Social security contributions at 50%! Economist Werding sounds the alarm!

Social security contributions at 50%! Economist Werding sounds the alarm!

In a recent warning to the public, economist Martin Werding warned of an increase in social security contributions to up to 50 percent of gross wages and salaries. According to his estimates, this need could be primarily due to the rising costs of social security, which may rise massively in the coming years. Werding emphasizes that such a development could have serious consequences for the country's economic stability.

The alarm bells are ringing especially since the challenges of demographic change and increasing costs in the healthcare sector cannot be ignored. Werding makes it clear that the average contribution payments, which are currently around 40 percent, could increase even further as a result of the desired reforms.

Consequences of a drastic increase

Werding's concerns are also underlined by the issue of competitiveness. He notes that companies in Germany could come under pressure from such high taxes, especially when faced with international competition with significantly lower social security contributions. This could lead to a decline in investments in Germany.

An additional aspect that Werding addresses is the shadow economy, which would likely increase in such a scenario. Higher taxes could lead to employees and employers being tempted to make working relationships informal in order to avoid the taxes. This would ultimately lead to a further lack of solidarity in the social security system.

The relevance of a sound economic system

Werding appeals to political decision-makers to carefully analyze necessary reforms and to maintain a moderate approach to social security contributions. While the provision of social safety nets is essential, they must not lead to overburdening the working population.

In this context, the debate about the future structure of social security contributions and their financing remains a central point in the political discussion. Werding's assessment could influence the direction the political agenda will take to find a balance between social security and economic stimulus.

For more information on Martin Werding's positions, see his full report at SPIEGEL.de.

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