO

Social protection remained the core function of government expenditure in 2021, representing 25.3 per cent of total General Government expenditure, followed by expenditure on Economic affairs and Health, the NSO said in a statement Thursday.

The NSO published data on the Classification of Functions of Government (COFOG), which is a commonly used methodology to examine the structure of government expenditure.

In 2021, total General Government expenditure increased by €527.3 million over 2020, amounting to €6,542.4 million. Social protection remained the primary expenditure function amounting to €1,655.5 million, an increase of €85.7 million over 2020, with the main increase reported in social benefits (€37.9 million).

A total of €1,375.1 million was spent on Economic affairs, an increase of €39.3 million over 2020. A significant amount was spent on measures to mitigate the adverse effects of the COVID19 pandemic, particularly the COVID-19 Business Assistance Programme of €355.2 million and a further €42.9 million spent on the Economic Regeneration Voucher Scheme.

A share of Government spending was also allocated to energy support initiatives to lessen the effects of the energy crisis (€77.4 million). Total outlay on Health stood at €970.7 million, a rise of €28.5 million, mainly as a result of a larger outlay on compensation of employees (€48.8 million).

This was followed by expenditure on General public services and Education, which amounted to €913.3 million and €837.1 million, respectively. The expenditure increase of €189.7 million in General public services over 2020 largely reflects an increase in the payments related to the EU Own Resources (€139.6 million).

The increase in Education expenditure was mainly on account of higher compensation of employees (€36.5 million), intermediate consumption (€19.5 million) and other current transfers (€14.1 million), predominantly a higher contribution to church schools. Almost all functions of General Government expenditure registered an increase, except for Housing and community amenities, which stood at €77.7 million.

In 2021, the highest share of General Government expenditure was spent on Social protection, which accounted for 25.3 per cent of the total outlay. This was followed by Economic affairs (21.0 per cent), Health (14.8 per cent), General public services (14.0 per cent) and Education (12.8 per cent). Expenditure on Public order and safety registered a share of 3.4 per cent, while Environment protection recorded a share of 3.1 per cent.

Moreover, expenditure on Housing and community amenities had the lowest share of total expenditure, followed by Defence, standing at 1.2 and 1.5 per cent, respectively. Spending on General public services as a share of total General Government expenditure registered an increase of 1.9 percentage points over 2020, representing the highest increase. Decreases in the share of expenditure were noted for Economic affairs and Health, down by 1.2 and 0.8 percentage points, respectively. General Government expenditure as a percentage of GDP decreased by 2 percentage points, General Government expenditure as a percentage of GDP decreased by 2 percentage points, from 45.7 in 2020 to 43.7 per cent in 2021.

Similar to previous years, when considering the components of General Government expenditure by function for 2021, a considerable share of government outlay was in the form of compensation of employees (27.0 per cent), social benefits in cash or in kind (21.2 per cent), intermediate consumption (19.7 per cent) and subsidies (10.6 per cent).

The largest share of government expenditure was spent on Old age (€1,039.8 million), which represents 62.8 per cent of spending on Social protection and 15.9 per cent of total General Government expenditure.

This was followed by expenditure on General economic, commercial and labour affairs, which amounted to €614.8 million, or 44.7 per cent of expenditure on Economic affairs. Furthermore, a considerable share of General Government outlay was spent on Executive and legislative organs, financial, fiscal and external affairs (€576.1 million), followed by a total of €550.6 million and €335.4 million on Hospital services and Transport, respectively.