Payroll Deductions as a Financing Mechanism

This page explains how payroll deductions function as a financing mechanism for public and social systems.

Why payroll is used

Payroll offers a stable, traceable base for financing collective systems because it is:

• regular
• measurable
• administratively efficient

Structural implications

Using payroll to finance systems links social protection directly to labour participation.

References

• OECD. Financing social protection. https://www.oecd.org/social/expenditure.htm