Redirecting more welfare spending towards early education, family support and essential services could cut child poverty more effectively than simply increasing budgets, the OECD says.
The OECD says countries could improve children’s lives more effectively by redirecting social spending towards early childhood education and care, family income support and essential services, rather than relying mainly on broader increases in welfare budgets. In a new report, the Paris-based organisation argues that the design of social policy matters as much as the total amount spent, because different combinations of support produce very different results for poverty, health and educational achievement.
The report, Spending Better for Children through Social Policy, comes at a time when social spending across OECD countries has climbed from 20% to 25% of GDP over the past two decades, driven largely by higher health and ageing costs. Yet spending aimed specifically at families with children still accounts for less than 10% of that total. The OECD says that one in eight children across its member countries lives in income poverty, education outcomes are worsening and more than one in five adolescents report fair or poor health.
Mathias Cormann, the OECD secretary-general, said governments can achieve more by investing early and targeting support where it has the strongest effect. According to the report, if social spending continues to rise at its historical pace, child poverty could decline by about 1.5 percentage points over the next decade. But the organisation says a better allocation of resources could do more than that, particularly if more of the extra spending is channelled into early childhood education and care.
The OECD found that expanding access to early childhood education and care could deliver especially strong gains, both by reducing poverty and by improving later educational performance. It said that directing one additional percentage point of social spending growth towards that area could make the policy around 50% more effective at cutting child income poverty than leaving the spending mix unchanged. The report also points to gains from family cash benefits, active labour market policies that help parents find work and public services such as healthcare and housing support, all of which can ease long-term budget pressures as well as improve children’s immediate living conditions.
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