Germany's Social Spending Reaches Record High Due to Aging Population

According to a report by the Ifo institute, Germany's social spending reached a record high last year, with expenditures related to old age and illness making up approximately 70% of the total.

The analysis indicates that spending in these areas accounted for over 80% of the real increase in social spending since 1992. The primary factor driving this trend is demographic change, which is shifting the welfare state burden across generations.

Ifo researcher Emilie Hoeslinger noted that the growth of the social budget is outpacing GDP growth, with the weak economy contributing to an increased share of social spending. From 2019 to 2025, social spending is projected to rise by 11.5%, or €104 billion, adjusted for price effects, elevating the social budget share from 29.6% to 32%. Key contributors to this rise include increased spending on elderly care and higher federal pension payments.