The Floodgates Are Breaking In Germany’s Welfare State
10th July 2025
Germany’s social insurance system is coming under increasing pressure from demographic shifts and a stagnating economy. Long-term care insurance is no exception. The political class attempts to sedate the symptoms.
It confirms what demographers and economists have warned about for years: Germany’s social security structure is not built to withstand demographic change or recession. It is a fair-weather construction—a luxury that prosperous societies afford themselves in times of surplus, only to pare it down in times of crisis. That crisis, anticipated by economists such as Stefan Fetzer and Christian Hagist, has now arrived. In a widely discussed study, they predicted that without fundamental reforms, the German welfare state would reach a tipping point by 2030. By then, the total contribution rate to social security would rise to 44.5% of gross wages—suffocating the private sector in the process.