Social Security Abroad

Much attentmn has been gwen to the effects of the recession on the financmg of the socml security program m the Umted States and abroad, where smnlar economm condltlons have arisen This report concentrates on the repercussions m France Fmanclal problems for the soclal security systems of many countries have been created by the combmatlon of mflahon and recession m the 1970’s Benefits, Indexed under all the advanced programs, have risen rapldly with mcreased prices and wages When wages and pensions were affected equally, the soclal security systems m these countrw were able to cope with moderate mflatlon As the recession mtens&d, however, mountmg unemployment caused a levehng off m payroll tax receipts to a pomt where rekelpts fell behmd expenditures To compensate for the rw mg deficits, most countrms mcreased them payroll tax In France the general recession began m 1974 and led to rapldly r~smg unemployment The unemployment rate chmbed steadily, reachmg an e&mated 4 7 percent 1 by December 1975-more than double the 2 l-percent average of the pmnous 15 years The soclal security system received less revenue than antlclpated because the smaller Rork force meant less m contrlbutlons The lower receipts, combmed with higher outlays, ml11 result m a slgmficant deficit for 19761t has been estnnated that the revenue gap ~111 reach Q-11 bllllon francs z To cope with this sltuatlon, the French go:overnment Increased the payroll tax rate begmnlng