Labour market developments and proposals

During 1999, Austria has experienced a considerable rise in employment and a further decline in unemployment. The social partners have drawn up proposals aimed at further developing these trends

The Austrian government took major initiatives during its Presidency of the EU in the second half of 1998, in order to make employment/unemployment issues a top priority at EU level. In line with the agreed EU Employment Guidelines, the Austrian government has pursued a National Action Plan (NAP) in 1998 (AT9901120F) and 1999. In 1999, ATS 11.15 billion has been allocated for NAP programmes.

Austria's social partners - the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB), the Chamber of Labour (Bundesarbeitskammer, BAK) and the employers' organisations, the Chamber of the Economy (Wirtschaftskammer Österreich, WKÖ) and the Federation of Austrian Industry (Industriellenvereinigung, IV) - jointly contributed to drawing up the NAP in 1998. Furthermore, the social partners are represented in the governing board of the Public Employment Service (Arbeitsmarktservice, AMS) and in its directorates in the federal states (Länder), which are implementing many of the NAP projects.

In 1998, the development of the Austrian labour market was still ambiguous, as employment increases were accompanied by an increase in the unemployment rate. In 1999, the unemployment rate (under the Austrian definition) declined gradually during the first half of the year and has stabilised at around 5.4% since June. Using the EU definition, the unemployment rate declined by 0.5 percentage points over the year to 4.2% in September. Employment rose by 1% in the year to September and currently stands at 3.15 million. The EU's 1999 Joint Employment Report gives a positive assessment of Austrian employment policies, and it is notable that by the end of June 1999:

  • unemployment had declined by more than 20,000 in absolute figures, with women and young people benefiting particularly. The decline in unemployment has affected nearly all sectors and age-groups, while unemployment among older people has virtually stopped increasing; and
  • employment had increased by 34,000, with women again benefiting. The number of vacancies had increased by 40%.

Against this background of a positive trend in the Austrian labour market, ÖGB and WKÖ have drawn up relatively comprehensive proposals on how to deal with the unemployment problem and increase employment, in line with the EU Guidelines and in response to the Austrian NAP.

ÖGB proposals

In principle, ÖGB agrees with the EU Guidelines and has developed several proposals in connection with them. However, it regards the existing Guidelines as insufficient to promote effective employment programmes because they focus too much on labour market measures. Both ÖGB and BAK support a more comprehensive approach that integrates labour market policy into other policy fields (ie economic, social and technology policy). Additional measures are proposed, including:

  1. investments in infrastructure;
  2. a tax reform that stimulates demand and mass purchasing power;
  3. "strategic ownership", whereby the state-controlled company which holds shares in many large companies should guarantee that production facilities are maintained in Austria, when decisions about production locations are to be made;
  4. following EU enlargement, there should not immediately be complete free movement and granting of work permits for workers from new eastern European Member States, until the main differences in wages and social standards with the rest of the EU are diminished; and
  5. further controls and sanctions to fight clandestine employment.

In order to carry out the proposed labour market initiatives, ÖGB demands additional financial funds of ATS 3.5 billion for the AMS.

WKÖ proposals

WKÖ has presented a 15-point programme related to the Employment Guidelines. Its most important proposals concentrate on three of the areas covered by the Guidelines:

  1. making it easier to start up businesses. WKÖ wants to foster a social climate that is favourable for entrepreneurs. There should be tax relief where companies are handed down from one generation to another, the administrative procedures related to setting up enterprises should be simplified, and financial means should be provided for those starting up in business;
  2. making labour markets more flexible. There should be more flexible arrangements regarding working time and wages within companies, certain protective working regulations should be loosened and adjustments should be allowed for specific groups or branches (such as apprenticeships); and
  3. exploiting new opportunities for job creation. Services to households and care services should be tax-deductible, VAT should be cut on labour-intensive services, new professions should be developed in the fields of new technologies and the media, and all aspects of business services should be stimulated, especially in the field of exports and "internationalisation" among small- and medium-sized companies.

Commentary

Recent labour market developments in Austria have not yet been subject to scientific investigation. Though the above observations indicate a relatively broad reduction of unemployment, it still remains to be seen whether recent developments mean a substantial change or just an easing of tensions in the labour market. The Austrian government states that the progress observed is a consequence of its NAP, but the employment effects of the plan have not yet been analysed. Several crucial features about the Austrian employment situation are still apparent: first, a considerable share of seasonal unemployment is found in the development of the unemployment rate; and second, about three-quarters of unemployment is structural and only one-quarter is related to the business cycle.

In consequence, both ÖGB and WKÖ seek measures to be taken by the state, in order to deal with these circumstances, although their policy focus differs. WKÖ's main proposals are aimed at strengthening the competitiveness of the Austrian economy, and employment policies are regarded primarily as business-promoting policies. ÖGB accepts certain demands of businesses, primarily a simplification of the process of starting up businesses. Furthermore, a consensus can be observed on numerous issues - both ÖGB and WKÖ support the introduction of new occupations in several business branches, for instance. However, some ÖGB proposals require a broader involvement of the state, such as comprehensive protection standards for all dependent employees and specific measures for women.

There are also proposals which are likely to bring about debate. A central question is how to obtain greater flexibility in wages and working hours and allow for further company-specific agreements. The Austrian unions concede that they should make compromises within collective agreements, but make clear that concessions should not worsen collective security for employees, and emphasise the voluntary nature of any further flexibility measures for the groups concerned. Some aspects of greater flexibility have been already agreed upon in the NAP.

The implementation of most programmes under the NAP depends primarily on projects run by the Public Employment Service (AMS). In the past, there has been discussion especially about the amount of funds allocated to the NAP and its ability to achieve the goals laid down. However, the role of the AMS is also still quite controversial. WKÖ claims that AMS's programmes are generally not tailored to respond to the specific problems of the Austrian unemployment situation, and that its programmes should concentrate especially on low-qualified and disadvantaged groups with few chances of entering the labour market (Angelika Stueckler, University of Vienna).

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