Social Protection Expenditure in Ireland 2023

Social protection expenditure

The preliminary estimates for 2023 show that €63.5 billion was spent on social protection measures. This is equivalent to 12% of Gross Domestic Product (GDP) or 22% of Modified Gross National Income (GNI*). Compared with 2022, there was a substantial increase of €4.3 billion or 7.2%.

Figure 1.1 presents a comparison of 2018 to 2023. This chart excludes administrative costs, which are shown in Table 1.2.

Figure 1.1 shows that spending on social protection continues to increase each year. It also shows that the share of expenditure by risk has changed somewhat to reflect changing social protection needs. While sickness and old age are the predominant categories of risk, looking at other functions can be informative. Unemployment was the third largest category of risk in 2020 and 2021, reflecting the large amount of expenditure on the Pandemic Unemployment Payment during that period.  In 2023, the amount and proportion of expenditure on the unemployment function has dropped to more normal levels, ranking sixth (out of the eight functions).  Comparing the growth of each function, housing has seen the largest growth in expenditure in 2022 (27.7%) and 2023 (31.6%), moving up to the fourth highest category in 2023. This is mainly accounted for by increased expenditure on persons seeking refuge in Ireland under EU Directive 2001/55/EC and Council Implementing Decision (EU) 2022/382¹ due to the Russian war of aggression in Ukraine.

 _{¹ Council Implementing Decision (EU) 2022/382 of 4 March 2022 establishing the existence of a mass influx of displaced persons from Ukraine within the meaning of Article 5 of Directive 2001/55/EC, and having the effect of introducing temporary protection}

Social protection schemes in Ireland

In Ireland, social protection receipts and expenditure are organised into seven schemes:

• Housing
• Private Occupational Pensions
• Department of Social Protection Voted Expenditure
• Public Health
• Government Employment
• Social Insurance Fund
• Child Protection

See Background Notes for more information on the data sources for and coverage of these schemes. By structuring the data by scheme, an analysis of how social protection expenditure is funded is possible.

There are three main sources of receipts for social protection schemes – government general revenues, social contributions, and other receipts.  In Ireland, social protection is primarily funded either by government (58.7%) or by social contributions (36.7%). At just under 5%, other receipts are a small proportion of the funding. At an individual schemes level, the predominant source of receipts can vary.

Funding of social protection schemes in other countries is presented later in Figure 1.6.

Table 1.2, Figure 1.2 and Figure 1.3 present data on the receipts and expenditure of social protection schemes in Ireland in 2023.

Social Protection expenditure includes administrative costs and expenditure on social benefits. Social benefits consist of transfers to households and individuals to relieve them of the burden of a defined set of risks or needs as categorised into the eight functions. These can be "in cash", for example, the payment of unemployment benefits and pensions or "in kind", such as health care services free at the point of delivery. In 2023, non-means-tested benefits (both cash and in kind) accounted for nearly three-quarters of social protection expenditure. Means-tested benefits (i.e. benefits that are explicitly or implicitly conditional on the beneficiary’s income and/or wealth falling below a specified level), both cash and in kind, were a quarter of expenditure. Administration costs account for 3% of expenditure.

The Public Health scheme is the largest scheme in terms of expenditure (€24.5 billion or 39% of total), followed by Department of Social Protection (DSP) Voted Expenditure (€13.5 billion or 21%), the Social Insurance Fund (€12.2 billion or 19%), Government Employment (€5.9 billion or 9%) and Private Occupational Pensions (€4.1 billion or 6%). The housing scheme accounts for €2.2 billion or 3% of expenditure and the Child Protection scheme €1 billion or 2% of expenditure.

Table 1.3 and Figure 1.4 present data on social protection schemes by function (excluding administration costs) in 2023 in Ireland. The sickness function accounts for the largest proportion of expenditure on social benefits (€27.6 billion or 45%) and, unsurprisingly, most of this expenditure falls under the Public Health scheme (€24.5 billion). However, other schemes provide protection benefits within the sickness function such as the government employment scheme in the form of paid sick leave.

