Continued High Claims on Social Welfare Budgets

Public expenditure on social welfare exhibit a marked anti-cyclical pattern. Thus, for 1990 a further slowdown in their upward momentum was to be expected. Actually, however, the rate of growth of 7¼ percent was the highest in eight years. The strong rise in unemployment caused a similar jump in benefit payments and demand for early retirement was unabated. Furthermore, family allowances were raised and the annual adjustment of pensions exceeded the traditional index-based mechanism. For 1990, the cost of higher benefits could by and large be covered by the cyclical boost to contribution revenues and intra-budgetary shifts of funds; this will not be possible to the same extent in the following years.