Anticipated Expansion of the Federal Social Fund to Reach €29 Billion by 2029
The Federal Social Budget in Germany is expected to increase by approximately 29 billion euros annually by 2029, according to a report by the Federal Audit Office. This growth is primarily due to rising social spending commitments, such as the expansion of the maternal pension scheme, and other fiscal pressures.
The budget of the Federal Ministry of Labour and Social Affairs has seen a substantial increase over the years. It stood at 129 billion euros in 2016 and rose to 182 billion euros last year, representing a 40 percent increase in nine years.
The report, addressed to the Budget Committee of the Bundestag, does not specify the reasons for the expected increase in the Federal Social Budget. However, it emphasizes the need for faster placement of people on unemployment benefits into work.
Other factors contributing to the budgetary shortfalls include tax revenue compensations and economic factors, resulting in a federal budget gap reaching around 170 billion euros by 2029. Part of this deficit is attributed to expanded social benefits like maternal pension advances set to begin by January 1, 2027, as well as increased debt servicing costs and other social expenditures.
The report also highlights the plans for securing the pension level and the mother's pension as part of the expected increase in the Federal Social Budget by 2029. Loans to the Federal Employment Agency are also part of these plans.
For the current year, 190.3 billion euros are planned for the Federal Social Budget. The Federal Audit Office expects an increase to 219.2 billion euros in the Federal Social Budget by 2029.
The growth rates of the Federal Social Budget and unemployment benefits were above the growth of the gross domestic product by 35 percent. This trend underscores the growing social obligations that the federal government must manage, alongside larger interest payments as debt rises.
The report calls for better implementation of already started and planned reforms, with a focus on faster placement of people on unemployment benefits into work. The report was obtained by the German Press Agency.
While defense spending is also sharply increasing—doubling by 2029 to over 150 billion euros in line with new government policy goals—social budget growth is a notable contributor to the overall rising expenditure burden that the federal government must manage. These growing social obligations, together with larger interest payments as debt rises, are key reasons behind the forecasted annual increase of 29 billion euros in the Federal Social Budget as identified by the Federal Audit Office.
- The report highlights the need for faster placement of people on unemployment benefits into work, which is one of the factors contributing to the expected growth in employment policies within the Federal Social Budget.
- The budget of the Federal Ministry of Labour and Social Affairs has seen a significant increase over the years, including an increase in employment policies, due in part to rising social spending commitments and fiscal pressures.
