The persistence into the 1980s of low growth and high unemployment, compounded by the aging populations, has obliged both poor and relatively prosperous countries to make cuts in welfare systems.
The Organization for Economic Cooperation and Development, which monitors the health of the major industrial nations, reported that between 1960 and 1981 social expenditure in the principal west European economies leapt from 14.5% to 26.3% of their output of goods and services. (In the USA over the same period, the rise was from 11%). In western Europe, huge pension increases led the way, accounting for about 40% of social outlay; health care, education, benefits and unemployment payments were the next biggest items. The oil price rises of the 1970s resulted in the first cuts in health and educational benefits, which had exploded in the previous decade.
By 1990, Germany pensioners were required to make a 5% contribution to what had been free medical insurance; indexation changes brought pensions down 5 to 6% in real income compared to 1979. Unemployment benefits had also been cut for workers without children - from 68% to 63% of total salary in the first year, and from 58% to 56% in subsequent years. In the UK, health spending fell for the elderly, the handicapped and the mentally ill. Housing benefits and free hot school meals, except those for the poorest, were also being trimmed. The government of France was been forced into an austerity programme that meant new private contributions to social security and restrictions on unemployment benefits. The budget for the costly state hospital system had been reduced.