Government expenditure on education
From Statistics Explained
Government expenditure on education as a ratio to GDP continued to fall in 2012
Statistics in focus 5/2014; Authors: M. MAROTTA, M. R. DIAS, M. ASSUNÇÃO, L. FREYSSON, I. KOSTADINOVA, L. WAHRIG
ISSN:2314-9647 Catalogue number:KS-SF-14-005-EN-N
In the framework of the European System of National Accounts (ESA95), Eurostat collects data on general government expenditure by economic function according to the international Classification of the Functions of Government (COFOG)– see methodological note.
This publication presents detailed COFOG data on education for the EU Member States and EFTA countries, presenting data by level of education on the basis of voluntarily transmitted COFOG level II data.
- 1 Main statistical findings
- 1.1 EU-27 general government expenditure on education at 5.3 % of GDP in 2012
- 1.2 Government expenditure on education as a percentage of GDP continued to decrease in 2012
- 1.3 Pre-primary, primary and secondary education have the largest share of expenditure on education
- 1.4 Compensation of employees is the most important component of education expenditure
- 2 Data sources and availability
- 3 Context
- 4 Further Eurostat information
Main statistical findings
In 2012, EU-27 total general government expenditure amounted to 49.4 % of GDP. Based on the latest available expenditure data by economic function for 2012, 5.3 % of GDP was devoted to expenditure on education. Of this, the highest shares were dedicated to ‘secondary education’ at 1.9 % of GDP and ‘pre-primary and primary education’ at 1.7 % of GDP (see Figure 1).
EU-27 general government expenditure on education at 5.3 % of GDP in 2012
General government expenditure on education amounted to around EUR 680 billion in 2012 in the EU-27, or 5.3 % of GDP (Figure 2). The figures reported for general government should not be interpreted as an indicator of total expenditure on education in a country, as significant parts of education expenditure can also be undertaken by households and non-profit institutions serving households.
As a ratio to GDP, the highest levels of government expenditure on education among the reporting countries were found in Denmark (7.9 % of GDP), Sweden (6.8 % of GDP) and Cyprus (6.7 % of GDP), while the lowest ratios were recorded in Romania (3.0 % of GDP), Bulgaria (3.5 % of GDP) and Slovakia (3.9 % of GDP). As far as EFTA countries are concerned, the highest value was recorded in Iceland (8.0 % of GDP).
In 2012, education had the highest weight in total government expenditure in Estonia (16.2 % of total expenditure), followed by Lithuania (15.5 %) and Latvia (15.0 %). Apart from the EU Member States, Iceland recorded the highest value (16.9 % of total expenditure) (see Table 2). The countries devoting a higher proportion of total general government expenditure to education tend to be those where total general government expenditure to GDP is relatively low.
The lowest weights of general government expenditure on education in total general government expenditure were recorded in Greece (7.7 % of total expenditure), Italy and Romania (both 8.2 % of total expenditure).
Government expenditure on education as a percentage of GDP continued to decrease in 2012
As a ratio to GDP, government expenditure on education decreased slightly from 2011 to 2012, continuing the trend started in 2009. In particular, the biggest decreases in terms of GDP were observed in Romania (-1.1 % of GDP), Portugal (-0.9 % of GDP), Cyprus (-0.5 % of GDP) and Hungary (-0.4 % of GDP) (as shown in Table 1).
However in some countries the absolute decrease in expenditure from 2011 to 2012 was significant, for instance in Romania (-27 % or RON -5 337 million) and Portugal (EUR -1 890 million or -16.8 %), due to measures undertaken to consolidate government expenditure.
'Pre-primary and primary education’, corresponding to ISCED levels 0 and 1, and 'secondary education', corresponding to ISCED levels 2 and 3, make up the largest part of government expenditure on education in the EU-27 and in most reporting countries (see Table 2). In the EU-27 as a whole, these two COFOG groups together accounted for 68.4 % of expenditure in the COFOG division in 2012.
In 2012 in the EU-27, the share of ‘tertiary education’, corresponding to ISCED levels 5 and 6, in the division’s total expenditure stood at 16.5 %. ‘Tertiary education’ had a high weight in total government education expenditure in Finland (28.4 %), Croatia (28.2 %), Poland (27.6 %), Estonia and Romania (both 26.3 %).
Compensation of employees is the most important component of education expenditure
In the EU-27, ‘compensation of employees’ (wages, salaries and other related costs for teachers, professors, academic teaching staff and other staff working in education) accounted for the largest share of education expenditure in most COFOG groups related to education (60.8 % of education expenditure).
Apart from ‘compensation of employees’, ‘intermediate consumption’, ‘other current transfers’ and ‘capital investments’ (for instance school buildings) are important expenditure components (see Figure 3).
From 2011 to 2012, ‘compensation of employees’ increased by 0.9 % in the EU-27. This was mainly due to an increase in compensation of employees related to secondary education.
The other categories for which an increase from 2011 to 2012 was observed at the level of the EU-27 are intermediate consumption (+2.0 %) and ‘other current transfer’ (+4.1 %).
On the other hand, EU-27 capital investments, mainly related to pre-primary and primary education and secondary education, decreased by 3.7 % from 2011 to 2012.
Data sources and availability
Reporting of data to Eurostat
Annual government finance statistics (GFS) data are collected by Eurostat on the basis of the European System of Accounts (ESA95) transmission programme. Member States are requested to transmit, among other tables, table 1100, 'Expenditure of general government by function' twelve months after the end of the reference period. Table 1100 provides information about expenditure of the general government sector divided into main COFOG functions and ESA95 categories. The transmission of the COFOG I level breakdown (divisions) is compulsory for the years 1995 onwards, whereas information on the COFOG II level (COFOG groups) is provided on a voluntary basis. The main reference years used in this publication are 2012 as the latest year available and 2002 as the first year for which complete data on expenditure by function are available at EU-27 level.
