However, the present system of taxes and transfers can, in some cases, stand in the way of higher labour force participation. For example, non-contributory inclusion in statutory health insurance makes having a job less worthwhile. On the other hand, these instruments are being used to pursue other political objectives which have to be weighed against the employment effect.
Only policy makers can find the balance. My point is to remind people that these measures make it less attractive to take on paid employment and can therefore cost us growth. This is a price we need to be aware of.