Social Spending: Recent Changes and Conditions for its Long-Term Viability

Abstract

Given the foreseeable increase in demographic ageing, it is alleged by some that the current system of public solidarity is not equitable for future generations, who may be unable to benefit from a system as generous and wellarticulated as the one which exists today. They argue that current social spending should be reduced to avoid imposing an excessive burden on future generations, especially since debt is a perpetual sword of Damocles, whose effects may be multiplied by a rise in interest rates or an economic recession. Do recent sociodemographic changes make the pursuit of equity easier or more difficult in a context of long-term population ageing? Though equity is an inspiring principle and objective, it is not easy to define. Should public transfers and services remain constant whatever the cost? Or should costs remain constant, even if this entails reducing public transfers and services as a consequence? Nor is the principle of equity easy to apply. Cyclical aspects (economic, social, public finance) combine their effects with those of major structural change (demographic, social, economic) and sometimes make it difficult to establish an overall perspective. What has been the impact of changes in social spending since the beginning of the 1990s? Have the budgetary difficulties encountered by governments and the ensuing spending cuts substantially modified transfers between generations? And have the recent changes in social spending by age produced winner and loser generations? This article examines the changes in spending over recent decades. We see how different age groups were affected by increases and decreases in monetary transfers and services between 1991 and 2003, a period of public