Compulsory military service would cost up to 70 billion euros
In light of Russia's aggressive behavior, there is intense debate over the reintroduction of conscription in Germany. According to a study by the Munich Economic Research Institute for the Federal Finance Ministry, the economic costs could be in the billions.
The reintroduction of conscription in Germany could cause economic costs, according to the Ifo Institute, amounting to billions of euros. This is based on a study by the Munich Economic Research Institute for the Federal Finance Ministry. The analysis examines the costs of conscription in three scenarios. If conscription affects an entire age group (100 percent), the economic output could decline by 1.6 percent or approximately 70 billion euros. If conscription affects a similar proportion to the old conscription system, the economic power could decrease by 0.4 percent or 17 billion euros. If conscription affects only 5 percent of an age group, the decline would be 0.1 percent or 3 billion euros, according to the Ifo Institute.
"A conscription as part of a social duty year would annually cause economic costs that are roughly the same size as the funds from the defense budget and the special fund of the Bundeswehr in 2024," said Ifo military expert Marcel Schlepper. The costs arise primarily because young people build up their assets and economically valuable skills and knowledge, such as through training. Experts refer to this as human capital.
"As an alternative to conscription, it would make more sense to fund the Bundeswehr with more resources to make it a more attractive employer," explained researcher Panu Poutvaara, head of the Ifo Center for International Institution Comparison and Migration Research. "It is conceivable to pay higher wages to conscripted soldiers." This would put a heavier strain on the state budget, but the overall economic costs would be more evenly distributed and would be significantly lower than with conscription: 37 billion instead of 70 billion euros (in the 100 percent scenario), 9 billion instead of 17 billion euros (in the 25 percent scenario), and 2 billion instead of 3 billion euros (in the 5 percent scenario). The military skills of the Bundeswehr would grow in the labor market in every scenario to the same extent as with conscription.
The costs of conscription would not be evenly distributed in society, but would primarily fall on the conscripts themselves. This is because conscription forces these individuals to adapt their educational and professional plans. "For non-conscripts, there are hardly any costs. This may explain why conscription is particularly popular among age groups that are not affected," explained Ifo expert Schlepper.
The FDP, which opposes the reintroduction of conscription, also argues with the numbers of the Ifo Institute. Defense Minister Boris Pistorius cannot understand this argumentation. He wished for a Finance Minister, who is also still a Major in the Reserve, to clearly see the needs of the troops. It is also not necessary to have an Ifo report to know that military service or conscription have economic consequences: "Defense, security has economic and social implications. I have always said that."
The German Armed Forces could face increased economic costs if compulsory military service is reinstated, as highlighted by the Ifo Institute's study for the Federal Finance Ministry. In contrast, funding the Bundeswehr with more resources could make it a more appealing employer and potentially reduce these economic impacts.
