Introduction of household services cheque, Austria
In order to increase legal activity rates in the private household services sector, which is characterised by a high degree of illicit employment practices, the Austrian government introduced the ‘household services cheque’ initiative in 2005–2006. As well as curbing undeclared work, the scheme aims to improve the social protection of the workers concerned. The scheme enables people using household-related services to pay for these by special cheque instead of cash – including some social insurance contributions. Results from an evaluation of the scheme have been interpreted quite differently by the various actors involved.
In Austria, household services, such as childcare activities, domestic cleaning and home maintenance have traditionally been carried out mainly by undeclared household workers. According to estimates of the formerly-named Federal Ministry of Economy and Labour Affairs (Bundesministerium für Wirtschaft und Arbeit, BMWA), in 2006 only slightly more than 10,000 out of more than 150,000 household workers were legally employed in terms of both labour and social insurance law on the one hand and – with respect to foreign workers – both work permit and residential status on the other hand (EIRO, 2006).
In light of this, the federal government decided to introduce a ‘household services cheque’ (Dienstleistungsscheck) with the aim of tackling undeclared work in the household services sector. The initiative also aims to improve the social protection of the (mostly female and foreign) workers concerned. Whereas the employer organisations largely supported the initiative, the trade unions opposed it. Under the Household Service Cheque Act (Dienstleistungsscheckgesetz, DLSG), the Main Association of Social Insurance Providers (Hauptverband der Sozialversicherungsträger, HSV), as the umbrella organisation for all of the country’s social insurance institutions, is obliged to select one institution to take charge of administering the scheme; finally, HSV appointed the Insurance Associations for Railway and Mining Workers (Versicherungsanstalt für Eisenbahnen und Bergbau, VAEB) as being the relevant ‘competence centre’.
The government aimed, in the mid 2000s, to tackle the informal economy in the household services segment of the private services sector. The then Minister of Economy and Labour Affairs, Martin Bartenstein, claimed that a new legislative instrument should be introduced with the aim of decreasing illegal activities in this problematic segment of the labour market.
As a consequence, in 2005, the DLSG was drawn up by BMWA and subsequently passed through the parliament. This act, which came into effect on 1 January 2006, enables people using household services to pay for them by special cheque – including injuries insurance contributions – instead of in cash. In practice, this means that people using such services – that is, ‘quasi-employers’ – have to buy ‘household services cheques’ prior to engaging a household worker. The cheques are available for sale at larger post offices and tobacconists’ shops. By paying for the service with the cheque, the (quasi-)employer has fulfilled all social insurance obligations on behalf of the worker who – for his or her part – has to submit all the cheques received for the work carried out at the end of the subsequent month to VAEB. The latter is in charge of administering the new scheme, which includes the conversion of the submitted cheques into cash to the benefit of the household workers. Each voucher has a fixed value of either €5 or €10. Vouchers with any other value have to be ordered directly from VAEB. This means that the household worker can be paid at the end of the month with a certain number of fixed-price vouchers to the value of €5 or €10 or with a voucher worth any other amount to be ordered from VAEB.
The scheme applies in particular to childcare, care of elderly people, simple gardening work, domestic cleaning and home maintenance (EIRO, 2005). It is important to note that these services have to involve simple, ‘assistant’ work that does not require any higher skills associated with recognised occupations such as professional childcare or nursing activities. The use of the cheque is based on the principle of voluntarism. This implies that pay rates can be freely agreed by the two parties involved; however, a minimum pay threshold has been set equivalent to the minimum pay scale under the Domestic Servants Act (Hausgehilfen- und Hausangestelltengesetz). This means that pay must be at least as high as this minimum pay scale plus 25% (relating to special payments) and 9.6% (relating to payment in lieu of holiday pay. Depending on province (Bundesland) and actual work performed, hourly pay rates, in 2008, had to exceed €8.30 for simple domestic cleaning work and amount to up to €14.60 for demanding care work.
Under the new scheme, the household worker is insured only against accidents if the monthly pay represented by the cheques submitted does not exceed a certain monthly limit, amounting to €478.10 in 2008. If monthly pay exceeds this threshold, which is only possible when the worker is paid by at least two employers, the worker is automatically and compulsorily covered by health and pension insurance. Social insurance contributions of 14.7% on behalf of the employee have to be paid directly by the employee. In the event that monthly pay remains below the threshold of €478.10, the worker may opt for voluntary health and pension insurance with flat-rate social insurance contributions of €49.25 a month.
It is important to note that the household services cheque scheme applies only to people with free access to the national labour market. This means that the scheme is not devised to convert current illegal situations into legal activity, but to create incentives for employers to engage household workers legally.
Evaluation and outcome
Achievement of objectives
The original aim of the new scheme was to facilitate and promote legal ‘quasi-employment’ in the area of household-related services and to help establish a ‘real labour market’ with ‘real prices’ for private household services. According to BMWA, this goal has largely been achieved. An evaluation of the scheme’s acceptance in the first year of applicability revealed that at the end of 2006 (one year after it had come into effect), some 2,060 workers and 2,310 quasi-employers had used the special cheque scheme. Moreover, the evaluation report indicates that most users of the scheme had positive experiences with this kind of ‘employment relationship’ and would recommend it to other people. However, the evaluation study also found that household-related services are most frequently carried out illegally by foreign nationals who are explicitly and deliberately not affected by the scheme. The trade unions and the Chamber of Labour (Arbeiterkammer, AK) have firmly questioned whether these results of the evaluation procedure can be seen as a success in terms of effectiveness. In the autumn of 2008, the Styrian Economic Chamber (Wirtschaftskammer Steiermark) also showed disappointment about the low rates of the scheme’s use and recommended a substantial amendment to render it more attractive.
Obstacles and problems
According to the AK and the vida trade union, the aim of legalising employment relationships and providing for more labour law protection to the benefit of the workers concerned have not been achieved. This is because the househeld services cheque scheme does not entail any entitlement to unemployment benefits or future pension benefits. Moreover, it does not include any provisions in terms of an entitlement to sickness benefits and claims on leave, nor with respect to periods of notice in the case of employment termination. Therefore both the AK and vida have criticised this scheme and have described it as a second-rate employment relationship without sufficient protective provisions, affecting mainly women who represent the overwhelming majority of workers in this labour market segment. Moreover, the scheme is deemed not only by organised labour, but also many non-governmental organisations (NGOs) engaged in welfare and social services, as an inappropriate instrument for curbing illegal employment. This is because the vast majority of household workers are employed on an illegal basis, most of them foreign nationals without any work permit, and therefore explicitly excluded from the scheme’s scope.
Federal Ministry of Economy, Family and Youth (Bundesministerium für Wirtschaft, Familie und Jugend, BMWFJ) – formerly BMWA
Insurance Associations for Railway and Mining Workers (Versicherungsanstalt für Eisenbahnen und Bergbau, VAEB)
Chamber of Labour (Abeiterkammer, AK)
Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB)
Austrian Federal Broadcasting Company (ORF), Dienstleistungsscheck floppt, September 2008, available online at: http://steiermark.orf.at/stories/304164/.
European Industrial Relations Observatory (EIRO), ‘Controversy over effectiveness of new household services cheque’, 2006, available online at: /ef/observatories/eurwork/articles/controversy-over-effectiveness-of-new-household-service-cheque.
EIRO, ‘Government proposes household service cheque to combat undeclared work’, 2005, available online at: /ef/observatories/eurwork/articles/government-proposes-household-service-chequeto-combat-undeclared-work.
Georg Adam, Department of Industrial Sociology, University of Vienna