Introduction

Welfare state provisions have grown considerably during the last half-century. Public expenditures for social security now amount to 25 per cent or more of the GDP in several OECD countries. The highest figure is reported for Sweden: 33.3 per cent. Table 7.1 provides information on the structure of public expenditures for social protection in Sweden in 1998. In accordance with Eurostat guidelines, expenditures have been classified into four categories: general/cash, general/in kind, selective/cash and selective/in kind.

In the Swedish case, sickness, disability and old age accounted for over 70 per cent of the social security budget. Selective benefits play a relatively minor role: only 6 per cent. Most benefits are therefore granted according to fairly simple criteria. From Table 7.1 one can get the impression that cash benefits dominate over benefits in kind, but one must bear in mind that, in Sweden, most cash benefits are taxed; hence, net benefits are considerably smaller.

Increasing expenditures over time do not mean that the welfare state is becoming more ‘advanced’. The growth in public expenditures for social security is to a large extent a mere reflection of the fact that existing welfare state provisions gradually become more expensive, due to demographic and other ‘exogenous’ forces, such as an ageing population and new technologies in health care. There is also a growing awareness of the risk that the welfare state will become a ‘black hole’ in the public budget, gradually absorbing resources for other, perhaps more urgent needs.