Not for citizens: Germany may review benefits system
On Sunday, August 24, it became known that German Chancellor Friedrich Merz plans to conduct a fundamental reassessment of the benefits system in Germany due to the fact that costs continue to rise in the country. He stated this at the party conference on Saturday, the 23rd. The statement immediately resonated. For more information about the reasons for the possible reform of the benefits system, as well as the state of the German economy, see the Izvestia article.
Germany's social security system: what is known
Friedrich Merz on Saturday, August 23, said that the structure of the so-called welfare state in Germany is not financially stable and it is necessary to carry out a fundamental reassessment of the benefits system due to the growing costs of the economy, which have already exceeded last year's record of 47 billion euros.
The welfare State is a system of benefits that includes a wide range of payments: These include housing and child benefits, unemployment and medical benefits, as well as other financial assistance to citizens.
"The welfare state as we have it today can no longer be funded by what we can afford economically," Friedrich Merz said at the meeting.
Experts expect that Merz's views on the idea of reforming social benefits will cause discontent among his coalition partners from the Social Democratic Party of Germany (SPD), which has traditionally positioned itself as a defender of the welfare state. Despite this, Merz has already stated that discontent within the coalition will not prevent him from carrying out the necessary reforms.
He also added that he was not satisfied with what his government had achieved during its rule and said: "Let's show together that changes and reforms are possible."
The German Chancellor called on both the SPD and the Christian Democratic Union (CDU) to commit themselves to making tough decisions and forming a joint "anti-immigration and business-friendly" coalition.
At the end of February, early parliamentary elections were held in Germany, during which the CDU/CSU bloc, led by Friedrich Merz, took first place. The right—wing Alternative for Germany (AfD) party came in second place, and the SPD came in third. Friedrich Merz took over as chancellor on May 6, before that, on April 30, the CDU/CSU bloc entered into a coalition with the SPD to form a government.
As Kirill Dmitriev, head of the Russian Direct Investment Fund, noted on the social network X, the crisis of the German social security system was the result of many years of consistently wrong decisions.
"Perhaps the "crisis" that Friedrich Merz is talking about didn't fall from the sky — it's payback for years of mistaken decisions and bad policies. And this bad policy continues," Dmitriev commented on the post of head of Germany.
German economy: slowing growth
The German economy has slowed down sharply since 2017. Since then, the country's GDP has grown by only 1.6%, while in the rest of the eurozone it has grown by 9.5%. Germany's economic growth declined by 0.2% in 2024 and by 0.3% in 2023. In the second quarter of 2025, GDP showed a decrease of 0.3%. The largest automotive giants Volkswagen and Audi were forced to lay off tens of thousands of employees due to the increased cost of electricity and other production costs.
As analysts emphasize, the crisis or, at least, stagnation is fixed in many directions at once — from deindustrialization to the state of the housing market, that is, there is no easy way out of the situation.
Despite the slowdown in the country's economy, social security spending has increased sharply and is expected to continue this year. This is due to both the aging of the German population and rising unemployment (the unemployed in Germany are protected by benefits). At the same time, it is noted that the majority of recipients of benefits are Germans, but at the same time, many of them are not German citizens.
According to Eurostat, state pensions alone in Germany account for about 12% of GDP, and the total public debt is 62.5% of GDP, which is lower than the average in the eurozone.
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