Berlin: Germany’s social spending reached a new record high last year, with costs linked to old age and illness accounting for around 70 percent of total social spending, according to an analysis by the Ifo institute.
The analysis found that spending related to old age and illness was responsible for more than 80 percent of the real increase in social spending since 1992, highlighting the growing impact of Germany’s ageing population on the country’s welfare system.
Demographic change has become a major structural driver of rising social costs as the number of older people increases and demand for pensions, healthcare and long-term care grows.
Ifo researcher Emilie Hoeslinger said Germany’s social budget was growing faster than gross domestic product, with the country’s weak economic performance also contributing to the rising share of social spending.
Between 2019 and 2025, Germany’s social spending increased by 11.5 percent, equivalent to around €104 billion, after adjusting for price effects. During the same period, the social budget’s share of the economy increased from 29.6 percent to 32 percent, reaching a new record level.
The main drivers of the increase included higher spending on healthcare and care for the growing elderly population, along with increased federal payments toward pensions.
The figures highlight the financial pressure created by Germany’s demographic shift, as a larger share of the population reaches retirement age while the working-age population faces the costs of supporting pensions and social services.
The trend is expected to remain a major challenge for Germany’s welfare system, particularly as economic growth remains weak and social spending continues to rise faster than the overall economy.
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