Western Europe 'facing welfare crisis'

There is a Europe-wide crisis in the financing of social protection systems or welfare states, the International Labour Organisation - the UN body for work and employment - warned yesterday.

In a report on the eve of a week-long ILO conference in Warsaw on employment and social security, the organisation said some pension, unemployment, health care and social assistance programmes risk becoming unaffordable in their present form.

Changes that will see the state's role reduce, with individuals asked to rely more on themselves are now widely seen as necessary, the ILO, a body usually seen as taking a collectivist view of welfare, said.

Earlier retirement and long life means pensions are now taking double the share of Western Europe's total government spending compared to levels of 25 years ago, and "controlling the growth of social expenditure is now a top priority for most European governments".

The overall weight of social spending "appears to some to have reached its limit", the ILO's report says, and to some to have already exceeded it. Yet further pressures from the growing number of elderly people and, in health care, from technological advance have to be accommodated. "While there are few signs in Western Europe of a widespread desire to roll back the level of the welfare state, there is equally little to warrant its further expansion."

The report, however, includes tables showing that compared to most of the rest of Europe, the UK is relatively well placed. By 2030, just under 30 per cent of its population will be aged over 60 - a rise from around 20 per cent now - compared to figures of more than 33 per cent in the Netherlands, 35 per cent in Germany and nearly 36 per cent in Italy.

The UK currently spends just over 24 per cent of its GDP on social protection - more than Spain and Greece and almost two points above the European Union average - but appreciably less than than France on 27 per cent, Denmark on 28 per cent and Sweden on 33 per cent. The UK also has large sums - some pounds 500bn on Government figures - already invested in private and occupational pension schemes, a far higher proportion than in any other EU country where the state remains overwhelmingly the pension provider.