New pension reform plans heavily disputed

Substantial reforms of the pensions and welfare system are underway in Austria. Proposals presented in January 2000 as part of coalition talks over the formation of a new government were met with substantial trade union opposition. Due to planned expenditure cuts, the debate over social policy is likely to continue in the future.

After three months of discussion following the general election in October 1999, a coalition agreement was finalised between the Social Democratic Party (Sozialdemokratische Partei Österreichs, SPÖ) and the conservative People's Party (Österreichische Volkspartei, ÖVP) in late January 2000. In the negotiations, plans for a reform of pensions were a key issue, with the aim of reducing public spending on pensions. However, the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB) strongly rejected the proposed changes after they were presented. Consequently, severe disputes between representatives of ÖGB, SPÖ and ÖVP followed. Trade union officials in the public sector affiliated to ÖVP also rejected other parts of the coalition agreement, as considerable cuts in public administration expenditure were announced. These disputes were claimed to be one major reason for the subsequent failure of the proposed renewal of the SPÖ-ÖVP coalition.

The failed coalition agreement contained an increase in the retirement age by two years, to be implemented within a relatively short time period. This measure aimed to stop the massive increase in early retirement which has occurred during recent years and made huge contributions from the federal budget to the pension scheme necessary.

ÖGB supports a stable government, but presented views on pension reform which were contrary to those in the coalition agreement.ÖGB rejects companies' strategy of dismissing older and often more expensive employees, who are rarely able to find a new job and then apply for early retirement as a consequence. In ÖGB's view, a change in the attitude of management is necessary to deal with this problem. Furthermore, specific employment-promoting measures should be utilised to support the employment of older people, as has already been attempted in Austria's National Action Plan (NAP) on employment in 1999 (AT9903135F). Apart from this, however, the unions accept the necessity of reform of the pension system, while demanding a sustainable reform, in which employees can have confidence. Furthermore, ÖGB regards a rise in the retirement age as a problem especially for female employees, who already face severe difficulties in the labour market due to childcare responsibilities and the trend of early dismissal of older female employees.

Discussions and disputes with regard to pension reform and other fields of social policy are likely to be prolonged, since the new government coalition formed by ÖVP and the populist Freedom Party (Freiheitliche Partei, FPÖ) in February 2000 announced cuts in public contributions to the pension system in combination with other social welfare reforms and tax increases.