Germany can no longer maintain a social system. What does this mean?

The head of the German government, Friedrich Merz, said that the existing model of social security can no longer exist. He stressed that the country is economically no longer able to maintain the current level of the welfare system, which means that a review of financing approaches is required. What are the causes of the problems and what it can lead to — in the material of Izvestia.

What led to the difficulties

• Germany spends huge sums on various social benefits every year, last year they reached a record high of about €47 billion. A significant part of them is paid to foreigners. The Chancellor called for a serious review of the benefits mechanism, noting that without changes, financial pressure on the state budget will only increase. He also warned that the welfare system, which had been considered unshakable for many years, could no longer function in its former form.

• Approximately 6 million people over the age of 80 now live in Germany, but by 2050 their number will increase to 10 million. The demographic structure is changing. As a result, the proportion of elderly people in need of medical and social support will increase significantly, while the number of economically active citizens will decrease. This leads to an increase in pension costs, medical services, and long-term care, while reducing the tax base, as the working-age population shrinks and the burden on it increases.

• Another important element of the existing problems with benefits is generally considered to be the stagnation of the German economy. In particular, the transition to new environmental standards and the high cost of energy resources due to sanctions confrontations with Russia lead to a decrease in the competitiveness of Germany. Added to this were the tariff wars unleashed by US President Donald Trump and disruptions in supply chains. Merz confirmed that the German economy will suffer "significantly" from US duties, with export-oriented companies bearing the brunt. All this also has a negative impact on exports and investment activity.

• The third factor is the proclamation of the need to increase spending on defense and the militarization of the European Union. Despite the social problems, Germany's defense spending in 2024 reached the threshold of 2% of GDP for the first time in more than 30 years. The last time this happened was only in 1992. At the same time, in 2025, the German authorities announced their intention to increase spending on defense by about 1.5%. Focusing on security issues undermines a country's ability to fulfill its social obligations to its citizens.

• The financial burden on the budget is also increasing due to the increase in social benefits. In recent years, spending on unemployment benefits, assistance to families with children, low-income support programs, and payments to migrants has reached record levels. Growing unemployment contributes to a further increase in the number of recipients of benefits, and the influx of people who are not German citizens further expands the circle of those who are eligible for financial assistance. In 2024, about 5.5 million people received benefits, while almost 4 million of them belong to the working-age population. This means that they can work at least three hours a day.

• The situation is complicated by structural contradictions related to the transition to new technological structures and energy. The country is actively investing in the "green" sector, but the process requires significant funds, and the return on these investments is not able to offset current costs. In conditions of low economic growth, public resources are divided between investments in the future and the need to cover growing current expenses.

How will the internal political situation in Germany change

• Social problems in Germany can significantly strengthen the positions of right-wing parties. The State has already admitted that it is unable to maintain the previous level of well-being. Many residents are beginning to associate problems with unsuccessful migration policies, because part of the social benefits goes to support those who do not have German citizenship.

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Centrists propose only gradual reforms, but it is likely that a significant part of society will seek more radical and rapid solutions. The right-wing forces formulate their programs with an emphasis on reducing the migration flow and redistributing budget funds in favor of the indigenous population. This approach resonates with voters who do not see effective solutions from the ruling forces.

• According to a survey by the INSA sociological institute published in mid-August by local media, 43% of Germans expect the AFD to win the next Bundestag elections in 2029. In addition, elections to the landtags of five federal states are planned in Germany in 2026. The same 43% of respondents are confident that the Alternative will lead one of them and bring its prime minister to power.

What does this mean?

• Against the background of problems with social security, more and more people tend to support parties promising harsh measures and rapid changes. If economic and social trends continue, the influence of right-wing forces on the political agenda will become even more noticeable. Right-wing parties urge voters to pay attention to the fact that the reduction in social benefits will primarily affect Germans who have paid taxes all their lives and may now find themselves without government support. Left-wing forces, on the contrary, emphasize that such measures will also affect migrants, and this increases social inequality. To avoid public discontent, the German authorities may have to review their spending. This primarily concerns increased spending on defense. The authorities will also be forced to listen more to the voice of the right.

When writing the material, Izvestia interviewed:

• economist Alexey Rodin;
• Artem Sokolov is a senior researcher at the MGIMO Institute of International Studies of the Russian Ministry of Foreign Affairs.