Rising Social Contributions: Experts Anticipate Record Increases

Germany is facing a significant rise in social contributions, a concern shared by both employees and employers. Following the announcement of the coalition agreement between the Union and SPD, economic experts are warning that these contributions may continue to escalate in the upcoming years.

Jürgen Wasem, a health economist from Essen, has indicated that without substantial reforms, contributions to health insurance may increase by approximately 0.2 percentage points each year over the next two years. The IGES Institute in Berlin has already reported a sharp rise in social contribution burdens for average earners, estimating an additional financial burden of around EUR255 for health insurance alone. The additional health insurance contribution has risen to an average of 2.9 percent as of early 2025, up from the standard rate of 14.6 percent.

Experts predict that without intervention, social contribution burdens in Germany could rise from about 42 percent to 49 percent over the next decade. Marcel Fratzscher, president of the German Institute for Economic Research (DIW), has expressed concerns regarding the coalition agreement, suggesting it exacerbates the issue by making expensive promises, such as maintaining stable pension levels and expanding benefits for mothers, rather than proposing solutions to limit future contribution increases.

Andreas Storm, CEO of DAK-Gesundheit, has criticized the coalition agreement, warning that it sets the stage for a potential surge in contributions, which could result in a "contribution tsunami" in the statutory health and long-term care insurance sectors by the start of the new year. The coalition's strategy aims to mitigate social insurance contribution increases by increasing employment to generate more revenue for the state. However, Verena Bentele, president of the VdK, has pointed out significant flaws in this approach, emphasizing that simply increasing the workforce will not be sufficient to address the rising costs.

Bentele noted that compensating for the increased contributions would require an additional 4.2 million people to contribute to health insurance. Andrea Römmele, a political scientist at the Berlin Hertie School, has also criticized the coalition's proposals regarding pensions, stating that they fail to address the pressing issues brought about by demographic changes, which could ultimately threaten the sustainability of the system.

The burden of social contributions is seen as one of the primary obstacles to stimulating economic growth in Germany. Current external pressures, such as tariffs imposed by the U.S. and the ongoing repercussions of the Ukraine conflict, have only intensified these challenges. Fratzscher has noted that revitalizing private consumption in Germany is essential for sustainable economic recovery, but high social contributions are a significant deterrent to increased spending. In conclusion, the urgency of addressing rising social contributions is paramount to ensure economic stability and growth in Germany.