The possibilities of reducing contributions in Slovakia

Last update: 03.08.2005 06:00

Reducing contributions is widely discussed among the public. This analysis brings many aspects of such a measure. The emphasis is laid at the same time on demand as well as offer effects. The material ambition is first of all the enhancement of current professional discussions in pursuit of finding an optimal system in securing three partially opposing objectives: to secure adequate assistance for people in need, increase motivation of people to improve their situation through work, and to reduce the public finance deficit to a long-term sustainable level. The following may be considered for main conclusions: reducing the contributions globally by a few percentage points appears to be a very effective tool for increasing employment; firstly, it is necessary to increase the motivation of low-income groups to become employed , at present there are also other priorities (for instance, reducing the deficit, or the Lisbon Strategy), which can be more important than symbolically reducing the contributions; removal of all deformations and a more significant reduction of contributions requires a system change, which, however, also brings its risks.