- 5 min
Social protection in Europe: great disparities between countries
According to Eurostat, the average spending on social protection by European Union countries amounted to 28.7% of GDP in 2014. France tops the list with spending corresponding to 34.3% of the country’s national wealth, ahead of Denmark (33.5%), and, further down the rankings, Germany (29.1%) and the United Kingdom (27.4%). What social benefits (unemployment, pensions, sickness) do our European partners offer? In France, how does private insurance supplement these provisions? Here is an overview.
Social welfare: France – leading the way in Europe
Last year, consumption of medical goods and services in France amounted to nearly €200 billion, corresponding to nearly 8.9% of GDP*. Approximately 77% of this consumption was financed by the social security system and 13% was funded by top-up insurance bodies (top-up insurance providers, provident institutions and insurance companies).
At 8.3%, the share of the amount to be paid by households after reimbursement is the lowest of all European countries. Expressed on a purchasing power parity basis, it amounted to an average of €230 in 2015, against €490 in the EU-15 countries**.
According to the latest survey by the French Ministry for Social Affairs, carried out in 2016 to coincide with the generalisation of employer-sponsored top-up health insurance schemes, no less than 95% of the French population was covered by a top-up health insurance policy or by another top-up health insurance body. This makes France the leading OECD country in terms of private health cover.
Although the share of the amount to be paid after reimbursement in the majority of Scandinavian countries and in Germany is higher than that observed in France (around 15%), it should be noted that most of this spending is covered by the public or compulsory schemes. Private insurance accounts for a very small proportion of the spending in these countries.
The highest amounts to be paid after reimbursement by the compulsory scheme are observed in Austria (over €800) and Belgium. These amounts have increased significantly in Spain and Portugal in recent years due to the decline in public spending following the economic crisis and due to fiscal adjustment.
Sickness: the Netherlands – a protective country
France: sick leave can last for up to 26 weeks (with three qualifying days), accompanied by an entitlement to financial compensation corresponding to 50% of one’s income.
In the Netherlands, the employees can be absent from work for up to 104 weeks and receive 70% of their salary throughout their entire period of sick leave. This benefit is limited to approximately €200 per day.
The Danes receive 100% of their salary for a period of up to 52 weeks.
In Ireland, the conditions vary according to the clauses of the employment contract. It is common for employees to receive 100% of their salary for the first 13 weeks followed by 50% for the next 13.
In the United Kingdom, sickness benefit is limited to 28 weeks at a flat rate of £88 per week (approximately €100).
Pensions (general scheme): towards a general rise in the retirement age
Comparing pension systems is a complicated matter, given the variety of different systems and rules, and the specific context of each country (unemployment, demographics, etc.).
Nevertheless, here are some comparative data.
In most countries, retirement ages have been increased in recent years.
- The minimum age of entitlement to pension rights has consequently risen to: 61 years old in Sweden, 61 years and 7 months in France (for the 1954 generation, followed by 62 years from the 1955 generation onwards), 65 in Belgium and the United Kingdom (eventually rising to 68 for the latter), just over 65 in Germany, Spain and the Netherlands (eventually rising to 67 in these three countries), and finally 66 years and 3 months in Italy (rising by approximately one year in every decade, according to life expectancy);
- The full pension age is calculated in the following manner: the pension amount is reduced for people retiring before the ages of between 65 and 68 (after the reform), except in Belgium and Italy, where instead of a reduction in the pension amount, there is a required insurance period in order to benefit from the maximum number of years of pensionable service from the age of entitlement to pension rights (45 years in Belgium, 42.5 years in Italy – rising by approximately one year in every decade, according to life expectancy). A reduction in the pension amount according to a duration requirement also applies in France.
Two different methods are used to calculate public pensions: at a fixed-rate (Netherlands, United Kingdom), or according to a reference wage corresponding to the average salary during the final years of employment (the last 15, and eventually, 25 years in Spain), the best-paid years (25 in France), or throughout one’s entire career (Germany, Belgium, Italy and Sweden).
European countries have different policies with regard to supplementary pensions. They are compulsory in Denmark, Finland, Greece, the United Kingdom and Sweden, but operate on a voluntary basis in the other countries, with different procedures adopted in each case.
Unemployment: very strict conditions in the United Kingdom
France: the period of entitlement to benefit varies between 4 and 24 months for people under 52 years old; it can rise to as many as 30 months for people aged 53 to 55, and a maximum of 36 months for the over-55s (since 1st November 2017). It depends on the period of service that preceded the loss of employment. The allowance paid out corresponds to 57% of the reference daily earnings, with the gross wage ceiling set at €13,076 per month.
The strictest conditions for the payment of unemployment benefits are found in the United Kingdom. Benefits are only paid for 182 days and the amount is set according to the beneficiary’s age rather than his or her prior earnings: £57.90 per week (approximately €65) for a person under 25 years old, and £73.10 (€82) for an unemployed person over 25.
The country with the highest level of protection – Denmark – provides up to two years of benefit payments at 90% of the reference salary.
In countries that pay fixed-rate benefits (United Kingdom, Sweden, etc.), employees can take out personal insurance and any compensation paid out is added to the basic allowance.
In Sweden, for example, they can purchase this insurance from one of the 36 “Unemployment Funds” which have private status and are mainly managed by trade unions. These funds are usually associated with the different sectors of industry. A similar principle applies in Finland.
In the United Kingdom, employees can take out a policy with an insurance company guaranteeing the payment of a proportion of their salary if they lose their job. These private insurance policies differ according to the desired benefit payment period, the excess and the amount of the allowance, etc. They are also expensive.
In France, private unemployment insurance schemes are intended primarily for self-employed workers not covered by the UNEDIC unemployment insurance scheme for salaried workers. However, employees (on permanent contracts) can take out job-loss insurance with their bank when buying property. This covers the reimbursement of monthly loan repayments in the event of the borrower losing his or her job, subject to certain conditions (duration, qualifying period, etc.).
All in all, European countries remain relatively generous in their provisions. But they are facing enormous challenges: ageing populations, transformation of the labour market and huge rises in health expenditure, etc. In recent years, all countries have implemented numerous reforms in order to adapt their social protection systems to this new social and economic environment.
The social protection of self-employed workers varies widely throughout countries belonging to the European Union.
In Sweden, the same schemes apply to salaried and self-employed workers, but with several specificities, which include the calculation of the qualifying period for daily sickness benefits. In Germany, there are several schemes which depend on the type of work carried out.
In the United Kingdom, self-employed people cannot claim general sickness benefits, which only apply to salaried workers. A specific allowance exists for sick leave, but it is subject to a subscription requirement.
In France, since 1 January 2018, the social protection of the self-employed - formerly managed by the Social System of the Independents (RSI) - is entrusted to the general social security scheme. After a two-year period of transition, self-employed workers will be affiliated to the general Social Security scheme under a single subscription system.
* Gross Domestic Product
** Corresponds to all countries belonging to the European Union between 1994 and 2004: Germany, Belgium, France, Italy, Luxembourg, Netherlands, Denmark, Ireland, United Kingdom, Greece, Spain, Portugal, Austria, Finland and Sweden.