The Nordic countries followed suitStudy: Germany rises to top spot in social spending
According to a study, Germany is now ahead of the Nordic countries in terms of social spending. Almost half of these funds are used for pension funds. However, the Federal Republic clearly lags behind in other areas.
Germany now spends more money on social security than a group of Nordic countries such as Denmark, Sweden, Norway, Finland and Iceland. This emerges from an unpublished study by the German Economic Institute (IW), which is available at the “Rheinische Post”. Based on this, 41 percent of total government spending in Germany in 2023 will be spent on pensions, health, care and unemployment insurance as well as social benefits such as citizen’s allowance.
But in the Nordic countries, the figure reaches 40 percent. According to research, the average for EU countries is 39 percent. In the Benelux countries, Belgium, the Netherlands and Luxembourg, the figure reached 38 percent.
The employer-linked agency presented its study shortly before the start of budget week in the Bundestag and before important coalition negotiations on the pension package. On Tuesday, Federal Finance Minister Lars Klingbeil will defend the 2026 federal budget in parliament. The budget provides for new debt of 98 billion euros in the core budget and additional borrowing for the special budget for infrastructure and the Bundeswehr in the same amount, resulting in a total debt of 180 billion euros.
However, in terms of the proportion of gross domestic product, the Nordic countries are still slightly ahead of Germany (20 percent each), the European Union average (19 percent) and the Benelux countries (18 percent) in terms of social spending. Since the Corona crisis, the German government’s overall quota – that is, the share of government spending in economic output – has increased significantly, according to the agency.
“At 41 percent of total expenditure, Germany currently spends more on social security than the comparison group, and therefore more than the Nordic countries, which are known for their distinctive social systems,” the study said. “Nearly half of these funds go to old-age insurance, which puts Germany in the middle position. In terms of spending on health services, Germany is at the top with 16 percent of total spending, along with the Benelux and Nordic countries.”
However, Germany spends only 9.3 percent of its total spending on education – almost half as much as Austria and Switzerland, according to the study. In terms of public investment, Germany is at the bottom with 5.9 percent. However, this may now change thanks to the introduction of a special infrastructure fund. At the same time, administrative costs increased to eleven percent, an international record.
