Both employment and unemployment rose simultaneously in Austria in 1998. This poses a difficult challenge for the country's National Action Plan for employment, drawn up in response to the EU Employment Guidelines, as it reveals that some of the Plan's most important and ambitious goals - to raise the level of employment and reduce the rate of unemployment - may prove to be consistent in theory but incompatible in practice.
In 1998, the number of people in employment in Austria rose by 22,000 or 0.7% to 3,077,000 on annual average. At the same time, unemployment also rose, with the annual average standing at 237,794, up from 233,348. History thereby repeated itself: over the period that the economy was growing at an annual average of 3.85% between 1988 and 1991, unemployment was scarcely reduced in the first two years and actually increased in 1990 and 1991. This poses a challenging background for Austria's National Action Plan (NAP) for employment (AT9804180N). As with the other EU Member States, Austria has drawn up an NAP in response to the Employment Guidelines.
Quantitative goals for the National Action Plan
In addition to others targets, the NAP was given seven quantifiable goals:
- to raise employment by 100,000 by the year 2002;
- to reduce the unemployment rate to 3.5% by 2002 from the current rate of 4.5%;
- to include 20% of unemployed people in reintegration measures by 2002;
- to halve by 2002 the proportion of unemployed people aged under 25 remaining jobless for more than six months, and of older unemployed people remaining jobless for more than 12 months;
- to create an additional 18,000 places in childcare facilities, for which purpose ATS 600 million is to be spent in 1999
- to reduce the proportion of all 20-24 year olds with only basic education to less than 15% in the medium term and to less than 10% in the longer term - the goal applies, by implication, to both males and females as individual categories; and
- to create by 2000 an additional 4,000 apprenticeship positions.
The first goal, forecasters felt, would be taken care of by economic growth. Since then, regional economic crises have begun rippling around the world and growth forecasts have been revised downwards. The Austrian economy produces growth in jobs only when growth in Gross Domestic Product (GDP) exceeds about 2.5%. While this actually happened in 1998, even optimistic forecasters predict only 2.7% for 1999, although it might rise again in 2000.
As events in 1998 made clear, the second goal may not be reached, even if the first one is, or particularly if it is. Only at rates of growth of GDP between roughly 2.5% and 3.5% does the rate of unemployment begin to drop in Austria, but when growth is above or below that rate it increases. Paradoxically, unemployment rises at growth rates of 3.5% or above as high growth induces people to enter the labour market who were not before looking for jobs. However, with current GDP growth rates consistently below 3.5%, the 2002 employment target may remain out of reach.
To achieve goals three and four the budget for active labour market measures is being increased from ATS 5.7 billion in 1996 to ATS 8.6 billion in 1999. Of the latter, ATS 0.5 billion is being specifically earmarked for the implementation of the NAP.
Budgeting for the fourth goal was calculated on the basis of including 21,500 people in some sort of course before their unemployment became long term. This is exactly half the number of unemployed people who crossed the threshold in 1997. There is no guarantee that they will find jobs after the course.
On goal six the NAP does not specify how this is going to be achieved. The rate of 20- to 24- year olds with only basic education is currently over 20%. It is unclear how a higher education school system unadapted to the needs of the children of immigrants (who are disproportionately represented in this group) is going to absorb them, as would be necessary were the 15% and the 10% goals to be reached.
To shore up the number of apprenticeship positions in 1998-9 and 1999-2000, as envisaged in goal seven, ATS 2.55 billion has been budgeted.
Employment service
Much of the implementation of the NAP will depend on the Public Employment Service (Arbeitsmarktservice, AMS). Its federal management has repeated several times that the funds allocated to the NAP will not enable it to reach the goals. The AMS is expected to have been about ATS 900 million in the red in 1998 - the first time it has displayed such a deficit since it was separated from the civil service in 1994. This is partly a late effect of the apprenticeship drive in 1997 (AT9807197F).
In Vienna, the trade unions have been publicly casting doubt on the ability of the provincial head of the AMS. They are actively working to dislodge him and make no bones about it. His defenders claim that the AMS or its personnel cannot be held responsible for structural unemployment, and that neither can they solve it. The problem in Vienna is a persistent decline in the number of jobs. This is a problem belonging to the realm of state policy making.
Commentary
Critics have said that the four central problems of the Austrian labour market are: the unemployment of older workers; the low participation rate of women and older workers; wide differentials in incomes; and an excessive degree of seasonal unemployment. There may also be an element of involuntary part-time working. None of these issues are addressed by the NAP and certainly not in an operational way (according to a report by the BEIGEWUM social research group, Der NAP ist da! Wo bleiben die Jobs?, Vienna, 1998). The critics, in line with the European Commission, also allege that the NAP is short on quantified goals and unspecific on implementation, and attribute its vagueness to the fact that the social partners and the government compromised on language, rather than on policies.
The social democrat ministers in the Government, while not sparing the AMS, have announced that they will scrutinise any new legislation for its effects on employment. However, such scrutiny will do little to address structural unemployment. Vast quantities of existing legislation would have to be subjected to this exercise were it to be of any service.
A degree of scapegoating is discernible in public statements on employment policy. Central banks and employment services are being accused of serving their own causes at the expense of employment. In the past, when employment and unemployment grew simultaneously, policy makers either stayed quiet about it, or, when the opportunity arose, as in 1990 and 1991, claimed unfettered immigration to be the culprit. The latter pretext, given lack of immigration, is impossible on this occasion. (August Gächter, IHS)