Keeping social insurance efficient and financially viable


Yes, we want to and we will keep these social security contributions below 40% not only for this election period, but also in general and for all future periods, so that employees and employers are not unduly burdened in this area.

Peter Altmaier, Federal Minister of Economics September 2018

The contribution rate for social security must remain below 40% in the future. For this reason, social security benefits must not be allowed to rise at a permanently higher rate than economic strength. Otherwise, massive risks will arise for international competitiveness and economic development at home. This would have unfavorable effects on employment and would also jeopardize social cohesion and a fair balance between the generations involved.
It is 0.05 before 12
As of January 1, 2021, the contribution rates for pension, health, unemployment and long-term care insurance already added up to 39.95%. They were thus just below the 40% mark. Compared with the previous year, the contribution burden increased by 0.2 percentage points because the average additional contribution rate for statutory health insurance rose by the same amount.
In February 2019, the Confederation of German Employers' Associations set up a commission on the future of social insurance. Under the leadership of Professor Dr. Werding (Ruhr University Bochum), it has drawn up proposals on how the total social insurance contribution rates can be kept below 40% in the long term.
The shows that the already high burden on wages and salaries is likely to increase significantly in the coming decades. On the basis of current legislation, the contribution rate is expected to rise to around 50% (49.6%) by 2040. This would create massive risks for international competitiveness and domestic economic development with unfavorable effects on employment, and would also jeopardize social cohesion and a fair balance between the generations involved. The political target of an upper limit of 40% for social security contributions was not set arbitrarily, but rather resulted from experience with economic development in Germany.
The overall social security contribution must not be allowed to rise above 40% in the future either, as each increase makes labor an increasingly expensive factor for companies. Every additional contribution rate point therefore costs jobs, as has also shown in a study.
The German government regularly asserts that it wants to strengthen and expand the competitiveness of the German economy. However, there are no measures to stabilize the future burden of social security contributions on labor.
The BDA therefore advocates - in its policy positions, statements and publications - concentrating the benefits of all branches of social insurance on a basic level of security and having individuals finance the entitlements above and beyond this themselves. This is possible without compromising social security and without financially overburdening those affected, especially since falling compulsory contributions also create additional room for maneuver.
The relationship between solidarity and subsidiarity must be brought back into proportion. The community of solidarity should only step in where individuals cannot help themselves through their own efforts. Greater emphasis on the principle of subsidiarity not only creates greater fairness in terms of benefits, but also keeps the welfare state financially viable in the long term.
Social benefits rise faster than economic strength
Funds totaling €1,099.7 billion were raised to finance current and future social benefits in 2019, i.e. before the Corona crisis, 3.7% more than in 2018. In relation to gross domestic product, which rose by 2.7% in the reporting year, this results in a significant increase in the social benefit ratio of 0.5 percentage points to now 30.3% of gross domestic product.
This development is particularly alarming because the social budget figures do not even include the Corona crisis, which will lead to a further divergence between social spending and economic strength. On the contrary, the welfare state had already grown disproportionately even before the current crisis - and this despite a long upswing and record employment. It is all the more important now that solidarity and subsidiarity - with a view to a sustainable and generation-appropriate policy - be brought back into an appropriate balance.
Total social security contribution
According to Section 28d of the German Social Security Code (SGB IV), the total social security contribution includes all contributions to the social security branches financed jointly by employees and employers, i.e. pension, health, unemployment and long-term care insurance. The special contribution to statutory health insurance (1.3%) and the supplementary contribution for childless persons to social long-term care insurance introduced on January 1, 2005 (0.25% and 0.07% respectively on average for all members) are thus also included in the total social insurance contribution.

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Facts and figures

Employers contribute the most to financing the German welfare state:
According to the German government's social budget, the employers' share of financing for all social benefits was 34.8%, higher than that of the state (32.8%) and higher than the social contributions of the insured (30.9%). Employers thus already bear the highest cost burden.