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Situation on the labour market in which the supply of labour exceeds demand, i.e. where people who wish to engage in gainful employment as employees are unable to find jobs. There is no general and unambiguous definition of unemployment. Although the international bodies try to establish standards, its definition and measurement differ widely from one country to another.

The indicator used as a measure of unemployment is the unemployment rate (Arbeitslosenrate), which expresses the number of people seeking jobs as a percentage of the available labour force. The definitions of both these quantities, and the methods used to calculate them, differ between institutions and have varied over time. In its OECD definition, the available labour force includes all economically active people (Erwerbspersonen), i.e. employees, the self-employed and the unemployed. The number of job-seekers is determined on the basis of both registration with the Employment Service and direct questioning in a microcensus using sampling. The unemployed register themselves for two reasons: for job-hunting purposes as a way of being placed in employment, and in order to claim unemployment benefit (Arbeitslosengeld). Since not all unemployed individuals are eligible for benefit (for example, school-leavers who haved not yet accrued entitlement and are therefore dependent on unemployment assistance), the number of people registered as unemployed differs from the number drawing benefit.

Up till 1994, in the microcensus conducted by the Austrian Statistical Office (ÖSTAT) employment and unemployment were determined according to the “subsistence concept”; anyone who normally worked at least 12 hours a week was classed as gainfully employed, while all those questioned who described themselves as unemployed were classed as such.

Following its accession to the European Union, Austria switched to using the “labour force concept” in its microcensus to measure employment and unemployment, as recommended by the International Labour Organization (ILO) and the Statistical Office of the European Communities (EUROSTAT). According to this concept, any person who engages in paid work for at least one hour a week or works in a family business as an assisting family member is classed as being in gainful employment. And any person without a job who during the past four weeks has actively sought employment and is available to take up any employment within two weeks is classed as unemployed.

The differences between these concepts are considerable. The effect is greatest in the case of the number registered as unemployed; in Austria they are allowed modest earnings as minimally employed workers up to a specified monthly threshold without losing entitlement to benefit from unemployment insurance. A similar delimination applies in the microcensus based on the subsistence concept, which allows up to 12 hours' employment a week. The employment rate turns out highest, and the unemployment rate lowest, when the criterion applied is the labour force concept, according to which just one hour's gainful activity a week counts as being in employment despite the fact that it does not constitute a livelihood, and those who are seasonally unemployed and drawing benefit but have the assurance of future re-employment and are therefore not seeking work are not counted as unemployed. Yet the census also includes people who are seeking jobs but are not registered.

In 1995 some 215, 700 people were registered as unemployed with the Employment Service, while the figure recorded in the microcensus was 173, 400 as calculated according to the subsistence concept and 143, 700 as calculated according to the labour force concept. The differences are due to people recorded as unemployed who have the assurance of future employment (51, 000) or are in minimal employment.

These differing concepts or recording unemployment also produce different unemployment rates. The tradition in Austria, because of the immediate availability of the data, is to express the unemployment rate in terms of the number of people registered as unemployed as a percentage of the combined number of people in employment as employees and unemployed. In 1997 its value as averaged over the year was 7.1%. Since its accession to the European Union, Austria has also published an unemployment rate harmonized with EUROSTAT which expresses the number of people classed as unemployed on the basis of the labour force concept as a percentage of all economically active people (the self-employed as well as employees, plus the unemployed). Its value for 1997 was calculated at 4.4%. The difference between the two rates is due firstly to the high seasonal component of unemployment (tourism) and secondly to the difference in the definition of the economically active population: in the pre-1994 Austrian definition the self-employed are excluded because the relevant data take longer to become available.

After recovering from the unemployment of the post-war years, in the 1960s and 1970s Austria had effectively full employment, with unemployment rates (as measured by the pre-1994 method) of 2.7% and 1.9% respectively. With the general downturn in growth during the 1980s it then followed the international trend of sharply rising unemployment. On average, unemployment (as measured by the pre-1994 method) reached 4.3% during the 1980s and 6.4% in 1990-97. By international standards, however, this is still relatively low; within the EU only Luxembourg has a lower rate.

There are several reasons why unemployment is lower in Austria than in comparable industrialized countries: 1) Combating unemployment has been a priority element of economic policy for longer than in other European countries (except the Scandinavian countries). 2) Since pay policy and monetary policy have always been harmonized, it has never been necessary to impose restrictive pay policies as an austerity measure. 3) Pay flexibility is in general relatively high in Austria and pay policy reacts flexibly to the labour market situation. 4) The dual system of vocational training (apprenticeship) means that youth unemployment is low. 5) The generous provision of early retirement pensions means that the activity rate of older people, and hence the risk of unemployment in the older age-groups, is low.

Please note: the European industrial relations glossaries were compiled between 1991 and 2003 and are not updated. For current material see the European industrial relations dictionary.
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