1) Germany has a long history of social welfare programs beginning in the 19th century under Bismarck. 2) Social security programs are seen as productive for the economy by promoting social harmony and motivated employees. 3) Welfare spending makes up nearly half of Germany's federal budget, with pensions, unemployment benefits, and family support receiving the most funds. Reform is ongoing to ensure programs can support future generations.

1. Welfare spending and its relevance
for Germany’s federal budget
hans-joerg.schaeper@bk.bund.de

2. Introduction
• Information on the social safety net in Germany
• History:
In the 19th
century Bismarck established an
insurance system against social risks.

3. Main topics
• Welfare state as a productive factor
• As little state as possible
• Future of the welfare state
• Role and development of the welfare budget
• Funding from the federal budget

4. Welfare state as a productive
factor
• Social security leads to social integration and
harmony.
• Employees with a social safety net are motivated
and productive.
• Number of working hours lost through strikes low
compared to other countries.

5. Social security –
a constitutional task
• Principle of the social state enshrined in
Article 20 (1) of the Basic Law.
• State has a responsibility to provide for its
citizens’ social welfare.
• State has a duty to keep the costs for each insured
person at a reasonable level.

6. Social security network
• In Germany the welfare state is shaped by
non-governmental institutions.
• Social partners define working and
economic conditions.
• Independent welfare organisations mobilise
private funding.

7. As little state as possible
• Branches of social security are self-governing
institutions.
• Subsidiarity is a fundamental organisational
principle of welfare state solidarity.
• Self-governance is a fundamental aspect of the
welfare state.

8. Reform needed
• Principle of social security must be upheld for
future generations.
• Federal Government is reforming health care,
unemployment and social security legislation as
well as pension insurance.

9. Role and development of the welfare
budget
• The welfare budget elucidates social security
spending trends, shows how spending is financed
and includes the medium-term forecasts.

10. Social expenditure ratio
• Index for relationship between social security
contributions and total economic value added.
• Social expenditure ratio = relationship between
social budget and nominal GDP.

11. Functional social budget
• Summary of social expenditure according to
purpose.
• Structuring according to function reveals social
development priorities.
• This is the nucleus of the social budget.

12. Institutional social budget
• Summary of social expenditure according to
institution.
• The focus is on social security.

13. Financing social security
• The financial accounts provide information about
the annual funding generated by the economy.
• They are presented in a way which differentiates
between the various forms of funding.
• Their structure makes it easier to evaluate the
burden on enterprises and labour costs.

14. Financing social security from the
federal budget
• Most heavily funded sector in the 2014 federal
budget.
• Expenditure amounted to around 146 billion euros
in 2013.
• This corresponds to 49.5% of total expenditure.
• Expenditure in 2015 and 2016 will amount to
around 160 billion euros.

15. Pension insurance payments
• Expenditure of 82.5 billion euros in 2014.
• Mainly comprises the federal subsidy for pension
insurance for wage earners and salaried‑
employees.
• 11.7 billion euros were earmarked for
child-raising periods.

16. Labour market policy
• This sector was characterised by a reform and
slow economic recovery.
• The only gradual drop in unemployment figures
resulted in payments totalling 30.3 billion euros.
• 30.2 billion euros were earmarked for basic job
seekers’ allowance.

17. Family related expenditure‑
• The Federation has recognised the task of
child-raising since 1986. 2.9 billion euros were
allocated for this in 2005.
• Family allowance – child benefit – is provided
tax-free up to the minimum subsistence level.
Relief for families totals around 2.3 billion euros.
• Parental allowance to support young parents
5.05 billion euros

18. Family related expenditure‑
• Childcare funding, investments:
261.3 million euros

19. Further federal welfare expenditure
• Housing benefits: 630 million euros in 2014
• Home owner allowance: 300 million euros
• Payments to war victims: 1.3 billion euros
• Social policy for the agricultural sector: 3.6 billion
euros
• Welfare benefits: 4.4 billion euros

20. Future of the welfare state
• An ageing population in Germany is presenting a
huge challenge to social welfare systems.
• Active social change is required.
• Economic momentum and social welfare must go
hand in hand.
• A viable balance must be found between
individual needs and the interests of the welfare
systems as a whole.