Cost of German welfare state exceeds one trillion euros in 2019

Finance Materials 10 July 2020 22:01 (UTC +04:00)
Cost of German welfare state exceeds one trillion euros in 2019

Social spending in Germany amounted to 1,040 billion euros (1,176 billion U.S. dollars) in 2019, the Ministry of Labor and Social Affairs announced on Friday, Trend reports citing Xinhua.

Employers in Germany paid the largest share of 34.8 percent, while the German government, at 32.8 percent, and insured employees, at 30.9 percent, provided a slightly smaller share, according to the ministry.

"It is a risky development if the welfare state has now grown faster than our economy for the fifth time in a row," said Steffen Kampeter, head of the Confederation of German Employers' Associations (BDA).

Around 442 billion euros were spent on health care while payments for the elderly, pensioners and dependents amounted to 383 billion euros, according to the ministry.

General family payments accounted for 115.8 billion euros while unemployment payments in 2019 only amounted to around 32 billion euros, the ministry noted.

In recent years, the good job market had spared Germans from sharp increases in contributions. However, Kampeter warned that "these times are definitely over. According to all forecasts, we will hardly ever reach the record employment level of 2019 again."

According to the ministry, the social benefit ratio, the ratio of the sum of social benefits to Germany's nominal gross domestic product, rose above 30 percent in 2019 for the first time since 2010.

"Particularly against the background of the current crisis and the demographic changes that we are facing, countermeasures must be taken in social spending," said Kampeter.

It would already be "foreseeable" that the social benefit ratio would rise sharply again in 2020, which Germany could not afford in the long term. "The additional social spending this year will all be financed on credit," said Kampeter.