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Social Budgeting

Social budgeting consists of two basic components. The first component is the statistical basis, i.e. the methodologically consistent compilation of the revenues and expenditures of a country's social protection system which is the Social Accounting System (SAS). The second component is the forecast of income and expenditure (budget projection) for normally a medium-term period and / or simulations of social expenditure and revenues under alternative economic, demographic and / or legislative assumptions and is known as the Social Budget. We use this notion in a comprehensive way. It comprises all analytical and interpretative work centered around the SAS plus its transformation into a concrete mathematical model application. Social budgeting is a critical aspect of the overall government budgeting and mid- to long-term planning process. A full round of social budgeting is completed when (a) the SAS has been established and (b) the projection has been carried out and interpreted.

Social budgeting is one of the most powerful tools for the quantitative management of national social protection systems. It serves two main purposes. It is (a) part of the general social policy planning process and (b) part of any meaningful medium term financial planning process. Social budgeting is thus a macro-device in national financial planning. National financial planning, i.e. essentially the attempt to reconcile public and semi-public expenditure with tax and contribution revenues, is an indispensable part of responsible governance in any society under any economic system.

Social budgeting supports the political decision making process at the increasingly sensitive intersection between social policy and national financial planning.

The central objective of the book is to provide social policy planners with a pragmatic reference for the social budgeting process. It should thus be read as a self contained "How to build a Social Budget guidebook" which should provide guidelines to a quantitative social protection expert on how to build a SAS and how to use this in Social Budgeting. The focus of the book is on the concrete creation of Social Budgets as an operational tool of governance.

The book is mainly written for those elaborating short- to medium-term financial planning, management and monitoring, i.e. who have a planning horizon of two to five, sometimes of up to ten years. It is part of a series on quantitative techniques in social protection being published by the Financial, Actuarial and Statistical Branch of the Social Security Department of the ILO, together with the International Social Security Association. Other volumes in this series are:

Actuarial Theory of Social Security Pension Schemes

Actuarial Practice in Social Security Pension Schemes

Modelling in Health Care Finance

Social Protection Statistics

Updated by JD. Approved by ER. Last update: 1 July 2000