“This burden threatens to overwhelm Germany’s pension and social system, especially as the pension budget already constitutes nearly a third of its deficit-ridden state budget. Germany’s hidden national debt presents an additional economic challenge, estimated to exceed GDP, with a trend toward further growth,” Milaković explained.
In other words, he noted, Germany’s welfare state will soon struggle to support such a large number of retirees.
“Increased military spending combined with rising pension costs will likely force Germany to redirect a significant portion of its budget toward military and social sectors. This could further limit resources for public investment in technology, infrastructure, and innovation, which are critical to long-term economic competitiveness. Addressing the labor shortage will require developing a natality policy and enacting painful reforms, including raising the retirement age, adjusting contributions, and reducing benefits,” Milaković suggested.
He recalled that Germany opened its borders in 2015 to address current and future labor shortages through mass immigration under its “Willkommenskultur” policy.
“However, the qualifications and competencies of the migrant population did not meet labor market needs, indicating that Germany’s high social benefits were the primary motivation for most new arrivals. This approach sparked heated debates within Germany and created divisions among EU countries,” Milaković noted.
Germany shows intentions to vent its frustrations on weaker parties
Milaković pointed out that besides demographic challenges, Germany’s “green agenda,” promoting a transition to renewable energy through its “Energiewende” strategy, has had a demotivating impact on its economy over the last two decades.
“This transition includes extensive legislative changes, investments in new technologies, public awareness initiatives, and more. The gradual phasing out of nuclear power and related restructuring costs have led to significant increases in electricity prices, especially impacting energy-intensive industries like chemicals and metallurgy,” Milaković explained.
He noted that Germany’s economic recovery challenges are complex and require a systematic and strategic approach.
“The accumulated problems are at odds with the willingness of German politicians to resolve them, as necessary solutions could threaten their hold on power,” Milaković observed, adding that these issues will only worsen the longer essential reforms are delayed, affecting not only Germany but also the EU.
“In positioning itself this way, Germany shows an inclination to vent its frustrations on those it perceives as weaker. This underscores the need for Republika Srpska to find and develop alternative mechanisms also outside the collective West to strengthen its own capacities,” Milaković concluded in his article, also published on the CDPI websitewebsite here.
Source: RTRS
