A leading German economist, Veronika Grimm, has advocated for a re-evaluation of social security benefits in light of growing financial pressures on Germany’s pension, care and health insurance systems. In comments published Sunday, Professor Grimm urged greater transparency regarding the affordability of existing provisions, stating a need for honest assessment of which benefits are sustainable in the long term.
Grimm cautioned against making promises that may prove unsustainable, citing the recently approved government commitment to maintain pension levels at 48 percent as an example. She argued that such guarantees could discourage individuals capable of private provision from saving for their future.
Similar concerns were raised regarding long-term care insurance. Grimm emphasized that benefit reductions should be considered as a means of ensuring the system’s financial viability. She explicitly rejected proposals for a comprehensive, fully-funded care insurance scheme, asserting that individuals with the financial capacity to contribute to their own care costs should do so to secure the system’s long-term sustainability.
Furthermore, the economist highlighted the rising burden of non-wage labor costs, which currently stand at 42 percent and could reach 45 percent by the end of the current legislative period. Grimm warned that these high costs are making employment more expensive and less attractive, potentially impacting the competitiveness of the German labor market.
