Whereas total social security expenditure from the social
insurance funds had increased at an average rate of 11 per cent per
annum between 1965 and 1969, the average rate of increase had
reached 16.5 per cent in the period 1970–5. There was a “cost
explosion” in the health service: total health expenditure almost
© 1990 H.J.Braun
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trebled during the 1970s. As a result of unemployment benefits
increases during the recession of 1974–5 the Federal Labour Office’s
total expenditure rose from DM 4 thousand million in 1970
to 22 thousand million in 1980. Because of growing
unemployment and reduced wage growth the Federal German
social system ran into difficulties. As a consequence, services
were reduced or became more costly for the insured as in the
health service, in old age or invalidity pensions and in the
eligibility requirements for unemployment payments. In view of
the still growing outlays for the social security system this policy
of cutting back social security benefits was continued after the
Wende of September 1982.