1997 Annual Review for Austria

This record reviews 1997's main developments in industrial relations in Austria.


The economic situation in Austria proved stable in 1997, with growth rates reaching 2% in real terms. These are expected to rise further to 2.7% in 1998. Economic growth was largely export-driven as the increase in domestic incomes was limited. Inflation was reduced to 1.4% and is expected to remain at this level in 1998. The level of unemployment was steady at 4.4% and is expected to decrease only slightly in 1998. The budget deficit amounted to 2.5% of GDP, which is half of the 1995 level, and it is expected that this decrease will continue.

The political situation remained unchanged in 1997, with the Social Democratic Party (Sozialdemokratische Partei Österreichs, SPÖ) as the majority partner in a two-party coalition Government with the christian democrat Austrian People's Party (Österreichische Volkspartei, ÖVP). National elections are due in October 1999, but there are some indications they may be held in spring of that year. Industrial relations were marked by cooperation at the company level and considerable acrimony at the provincial and national level. Labour organisations experienced a sense of social policy "rollback", while employers' organisations were impatient with the costs of employment and the "density" of regulations.

Key trends in collective bargaining and industrial action

Minimum wages and salaries rose, on average, by 1.7% in 1997, with awards in agreements concluded in 1997 ranging between 1.5% and 3.0%. While sectors such as manufacturing averaged increases of 2.0% (AT9709130F), minimum salaries in the civil service remained unchanged and public transport workers achieved a rise of only 0.7%. Manufacturing and the public sector saw the continuation of a trend (AT9705112F) towards reforming salary grades, with the aim of reducing the impact of length of service on incomes, while maintaining lifetime incomes and keeping total salary costs stable. A new element was the introduction of a "distribution option" in a number of sectoral collective agreements (AT9801155F). This allows for individual companies, by agreement with their works council, to award a smaller general pay increase than agreed at sector level, but to make an extra payment to designated groups of workers, outside seniority considerations. This was particularly intended to benefit younger and female workers as well as key personnel.

Pension reform (AT9711144F and AT9712152N) was the only issue in several years to lead to strike action in Austria (AT9706117F, AT9707124N and AT9709132N). The civil service experienced the highest level of conflict, triggered by the pensions reform issue and by the Government's intention to reduce drastically the number of tenured positions. Industrial action, in the form of public protests, information campaigns and staff meetings, also took place in the tourism industry (AT9706120N).

The increase in the gap between the number of 15-year-olds leaving school and the number of openings for apprentices (AT9712153N and AT9801159F) provided cause for concern in 1997 and will continue to be an issue in 1998, before changes in the demographic situation begins to iron out such discrepancies.

Another prominent issue in collective bargaining was working time flexibility (AT9801156F and AT9702102F). Since progress was restricted to a few, albeit large industries, such as construction and metalworking, working time will remain a key issue for debate in 1998. This will be complemented by a reinvigorated trade union drive towards a 35-hour working week. Weekend and especially Sunday work was also an issue of some controversial public debate in 1997 and is set to remain on the agenda in 1998.

Industrial relations, employment creation and new forms of work organisation

After two years of reduction, employment grew by 0.4% between the annual averages of 1996 and 1997. However, one in six of the newly created employment relationships was part-time, and the queue for jobs effectively grew longer. In 1997, there were on average 12.3 registered unemployed people for every registered job opening, nearly 50% more than in 1995. Considerable employment growth and a reduction in unemployment is expected in 1998 with a particular focus on women.

Key figures for the Austrian labour market, 1995-7
1995 1996 1997
Labour force participation rate 75.4% 74.8% 74.9%
Change in employment level -0.1% -0.6% 0.4%
Part-timers as % of total employment - men 4.0% 3.7% 4.0%
Part-timers as % of total employment - women 27.1% 27.2% 28.4%
Unemployed people per vacancy 8.6 11.9 12.3

Sources: Central Statistical Office, Public Employment Service.

The number of employees earning less than ATS 3,880 (ECU 281) per month (ie those in "limited part-time employment") increased from around 100,000 in 1995 to around 170,000 in 1997 (AT9705115N) but is expected to decline in response to new social security regulations in force since 1 January 1998 (AT9711144F), which require such employment relationships to be covered by social insurance contributions at the request of the employee. Approximately 117,000 employees held a fixed-term employment contract at the end of 1997, and 270,000 individuals worked from home. The share of the labour force with at least one day of registered unemployment rose to over 23% in 1997. Efforts to reinsert long-term unemployed people into the labour market continued in 1997 but will be stepped up in 1998 in the context of the implementation of Austria's action plan for employment (in response to the EU employment guidelines).

Developments in representation and the role of the social partners

In 1997, the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB) strengthened its drive to reduce the number of its member unions from 14 to only three - covering manufacturing, services, and public service (AT9801161N) - hand-in-hand with a sustained membership drive. For the first time in its history, the ÖGB will probably have to face a competing trade union (AT9802166N) from 1998.

A new president was appointed to the Federal Chamber of Labour (Bundesarbeitskammer, BAK) in 1997, after his predecessor became Minister of Labour. The Austrian Chamber of the Economy (Wirtschaftskammer Österreich, WKÖ) had to face a challenge to its funding, but was vindicated by the European Court of Justice (ECJ). Membership in chambers is compulsory, and all chambers had to conduct a referendum among their members in 1996 to prove continued acceptance among the membership.

Industrial relations and the impact of EMU

Austria met the criteria for EMU and is set to join the single currency in the first wave. Because of the relatively recent entry of the country into the European Union, the question of the impact of EMU on the economy was more widely debated at the time of entry (1995) and is less topical at the present moment, apart from discussions over the consequences of budgetary stringency on employment opportunities, particularly in the public sector.

Conclusions and outlook

Industrial relations were marked by a great deal of activity, a number of highly controversial issues, and also by novel departures. Wage rises were moderate, unemployment remained stable, and the Maastricht convergence criteria were met. The contribution of the social partners to these achievements were of key importance. Issues which are set to continue to occupy policy-makers in 1998 are the implementation of employment programmes for disadvantaged groups, the lack of apprenticeship positions for young workers and the flexibilisation of working hours.

(August Gächter, Institut für Höhere Studien)

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