The national insurance system, in which footballers are required to carry a specific amount of personal insurance on their backs, is set to be abolished.
In a speech at a press conference in Berlin, German Chancellor Angela Merkel said the decision was a “no-brainer”.
“It is time to take back our national insurance and to bring our national policy to a new level,” she said.
“I am absolutely convinced that we have enough people to cover all our needs and we can take the first steps towards it.”
The announcement comes just days after the German government unveiled a plan to cut the number of people covered by the state’s pension system by 25% in 2019 and 50% in 2020.
The decision comes at a time when the economy is struggling to pick up, with the country’s unemployment rate hovering around 6.4% and a series of economic setbacks.
However, German media reported that Merkel’s decision to scrap the National Insurance is being backed by the government’s top financial official, Thomas Warburg, who said it would have a “major impact” on Germany’s future growth prospects.
“The decision is a no-brainer.
It will reduce the number and severity of claims, make it easier for businesses to pay their employees and ensure the quality of the public finances,” Warburg said.
He added that the German economy was “still in its early stages”.
“I’m convinced that the government can have a good impact on the growth of the German market and can deliver jobs to the country,” he said.
The move has been welcomed by many commentators, as it could have significant economic consequences in Germany.
Germany’s economy is currently in recession and unemployment is around 7%.
Germany is set for a budget deficit of about €10bn ($12.6bn) this year and the government is facing a looming shortfall of about £5bn, according to the IMF.
Earlier this month, a series and the German state’s largest pension funds have been hit by a series, including the German Federal Insurance Agency, the state pension fund and the state-run health insurance fund.
This comes as the country struggles to cope with a rise in violent crime, particularly on the streets of major cities, where the police and the courts are overwhelmed.
It comes just a week after the state budget cut the pensions of hundreds of thousands of public sector workers, which led to a rise of 2.7% in the unemployment rate in the country.
While the national insurance has traditionally been a mainstay of the welfare state, it has been gradually being dismantled in recent years.
Since the state was formed in 1922, it was set up to protect the interests of the people, which meant that the state received money from different parts of society to cover the needs of the population.
Its aim was to ensure that the people would not be left out, but rather to support the government.
But the changes made in the late 1970s to the system saw the state no longer receive funds from the taxpayer, but instead received payments from the private sector.
Now, instead of receiving money directly from the state, the government pays the money directly to private firms.
At the time, the changes were seen as a significant reduction in the public sector’s responsibility to the people.
Some commentators have also said that the changes are now “un-democratic” and are causing a loss of trust in the state.