The solidarity premium model

A new scheme for reducing unemployment in Austria was agreed in November 1997. It attempts to encourage workers to reduce their working time, thus allowing room for the recruitment of additional part-time employees. Collective agreements will be required to implement the scheme.

Austria's current pensions reform aims to reduce the level of early retirement. However, since the late 1970s, early retirement has been serving as the main means to reduce the labour market participation rate among older workers and thus make room for younger workers who would otherwise have been unemployed. With early retirement now being squeezed, the social partners and the Government have been looking for other measures to keep the participation rate among older workers, and thus unemployment, at a relatively low level. A new device - in the Austrian context - is a greater use of part-time work, especially among men, which does not take workers off the labour market altogether but reduces their hours of presence within it. As part of this effort, the Government and the social partners agreed in November 1997 to create, by law, the so-called "solidarity premium model" (Solidaritätsprämienmodell).

Under the new scheme, groups of workers can reduce their working time in order to create an additional part-time position. If a worker receiving unemployment benefits is recruited for this new position, all involved will receive a "solidarity premium". The amount to be distributed will be equal to the savings in unemployment benefits from the creation of the new part-time position. In addition, the company receives an "integration subsidy". The participants will be protected from dismissal for having reduced their working time. Collective agreements will be required for the introduction of the scheme, probably at sectoral level and specifying conditions for the applicability of the scheme and for concluding works agreements.

The Government expects additional employment of about 1,000 people through this model in 1998, half of whom, it is hoped, will be recruited from the pool of long-term unemployed people. The net cost is expected to run at about ATS 39 million. The precise cost per case will depend on the level of the previous benefit entitlement: the higher it was, the lower will be the net cost. The model has been in the making for about three years.

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