In order to promote employment, both general and targeted tax cuts have been proposed. Such cuts could affect income taxation, social insurance fees or value-added taxation. Cutting the tax bite by reducing the State's tax revenues and social insurance fees would further hamper the funding of social security. With the present funding structure, the high unemployment and pension costs necessitate high social insurance fees. So in the near future it will be necessary to achieve a balance between conflicting objectives.
Traps also have a negative bearing on the entire national economy.
If increasing the amount of work done does not result in economic gain, the labour supply shrinks. A smaller supply of labour tends to mean rises in wages, which in turn cut demand for labour. Traps and imbalance on the labour market may mean increased tax evasion and growth in the grey labour market. This, too, affects the funding of social security. The OECD Job Study points out that creation of low-paying jobs should not be promoted by means of tax reliefs or employment support measures, unless there is total conviction that major social advantages will be achieved.