Social Policy

Germany’s ‘social market economy’, an economic system introduced after the Second World War, promises to balance the socially desirable with the economically sensible. However, Germany’s welfare state is increasingly losing this equilibrium, as more and more people come to live on subsidies. Germany spends around a third of its gross domestic product on social benefits, more than any other industrial country.

Demographic change will raise the need for social protection even further. The number of pensioners is growing and with it the number of those taking advantage of increasingly expensive medicines. Simultaneously, the ageing and shrinking population is limiting the options for funding the welfare state as fewer and fewer people pay contributions into the social insurance system. The main task for policy makers is to make the social security system financially viable. On the one hand, everything must be done to ensure that all those who are fit to work actually have employment. On the other, the benefits paid out by the social system must be limited to what is strictly necessary.