Social security spending

The study released by the German cabinet in Berlin on Wednesday showed that government spending on social security is expected to reach 754 billion euros this year - an increase of 4.5 percent compared to last year.

According to the government, the share of social security spending will climb from 29 to 31.9 percent of the gross national product this year. In 2003, it reached a record high of 32.2 percent of GNP.

The government said that recession-driven spending on unemployment benefits, childcare benefits and improvements in pensions, healthcare and the nursing sector were largely responsible for the current hike.

"In the middle of a crisis, the German social welfare state has proved its effectiveness," German Labor Minister Olaf Scholz said.

Scholz used the latest figures to defend the government's decision for a long-term guarantee that pensions won't be cut, regardless of how badly the economy develops.

Critics hit out at report

But critics have slammed the latest spending figures in light of rising joblessness and a ballooning budget deficit.

The Confederation of German Trade Unions (DGB) said the report couldn't mask the fact that the social security system in Germany had developed "huge cracks" and that the burden of higher social contributions was borne largely by workers.

Klaus Ernst, deputy chairman of the opposition Left Party called the hike in spending on social welfare a "warning sign."

Ernst warned that rising unemployment meant that more people were depending on handouts - a fact that posed a serious challenge to the German welfare state.

sp/dpa/AFP

Editor: Neil King