Social budgeting

At the beginning of 2020 with the globally spreading pandemic of COVID-19 and all its social and economic consequences, the importance of having comprehensive, universal and effective social protection systems became once again – like during all the major economic and social crises before – very clear (Gentilini et al. 2020; Chapter 43 of this volume). Countries with strong social protection systems, although needing to enhance many benefit provisions and extend coverage to reach those in non-standard forms of employment, still were coping better with the pandemic and had better chances of cushioning the resulting economic downturn. However, we know from past experience that after the crisis is over, austerity measures may focus again on limiting social expenditure under all kinds of excuses. The level of public social expenditure1 relative to gross domestic product varies widely across countries (ILO 2010b, 2014a, 2017; World Bank 2018). However, it often consumes (and one can say – should consume) more than half of available public financial resources. Therefore, all social policy decisions have – apart from other important social and economic consequences – significant impacts on overall public finances. That is one of the reasons why social policy requires careful and comprehensive financial planning. Such planning has to be supported by quality statistics, reliable accounting and financial projections for different time horizons: short-term, covering the next budget year, but also mediumand long-term projections. Many social policy decisions have an impact on public finances over many years in the future, often affecting more than one generation (Cichon et al. 1999a). Social protection (including health care) is one of the key areas of social policies, and also the one which consumes (also: should consume) the most significant resources. That is why the social budgeting approach described in this chapter has been developed to address challenges of coordinated social protection planning. However, the approach can be easily broadened to include other social policy areas like education, housing, water and sanitation and other social services. There are also close relationships between different social protection programmes. For example, establishing an unemployment benefit programme involves, in addition to funding the cost of unemployment benefits, planning and funding effective employment services. It also requires implementing a whole range of other labour market programmes aimed at providing training, retraining and other services enhancing the employability of job seekers as well as stimulating the willingness of employers to provide decent jobs. Higher expenditure on education and vocational training today may in the long run increase employability and