German Companies Face Record €85.6 Billion Cost for Sick Leave in 2025

In 2025, German companies paid a record-breaking €85.6 billion for continued salary payments to sick employees, marking a significant rise from €81.2 billion in 2024. This represents more than a doubling of these costs over the past 15 years, driven by factors including higher wages, increased employment, and a higher sickness rate.

The Institute of the German Economy (IW) study highlights that out of the total €85.6 billion, around €72.5 billion were for continued gross wages, with an additional €13.1 billion attributed to social security contributions paid by employers. The costs have soared by over €21 billion since 2020 alone.

A notable contributor to the increased sickness rate since 2022 is the introduction of electronic recording of sick notes, which improved tracking but leaves it unclear if actual absences have risen. Demographic factors also play a role; older employees more frequently suffer from musculoskeletal ailments that tend to require longer recovery, and mental health issues, though comprising only about 5% of all sickness cases, account for roughly 13% of sick leave days.

In response to rising costs, the German government plans to end telephone sick notes, especially for respiratory diseases, and introduce a mandatory doctor's certificate starting from the very first day of absence. However, this proposal faces potential resistance from employers due to concerns over increased administrative burdens and possible strain on employer-employee relations. IW economist Jochen Pimpertz noted that while employers can already legally demand a sick note from day one, the current leniency is based on trust and responsible conduct, and there is uncertainty whether stricter rules will actually reduce sickness prevalence.

The mounting financial impact on companies underscores ongoing challenges amidst changing workforce demographics and evolving health policies.