"The German welfare state is no longer financially viable" - Chancellor Merz warns of deep structural reforms
The German welfare state is facing major financial challenges. Chancellor Merz warns of the need for deep structural reforms, while facing criticism from the opposition.
The German welfare state is not functioning properly. Health insurance, long-term care insurance for the elderly, pensions and unemployment benefits are all creating bottlenecks. In all these sectors, the federal government must regularly inject large amounts of state tax revenue to prevent the welfare state from collapsing. Upon coming to power, the coalition government of the conservative CDU/CSU bloc and the Social Democratic Party promised comprehensive reforms of the welfare state and the modernization of Germany's social security systems. But there has been disagreement over how this will be achieved.
A recent statement by German Chancellor Friedrich Merz has hinted that in the coming months in Germany there will be strong debates both within the coalition and in German society regarding these reforms.
"The welfare state, as we have it today, is no longer financially viable with what we are achieving economically," the German chancellor said at a conference, stressing the need for a reorganization of social policies. "Let us show together that change is possible, that reforms are possible," he said.
Chancellor Merz's reaction came after the SPD proposed tax increases. Party sources have stated that they would not rule out higher taxes for the wealthy. According to them, "no option is off the table."
However, the Social Democrats warn of the risk of deepening social injustice. "We need structural reforms to keep social contributions sustainable in the long term," they emphasize.
Meanwhile, work on this program has begun. Starting in September, a new commission will propose reforms to social benefits, such as the citizen's payment, housing payment and child allowances. The State Social Commission, appointed by the Ministry of Labor, is expected to present its results by the end of 2025.
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