Data was extracted on 07 March 2014.
Data for Bulgaria (BG), Greece (EL), Hungary (HU), Iceland (IS) and Sweden (SE) (2012 only) is provisional.
Definition of general government and its sub-sectors
The data relate to the general government sector of the economy, as defined in ESA95, paragraph 2.68: 'All institutional units which are other non-market producers [institutional units whose sales do not cover more than the 50 % of the production costs, see ESA95 paragraph 3.26] whose output is intended for individual and collective consumption, and mainly financed by compulsory payments made by units belonging to other sectors, and/or all institutional units principally engaged in the redistribution of national income and wealth’.
Classification of functional expenditure of government
The Classification of the Functions of Government (COFOG) classifies government expenditure into ten main categories (divisions known as the 'COFOG I level' breakdown): general public services; defence; public order and safety; economic affairs; environmental protection; housing and community affairs; health; recreation, culture and religion; education; social protection. These divisions are further broken down into 'groups' (COFOG II level).
Further information is available in the Eurostat Manual on sources and methods for the compilation of COFOG Statistics.
COFOG level II data
COFOG level II data is published only in agreement with the country concerned. The development of COFOG level II data is not completed in many Member States and data needs to be looked at with this in mind. The transmission of COFOG level II data for the general government will become compulsory by the end of December 2014.
For Belgium (BE) and Slovakia (SK), COFOG group data is available but not published. For Spain (ES), COFOG group data is available for 2012, but not published pending the availability of more final data.
Administrative expenditure data is additionally collected in so-called satellite accounts. For education, the relevant collection is UOE (UNESCO-UIS/OECD/EUROSTAT data collection). In general, the amount of expenditure recorded in satellite accounts is expected to exceed the expenditure recorded under the respective COFOG division, as the COFOG classification focusses on recording expenditure by primary function. The comparability of UOE with COFOG data is explored in the COFOG manual.
Definition of general government expenditure
Government expenditure is defined in Commission Regulation 1500/2000 which uses as reference a list of ESA95 categories: Government expenditure comprises the following categories:
- P.2, 'intermediate consumption': the purchase of goods and services by government;
- P.5, 'gross capital formation' consists of: (a) gross fixed capital formation (P.51); (b) changes in inventories (P.52); (c) acquisitions less disposals of valuables (P.53); where
- P.51, 'gross fixed capital formation': consists of acquisitions, less disposals, of fixed assets during a given period plus certain additions to the value of non-produced assets realised by the productive activity of producer or institutional units. Fixed assets are tangible or intangible assets produced as outputs from processes of production that are themselves used repeatedly, or continuously, in processes of production for more than one year;
- D.1, 'compensation of employees': the wages of government employees plus non-wage costs such as social contributions;
- D.29, 'other taxes on production, payable',
- D.3, 'subsidies, payable',
- D.4, 'property income, payable', consists of : (a) 'interest, payable' (D.41) and (b) 'other property income, payable' (D.42+D.43+D.44+D.45), where
- D.41, 'interest': excludes settlements under swaps and forward rate arrangements, as these are treated as financial transactions in the ESA 95;
- D.5, 'current taxes on income, wealth, etc, payable';
- D.62, social payments: cover social benefits and pensions paid in cash;
- D.6311, D.63121, D.63131, 'Social transfers in kind related to expenditure on products supplied to households via market producers';
- D.7, 'other current transfers, payable';
- D.8, 'adjustment for the change in net equity of households in pension fund reserves'
- D.9, 'capital transfers payable'
- K.2, 'acquisitions less disposals of non-financial non-produced assets': public investment spending. Non-financial non-produced assets consist of land and other tangible non-produced assets that may be used in the production of goods and services, and intangible non-produced assets.
- Capital investments includes P.5 and K.2.
- Other current expenditure includes D.7, D.29, D.5 and D.8.
Gross Domestic Product
Throughout this publication, nominal GDP, i.e. GDP at current prices is used.
Time of recording & symbol
In the ESA95 system, recording is in principle on an accrual basis, that is, when ‘economic value is created, transformed or extinguished, or when claims and obligations arise, are transformed or are cancelled.'
"ISCED" International Standard Classification of Education (1997)
":" not available
"pp" percentage points
More data and information
Denmark: Due to the structure of the Danish education system, primary education is not divided into two levels. Therefore, the COFOG education data on primary education, 09.1 is composed of COFOG 9.1 primary education and 9.21 Lower-secondary education. COFOG group 09.2 is composed of COFOG 9.22 Upper-secondary education.
For more country-specific notes, e.g. on missing data, please refer to the metadata published on Eurobase. The authors can be contacted at ESTAT-ESA95-GOV@ec.europa.eu
In the framework of the European System of National Accounts (ESA95), Eurostat collects data on general government expenditure by economic function according to the international Classification of the Functions of Government (COFOG) – see methodological note. This publication presents detailed COFOG data on education for the EU Member States and EFTA countries, presenting data by level of education on the basis of voluntarily transmitted COFOG level II data.
Further Eurostat information
Methodology / Metadata
- General government expenditure by function (COFOG) (ESMS metadata file - gov_a_exp_esms)
- Manual on sources and methods for the compilation of COFOG statistics - Classifications of the Functions of Government - 2011 edition
Source data for tables (MS Excel)