Udo Dinglreiter, president of the employer association Gesamtmetall, is calling for substantial cuts to the German social system intended to lower ancillary labor costs for businesses. As a specific measure, he proposes reducing the duration of unemployment benefits paid out. Dinglreiter told the “Welt am Sonntag” that shortening the duration of unemployment benefits to twelve months would yield a savings of three billion euros.
Currently, unemployment benefit I (ALG I) in Germany is paid for between six and a maximum of 24 months, depending on the individual’s age and prior period of insured employment. The duration is determined by how long the individuals were subject to mandatory insurance during the preceding five years and their age at the start of unemployment.
The Gesamtmetall chief justifies his demands by citing the heavy burden that social security contributions impose on companies. He noted that the country spends 1.43 trillion euros in social matters, broken down into 970 billion euros in contributions and almost 500 billion euros in taxes. Dinglreiter argues that the total social security contribution percentage must drop from the current 42% to 40%. He estimates that achieving the 40% target requires savings of between 40 and 50 billion euros within the system, which he considers feasible given the total volume of spending.
Savings could also be realized in healthcare expenditures. The Gesamtmetall president stated that “anything that fails to achieve its planned effect can be cut. This applies particularly to the healthcare sector, where savings are unavoidable, even among service providers.” Healthcare providers include physicians, clinics, and therapists.
Dinglreiter heavily criticized systemic inefficiencies. He told the “Welt am Sonntag” that the state collects about 1,000 billion euros annually in taxes, suggesting this amount should be sufficient to maintain a functioning social market economy. He insisted the issue is not a lack of revenue but rather a question of how efficiently the money is being spent. Expenditures that demonstrably fail to produce the desired outcomes should be put under review.
Furthermore, Dinglreiter proposed that benefits currently paid for by tax revenue, which are outside of the insurance system, should remain so. Specifically, he mentioned that the health insurance costs for recipients of citizen benefits, which amount to around twelve billion euros, should be covered by tax funds instead of insurance contributions.
