All EU member states will increase welfare spending in 2024, increasing by nearly 7% globally, taking the bloc’s total social budget to almost €5 billion, according to Eurostat data.
Compared to GDP, average social security spending is around 27% across the bloc.
However, interest rates vary widely from country to country.
Finland, France and Austria are the most generous EU member states, each spending around 32% of their GDP on social security.
According to Eurostat, Ireland is at the bottom of the list with just 12%, lower than non-EU countries such as Bosnia and Herzegovina (20%) and Serbia (18%).
However, experts say there are reasons for this, including the country’s demographics.
Professor Bernhard Ebbinghaus, Dean of Macro-Society at the University of Mannheim, told Europe in Motion that Irish society is still relatively young compared to other economies, so there is less spending on pensions, long-term care and age-related health care.
“Furthermore, Ireland, like Luxembourg, has a somewhat inflated GDP due to international companies using the country for tax purposes,” he added. “For Ireland, GNP (Gross Population Income) is a better indicator than GDP to understand the standard of living of the population.”
However, Ireland is not the country that spends the least on all social security. It ranks second in the EU in proportion to GDP when it comes to spending on social housing.
Pensions, unemployment and housing: where are the biggest benefits?
Pensions generally account for the largest portion of social spending in the EU, accounting for €2 trillion of total social security spending in the EU.
Disease and medical care comes in second with approximately 1.5 trillion euros, followed by family and child support measures with 0.4 trillion euros, and support for persons with disabilities with 0.3 trillion euros.
France is not the EU’s biggest spender on old-age benefits, spending 13% of its GDP on old-age benefits, even though the recent controversial (and currently suspended) pension reform was poised to curb government spending on pensions.
In fact, the top three are Austria (14.7%), Italy (14.6%) and Finland (14.5%).
When it comes to healthcare and illness, Germany invests the most (9.9%), followed by France and the Netherlands (9.5%).
France ranks first in terms of unemployment support (1.75% of GDP), followed by Finland (1.65%) and Spain (1.5%).
When it comes to housing support, Finland ranks first (0.99% of GDP) ahead of Ireland (0.72%) and Germany (0.63%), but Europeans seem to welcome more spending in this regard.
in 2025 eurobarometer pollThe lack of affordable housing emerged as the most “pressing and urgent” issue in the EU, highlighted by 40% of respondents (51% for city-dwellers).
Estonia’s welfare boom: how much is it related to inflation?
Despite the East-West disparity, many of the countries spending the least seem to be catching up with the countries spending the most.
Last year, Estonia increased welfare spending by around 20%, the fastest rate of all EU countries, followed by Croatia at around 18% and Romania at 17.5%.
But Lauri Tollin, professor of comparative public policy at Tallinn University, says Estonia’s surge in social spending is primarily the result of a combination of price indexes and strong wage growth, rather than a political shift towards expanding the welfare state.
“The 2024 pension index has increased significantly due to the previously high inflation and rapid wage growth,” he told Europe in Motion. “When you have a significant number of pensioners, that automatically increases spending.”
“In Estonia, childcare benefits are wage-based, so when average wages rose by about 10%, the total cost of these benefits increased as well,” she added. “Changes to tax-free income thresholds and widespread cost-of-living pressures are further compounding this impact.”
Will Germany continue to lose?
At the same time, in general all EU member states increased their benefit expenditures, although the slowest increases were in Greece (+3.2%), Sweden (+3.9%), Italy and Denmark (+4.3% each).
Early estimates suggest that Germany’s social spending growth rate (about 6.5%) has been relatively small compared to most other EU countries, but experts doubt that the country will tighten its fiscal lid any time soon.
“Although pension reform has been implemented in Germany and further measures are currently being discussed, additional costs from refugees from Ukraine and the economic slowdown (resulting in lower GDP growth and higher unemployment) will further increase spending pressures in 2024,” Ebbinghaus said.
