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Description of the main terms used
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(1) Social Expenditure based on the OECD standards
●Social Expenditure
According to the OECD standards, the scope of social expenditure is defined as “The provision by public and private institutions of benefits to, and financial contributions targeted at, households and individuals in order to provide support during circumstances which adversely affect their welfare.”. However, it only includes benefits provided by institutions under certain schemes and does not include a direct payment for a particular good or service or an individual contract or transfer. The conditions for an expenditure item to be identified as “social” are twofold: (i) the benefits are expected to address one or more social purposes (nine policy areas), and (ii) the scheme that makes the provisions of the benefits contributes to the redistribution of income across individuals or involves compulsory participation. Based on these standards, our country aggregates and provides data on public social expenditure and mandatory private social expenditure (explained below) that include expenditure not directly transferred to individuals, such as facility maintenance expenses.
Public social expenditure and mandatory private social expenditure are two categories of social expenditure used by the OECD. The distinction between "public" and "mandatory private" is made on the basis of who controls the relevant financial flow; namely, public organizations or private operational bodies. The financial statistics of social security of our country covers the range of these two types of expenditure.
●Public Social Expenditure
Public social expenditure is social spending where financial flows are controlled by the general government (central government, local governments, and Social Security Funds), such as social insurance and social assistance.
●Mandatory Private Social Expenditure
Mandatory private social expenditure is social support operated through the private sector but stipulated by legislation; for example, direct sickness payments by employers to their absent employees as legislated by public institutions, and benefits accruing from mandatory contributions to private insurance funds.
●Social Expenditure by policy area (Refer to the Appendix 2 for more details)
The nine policy areas are: 1. “Old age” – pensions, early retirement pensions, home-help and residential care services for the elderly; 2. “Survivors” – pensions and funeral expenses; 3. “Incapacity-related benefits” – care services, disability benefits, occupational injury and accident legislation, employee sickness payments; 4. “Health” – spending on in- and out-patient care, medical goods, prevention; 5. “Family” – child allowance and credits, childcare support, income support during leave, sole parent payments; 6. “Active labour market programmes” – employment service and administration, labour market training, job rotation and job sharing, subsided employment, supported employment and rehabilitation, direct job creation, start-up incentives; 7. “Unemployment” – unemployment compensation, early retirement for labour market reasons; 8. “Housing” – housing allowance and rent subsidies; 9. “Other social policy areas” – non-categorical cash benefits and social services targeted at low-income households such as food subsidies. It includes expenditure not directly spent on individuals such as expenditure on equipping expenditure, but not administrative costs for the provision of these benefits.
(2) Social Benefit based on the ILO standards
●Social Benefit
The ILO’s 18th and 19th International Inquiries on the Cost of Social Security define social benefit as the schemes and services that meet the following three criteria:
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The objectives of the schemes must be to grant benefits for at least one of the following risks and needs: (1) Old age; (2) Survivors; (3) Invalidity; (4) Employment injury (5) Sickness and health; (6) Family; (7) Unemployment; (8) Housing; (9) Social assistance and others.
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The schemes must have been set up by legislation, which attributes specific individual rights to, or which imposes specified obligations on, a public, semi-public or autonomous body.
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The schemes should be administered by a public, semi-public or autonomous body founded by legislation; or by a private body, which has been granted rights to perform legal obligations.
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Our country has aggregated and published data on social benefit based on the ILO standards since 1950, and the data have been used as a basic material in policy making as well as for a variety of other purposes.
●Social Benefit by category (Refer to Table 8)
Social benefit is classified into three categories: “medical care,” “pensions,” and “welfare and others.” While this categorization is unique to our country, it is based on the summary table of balance of social benefit from the ILO’s 18th International Inquiry on the Cost of Social Security.
“Medical care” includes costs for health insurance, the medical care system for latter stage elderly, medical aid for public assistance, medical services for the insured of the Workmen's Accident Compensation Insurance, and government-financed special medical services such as the treatment of tuberculosis and mental disorders.
“Pensions” includes payments by public pension schemes such as National Pensions and Employee's Pension Insurance. It also includes some cash benefits paid in the form of pensions within the scheme of gratuities for retired public employees, and the scheme for Workmen's Accident Compensation Insurance.
“Welfare and others” includes expenses for social welfare services or long-term care, public assistances other than medical services, cash benefits for child allowance, sickness and injury cash benefits within the health insurance schemes, leave compensation benefits paid by the Workmen's Accident Compensation Insurance and unemployment benefits from Employment Insurance. In addition, Long-term care includes long-term care insurance benefits and public assistance long-term care services, atomic bomb victim long-term care insurance system co-payments, partial cost sharing and family-care leave benefits.
●Social Benefit by functional category (Refer to Table 10)
Functional categories of social benefit represent nine risks and needs for which benefits are provided to alleviate deficiency and poverty: (1) Old age –All benefits paid to persons who have withdrawn from the labor market due to retirement; (2) Survivors – Benefits paid to dependents of a protected person arising from death of this protected person; (3) Invalidity benefits – Benefits arising from partial or total inability of a protected person due to a chronic condition; (4) Employment injury – Benefits paid by a work injury program for work-related injury, diseases, incapacity or death of a protected person; (5) Sickness and health – Benefits paid to a protected person for disease, injury, childbirth, etc., with a view to maintaining, restoring, or improving the health of the protected person (also provides benefits for earnings losses during periods of absence from work due to disease or injury); (6) Family benefits – Benefits provided to assist families (households) with children and other dependents; (7) Unemployment – Benefits provided to a protected person due to the loss of gainful employment; (8) Housing – Benefits provided (on a means-test basis) to assist with the cost of housing; (9) Social assistance and others – Benefits in cash or in kind provided to individuals or certain targeted groups who require assistance to achieve the defined minimum level of income and minimum subsistence requirements.
●Social Security Revenue (Refer to Statistical table 2)
Revenue refers to the overall revenue including operational losses and other expenditure (facility maintenance expenses, etc.), in addition to benefits, and is broadly divided into three categories – social insurance premiums, taxes, and other receipts. 1. Social insurance premiums are classified into employers contribution and insured persons contribution. 2. Taxes are classified into those of the central government (state contribution) and those of local governments (other public contribution). 3. Other receipts are classified into asset income and others. The asset income includes interest and dividends, and others include a receipt from reserve funds, etc.
(Note) When the employer is the state as in the case of the civil service system, the amount contributed by the state as the employer is included in the contributions from employers even if it is the national treasury disbursement (this also applies to the local civil service system).
●Transfer between Institutional Schemes (Refer to Statistical table 2)
Transfers from other systems include the following expenses: contributions to special schemes for persons employed on a daily-wage basis in the Association-Kenpo Health Insurance and the National Health Insurance; transfer payments from all health insurance schemes to the medical care service program for retired employees in the National Health Insurance, to the medical care system for the early-stage elderly, to the medical care system for the latter stage elderly, and to the National Pension for contribution to universal basic pensions; transfer payments from the National Pension to other schemes for the payment of universal basic pensions; transfer payments from all health insurance schemes to long-term care insurance, etc.
Transfers to other systems include the following expenses: transfer payments from the other health insurance schemes to special schemes for persons employed on a daily-wage basis, for retired employees, for the medical care system for the early-stage elderly, and for the medical care system for latter stage elderly; transfer payments from other pension schemes to the National Pension for universal basic pensions; transfer payments made by the National Pension to the other schemes for the universal basic pension; transfer payments from all health insurance schemes to long-term care insurance, etc.
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