Germany spends more than ever on defense since World War II. The country is unable to find enough youths willing to serve in the military.
At the same, it’s economy barely grows, pension costs soar, and employers are warning of a lack of qualified workers.
The numbers indicate that restoring military conscription could be a costly proposition for an economy already under strain.
It is a question of whether Germany could re-arm without undermining its own system.
Can money buy soldiers?
Germany’s defence budget has been increased from $66.8 Billion in 2023, to $109 Billion in 2025.
To meet NATO’s target of 3.5% GDP spent on defense, the government has committed EUR649billion through 2029.
Rheinmetall is one of Germany’s biggest arm makers, with a backlog worth EUR63 billion for ammunition and tanks.
Airbus secured a EUR8 billion deal for F-35 jet fighters.
The state-owned rail company, Deutsche Bahn is also expected to get EUR150 billion for modernising lines which will double up as military transport corridors.
It is evident that industrialization has begun. Manpower is what is lacking. The Bundeswehr has only 181,000 soldiers active, which is far less than what NATO requires.
Germany will need 50,000-60,000 additional troops before the end of this decade. The recruitment campaigns held at fitness fairs, gaming expos and bakeries brought more volunteers but still not enough.
In recent years, the situation has gotten worse. In 2024, new students’ drop-out rates were around 27%.
The problem is not resolved by high salaries. The pay for new recruits will rise by more than a third, to over 2,300 euros per month. This is often twice what trainees make.
The willingness to serve is still low. In August, a Forsa poll showed that only 16 percent of Germans were certain to defend their country in the event of an attack. According to global standards, this is one of the lowest levels in terms of commitment.
Gallup’s survey found that 57% of German respondents said they wouldn’t fight for their country.
How much would conscription really cost?
The government of Chancellor Friedrich Merz has proposed a law that would restore some elements of mandatory service.
All 18-year old men must complete an online questionnaire in January 2026 about their skills, health and readiness to serve.
Medical checks will become mandatory in 2027. The trigger for full conscription would be a vote in Parliament.
Some supporters argue that a draft is the only way to close the gap in manpower. Critics say that the cost to the economy is too high.
According to the ifo institute in Munich, universal conscription costs about EUR70 billion a year. This is equivalent to 1.6% of Germany’s Gross National Income.
Losses are caused by delayed entry into the workforce, lost wages and decreased productivity.
This cost will be added to the already high pension expenditure. The federal transfers for the state pension systems are expected to reach EUR122.6 billion by 2025.
By 2028, the contribution rates that are currently fixed at 18,6% will likely reach 20 percent. German Court of Auditors warned recent reforms would add nearly four billion Euro to annual bills.
The state spends more on pensions each year than on defense.
Conscription, a 70-billion euro obligation would push finances beyond their limits.
Young Germans say no to a lot of things
It is more political than fiscal that’s the bigger issue. The military, for many German youths is neither an employer nor a job they would be interested in. It represents a system that does not inspire trust.
Rents are high, wages stagnant and only the older generation appears to be able to secure pensions. Climate change is a major concern, as well as the fragility of democracy.
More than 1 in 5 voters under 25 years old backed AfD (the far right AfD), now considered extremists by the domestic intelligence.
Many other people moved far to the left.
Reputation of the Bundeswehr is poor. The perception of the Bundeswehr as a broken institution has been fueled by scandals involving far right networks, shortages in equipment and delays with procurement.
Recruitment is still lacking despite image campaigns, generous compensation and web series.
Ironically, for those that do decide to join the military, it can provide a source of rare stability.
All new recruits are entitled to free housing, food, and transport as well as access to sport facilities and career development.
Others see it as an escape from precarious work. These stories are not enough to change the general reluctance.
Unbalanced system
The manpower crisis in Germany is exacerbated by the stagnation of Germany’s economy. The GDP fell by 0.3% during the second quarter 2025.
In June, industrial production dropped 1.9% to the lowest level seen since 2020. Nearly 12,000 businesses failed in the first six months of this year, a record high for the past decade.
Although the ifo Business Climate Index has increased slightly, it still indicates weakness.
The ageing population is driving pension transfer rates higher each year. The labour market, which is already lacking in nurses, teachers and engineers, will now be asked to provide tens thousands of soldiers.
This leads to a conflict between fiscal math of defense spending and demographic math of welfare.
Germany’s allies welcome the country’s rearmament. The country has positioned itself in Europe as a major military force for the first time after the war.
The scale of the spending masks the fact that it is people and not the money which are at the bottleneck.
The billions of dollars flowing into infrastructure and industry will never translate into an effective force if there is no credible plan for closing the gap in troops.
What can be done to make it better?
Germany has plenty of resources. It does not have a system that can convert spending into human resources without crippling its economy.
A market could be created for “national ready hours.”
The state could set annual targets for training, civil defense, cyber-exercises, and logistics.
These hours would have to be supplied by large employers, public institutions and universities or purchased from other sources.
It would turn readiness into a commodity that could be measured. Companies with surplus capacity at depots, data centres or hospitals could provide goods cheaply. Other firms could purchase credits from the market.
A national goal of 80 millions hours at a price of 25 euros an hour would cost under two billion euro a year. This is far less than the estimate of ifo for universal conscription.
It would also increase the number of hours certified for training and enhance retention, by placing more emphasis on skills and supervision rather than just headcount.
A second option would be to mobilize the older generations rather than just the young. Senior reserve corps that pays stipends or pension topping-ups can draw upon the expertise of tens, thousands of trainers and logisticsians who are in their fifties.
It would improve the quality of training and allow young recruits to take on frontline positions, while not taking teenagers from their apprenticeships or universities.
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