Germany’s social security spending hits 41% of national budget, study reveals
Germany’s government spending on social security has reached 41% of its total budget, outpacing both the Nordic countries and the EU average. A new study by the Cologne Institute for Economic Research (IW) highlights where the money goes—and where it falls short.
The IW study, released ahead of coalition talks on pension reforms, shows that nearly half of Germany’s social security spending goes to old-age pensions. Healthcare takes up another 16% of total expenditure, matching levels in the Nordic and Benelux regions. Yet despite these high figures, public investment remains low at just 5.9%, the lowest among comparable nations.
Germany’s social security spending as a share of GDP stands at 20%, equal to the Nordic countries and the EU average. However, administrative costs have risen to 11% of total spending—one of the highest rates internationally. Education receives only 9.3% of the budget, nearly half what Austria and Switzerland allocate.
The study also notes a sharp rise in overall government spending since the coronavirus pandemic. While social security dominates the budget, other areas like infrastructure and education lag behind.
The findings place Germany’s spending priorities under scrutiny as policymakers prepare for pension reform discussions. With high administrative costs and low investment, the study suggests a need for rebalancing—especially as social security demands continue to grow.
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