New calculations, spearheaded by economist Martin Werding, reveal a potentially far more drastic increase in social security contributions than previously anticipated in Germany. The projections, based on the latest population forecast from the Federal Statistical Office, highlight a more significant contraction of the working-age population, placing considerable strain on the nation’s social welfare system.
Werding’s analysis, performed for “Der Spiegel”, suggests that the total burden of social contributions could surge to 53% of gross wages and salaries by 2050, a sharp increase from earlier estimates. This translates to an average of 22.8% of salaries earmarked for pensions – up from the current 18.6% – alongside a rise in statutory health insurance contributions to 19.1% (currently 17.1%), a substantial increase in long-term care insurance to 5.4% (3.7% presently) and a rise in unemployment insurance to 5.6% (currently 2.6%).
The pressure on contribution rates is predicted to continue beyond 2050, with projections indicating a potential rise to 60.1% by 2080 under current demographic trends. While acknowledging that these calculations represent projections and not definitive predictions – and that rates could theoretically fluctuate – Werding, a professor of social policy and public finance at Ruhr University Bochum and a member of the government’s Council of Economic Experts (“Wirtschaftsweisen”), warns of significant systemic challenges.
The escalating contribution burden poses a considerable threat to economic growth and employment. Werding emphasizes the need to actively prevent such a scenario from unfolding, questioning the long-term sustainability of such a trajectory. Critics are already pointing to potential consequences, including disincentives for work and investment and further erosion of Germany’s competitiveness on the global stage. The findings are likely to fuel debates surrounding pension reforms and broader discussions on fiscal policy adjustments, with increasing pressure on policymakers to address the looming demographic crisis and its inevitable financial repercussions.
