Germany, with the highest social spending in Europe - Study: It lags behind in education and public investment
With around 41% of public spending, Germany is the country that spends more money on social security than the rest of Europe. This is based on a study by the German Institute for Economic Research (IW), which is close to employers. According to the study, around half of the funds are spent on social security.
The study is published just before the budget week in the Bundestag and the important coalition negotiations on the pension package. Amid the pension dispute, the institute advises "counteracting further increases in state activity and, above all, social spending." This also applies to healthcare spending.
According to the study's authors, the Nordic countries, as well as Austria and Switzerland, spend 40% of total public spending on social security, while in the Benelux countries the figure is 38%. The EU average is 39%.
However, in terms of economic performance, the Nordic countries are still slightly ahead of Germany in terms of social spending. In the healthcare spending sector (16%), Germany leads together with the Benelux and Nordic countries.
The institute explains that spending on public administration is particularly high in Germany. During the study period, it increased significantly, from 7.2% to 11% of public spending. In contrast, Germany ranks last in the field of education, with 9.3% of total spending. While Austria and Switzerland rank almost 50% higher.
Berlin has also lagged behind in public investment throughout the observation period. Currently, investment accounts for 6.2% of total spending.
For the study, Germany's overall spending and costs in various areas were analyzed for the years 2001 to 2023. As comparable regions in Western Europe, the institute took as reference the Benelux countries, Austria and Switzerland, as well as Denmark, Sweden, Norway, Finland and Iceland, which are relatively similar to Germany in terms of economic development and cultural formation.
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