Increased spending on social assistance observed substantially
In 2024, Germany's social welfare spending reached a record high of 20.2 billion euros, according to the Federal Statistical Office in Wiesbaden. This figure does not include spending on services for health, overcoming special social difficulties, and other life situations, which amounted to an additional 1.9 billion euros.
The increase in social welfare spending from the previous year, 2023, was significant. Last year, the state's social welfare spending increased by 14.8%. In 2024, this increase was more pronounced, with all services under SGB XII experiencing a boost.
The key areas of increased spending primarily include pensions, housing and child benefits, unemployment payments, family allowances, and subsidies for the elderly and sick. Pensions represent the largest share of welfare spending, with the federal contribution to pensions reaching €127.8 billion in the 2026 budget and projected to rise significantly.
Unemployment payments and welfare benefits (Bürgergeld) are another key area, with welfare payments amounting to €41 billion in the 2026 budget. Family-related benefits such as child benefits and family allowances continue to contribute significantly to welfare spending.
The aging population increases the need for subsidies targeted at the elderly and sick, putting additional pressure on welfare budgets. The welfare system also includes housing benefits, another important expenditure item under strain due to demographic and economic factors.
The increase in social welfare spending occurs despite Germany’s slowing economic growth and rising deficits, stirring political debate about the sustainability of the current welfare model and the need for reforms. The Chancellor and government reports emphasize that the welfare state’s costs are reaching unsustainable levels amid demographic changes and economic pressures.
In 2024, the largest share of social welfare spending, 56.5 percent, was allocated to basic security in old age and in case of reduced earning capacity, totaling 11.4 billion euros. The allocation to basic security in old age and in case of reduced earning capacity saw a 13.3 percent increase. Spending on care assistance increased by 17.7 percent, totaling 5.3 billion euros.
Assistance for living expenses rose by 11.1 percent, amounting to 1.6 billion euros. The spending on services for health, overcoming special social difficulties, and other life situations increased by 19.4 percent from the previous year. The data provided refers to social welfare spending.
[1] Federal Statistical Office (2024). Social Welfare Expenditure Statistics in Germany. [2] Government Report (2024). Sustainability of the Welfare State. [3] Federal Budget Outline (2026). Social Welfare Expenditure Projections. [4] European Union Report (2024). Demographic Changes and Welfare Spending in the EU. [5] International Monetary Fund (2024). Germany: Fiscal Policy Challenges.
- The increase in social welfare spending in 2024, compared to the previous year, was more pronounced and was a significant part of Germany's business sector, with finance allocated towards various services like pensions, unemployment payments, family-related benefits, and housing benefits.
- The growth in social welfare spending has been a topic of debate in Germany's political sphere, as it continues to increase, with financing primarily going towards basic security in old age and in case of reduced earning capacity, care assistance, and services for health and overcoming special social difficulties.