The old age function is the next largest category of expenditure at €16.8 billion or 27% and is mainly comprised of pension payments. Contributory State Pension payments at €8.6 billion were paid by the Social Insurance Fund; €4 billion was paid in public sector pensions; €2.7 billion was paid by private occupational pensions; and €1.5 billion was paid out in non-contributory state pensions payments (DSP Voted Expenditure).

The family and children function was the third largest category of expenditure at €5.7 billion. The majority, (€4.1 billion) falls under DSP Voted Expenditure and relates to child benefit payments. Social protection benefits in relation to family and children are also provided by the Social Insurance Fund and the Government Employment Scheme in relation to parental benefits and paid maternity and paternity leave.

In 2023, the housing function was the fourth largest function at €3.6 billion or 5.9% of all social benefit expenditure. This primarily relates to the provision of social housing by Local Authorities and Approved Housing Bodies, emergency accommodation to persons seeking refuge from the war in Ukraine, and RAS² and HAP³ to people needing housing support payments. 

The disability function closely follows the housing function at €3.3 billion. The majority of expenditure on social benefits protecting against disability comes from the DSP's Disability Allowance (Voted Expenditure). The payment of the Invalidity Pension accounts for most of the protection against disability under the Social Insurance Fund.

The unemployment, survivors and social exclusion functions make up the remaining €4.4 billion of social protection benefits.

_{² RAS: Rental Accommodation Scheme,}

³ _{HAP: Housing Assistance Payment}

Within the DSP Voted Expenditure scheme, it is possible to identify expenditure relating to beneficiaries of temporary protection in Ireland due to the war in Ukraine.  In 2023, €1.8 billion was allocated to Ukrainian refugees, the majority of which (€1.3 billion) related to housing.⁴ This expenditure equates to 14% of the scheme total and 3% of all social protection expenditure.  It should be noted that not all expenditure related to Ukrainian refugees can be identified in the data sources used for ESSSPROS data reporting; for example, there is no separate estimate of the expenditure on GP and other health care services provided to Ukrainian refugees under the Public Health scheme.⁵

⁴ _{For ESSPROS compilation purposes, expenditure relating to the accommodation of Ukrainian refugees and funded by the Department of Children and Youth Affairs has been included in the DSP Voted Expenditure Scheme.}

_{⁵ See CSO’s Ireland’s Relationship with Ukrainian People and their Economy for more information on services provided to Ukrainian refugees} 

International comparison

Data on social protection expenditure are collected under the 'European System of Integrated Social Protection Statistics' programme (ESSPROS) which facilitates an international comparison of data on the expenditure and receipts of social protection within European countries (see Background Notes).

Figure 1.5 compares the increase in social protection expenditure per inhabitant across EU Member States for the years 2022 to 2023.  Sweden was the only country⁶ to show a decrease in the amount of social protection year-on-year. Among the rest of the member states the rate of increase was largest, for the most part, for those countries bordering on Ukraine.  Poland had the largest increase at just under 23%, followed by Slovakia at 19%, Hungary at 18.7% and Bulgaria at 18.1%. These countries have received large numbers of persons seeking protection in the European Union⁷ following Russia’s war of aggression against Ukraine which is undoubtedly adding to their social protection expenditure. 

_{⁶ Data was not available for Greece at the time of publication.}

_{⁷  See Eurostat data on Temporary protection for persons fleeing Ukraine.}

Figure 1.6 summarises data for 2022, the latest year available at the time of publication, on the sources of funding for social protection schemes in EU Member States. The figure illustrates that the sources of funding – general government revenues, employers’ social contributions, protected persons’ social contributions and other receipts - vary considerably across member states. In Denmark, just under 75% of social protection receipts are received from general government revenues.  This drops to just under 24% in Slovakia. Employers’ social contributions make up over 70% of receipts in Estonia while only 10% in Romania. On average in the EU, general government revenues make up 41% of receipts, followed by 35% for employers’ social contributions, 21% for protected persons’ social contributions, and other receipts making up the remaining 3%.