The government estimates that social security cuts encourage work, which raises tax revenue after a few years. If the cuts are reversed, this effect is lost.
Disputed assumption – may not work this way in reality
Economists disagree whether this effect works, and how strongly.
The government's estimate of employment effects is disputed: some researchers consider the effect much smaller, especially in a downturn when jobs are scarce. Part of the effect may also already be in the Ministry of Finance forecast, in which case it would be counted twice.
Of every 100 euros that a change to “Government's social security cuts” saves or brings in, 30 € comes in as extra revenue on the line “Personal income tax”, starting after 1 yr and building up to its full size over 3 yrs. (The other way round if the change adds spending or cuts taxes.)
Estimate; the Ministry of Finance gives a target of about 2 bn € from structural employment measures by 2027, but the share from benefit cuts is not itemised.
How the effect builds up over time
Share of the change's own effect on the balance, year by year while the change continues: −15% means 15% of a saving comes back as cost (or 15% of extra revenue is lost). With the default values.
You can switch the effect on or off and adjust its assumptions in the simulator under Cause-and-effect chains.