How much social security can Germany still afford?

How much social security can Germany still afford?

In Germany, cities, municipalities and districts are facing enormous financial challenges. The Ludwigslust-Parchim district, which is often described as the better-off district in Mecklenburg-Western Pomerania, is also forced to make compromises. “It is an issue that affects us all,” emphasizes Federal President Frank-Walter Steinmeier, who is calling for comprehensive reforms of the welfare state. This reform sets the tone at a time when the social safety net is becoming increasingly difficult to finance. So how much security can our society still afford?

We have enjoyed relative social security in Germany for around 80 years, despite various crises. But now a paradigm shift is on the horizon. The design of the welfare state is in jeopardy: a new balance must be found between income and expenditure as well as between solidarity and personal responsibility. Steinmeier warns that society must decide how social it wants to be in the future. A complex discourse about possible options for action is necessary. These include reducing the social safety net and eliminating mandatory aid such as the care cost subsidy or citizen's allowance, while others are calling for revenue to be increased through tax increases. These could be burdened on all citizens in the form of VAT or income taxes, or more specifically, only affect those who are financially better off through wealth, inheritance and rich people taxes.

Need for renovation

As the website Wissen.de describes in detail, the welfare state in Germany is designed to ensure social justice and the greatest possible security for citizens. At the same time, the need for all citizens to participate in the welfare state is emphasized. Demographic change, increasing life expectancy and a falling birth rate call for a restructuring of the welfare state. High unemployment in particular is putting a strain on social security systems and urgently requires new solutions. It is undeniable that the welfare state is anchored in the Basic Law and is intended to help balance out inequality of opportunity.

The importance of a well-functioning welfare state is also reflected in an international comparison: Germany offers more comprehensive social services than many other countries, including the USA. As a result, the poverty rate in this country is lower. Nevertheless, there is intensive discussion about the structure of social benefits, especially about the new citizens' money that is intended to replace Hartz IV. It should not only offer social security, but also promote the qualification of the unemployed. However, critics complain that the standard requirements have not been raised sufficiently and the gap between wages and social benefits has continued to widen.

Society in a quandary

The situation is complex. According to the Böckler Foundation, the low-wage sector persists despite a shortage of skilled workers and many people who work full-time are dependent on social benefits. While some reforms such as citizen's money are being discussed, the reality for many remains without noticeable improvement. Over 1.5 million children could benefit from basic child protection, which is seen as a step in the right direction, but here too, implementation often depends on the available childcare places and the quality of public offerings.

In addition, rising income inequality is causing unrest. The situation has worsened since 2010: over 40% of poor households have no financial reserves. Action to combat poverty is more urgent than ever, and the well-being of society depends on skillful reform policies. The necessary measures could be financed through a reform of the debt brake and more effective taxation of large assets.

Overall, we are at a crossroads: the balance between social demands and the state's financial possibilities requires active participation by citizens and political committees. The risks of division and social inequality must be kept in mind, because the unpredictability of life circumstances can also affect every individual. How will our society decide?