This is the third annual Report on the Social Situation, which contributes to the monitoring of developments in the social field across Member States. It provides a holistic view of population and social conditions as a background to social policy development, and establishes links to annual Commission publications such as Employment in Europe, Industrial Relations in Europe and the Gender Equality report. The first section of this Report presents an executive summary which looks at the main social trends. There is an analysis of trends in social protection expenditure together with the effect of social transfers on the distribution of income. Special attention is also given to the issue of geographical mobility in the EU and its implications for living conditions and social cohesion. This is followed in section 2 by a more in-depth look at social developments related to geographical mobility. Analysis and research, both quantitative and qualitative, are presented under three headings - population, living conditions and social participation. Section 3 presents a set of harmonised social indicators ranging from demographic issues to employment and income conditions for each Member State. The indicators provide an initial overview of the social situation. In addition, they serve as a powerful tool for the monitoring of social developments over time.