The legal position of foreign nationals

The Austrian Government has suggested sweeping changes to five laws defining the rights and obligations of foreign nationals. These alter the bargaining power of foreign employees and job seekers, in turn also affecting the bargaining power of Austrian nationals.

On 13 March, after long debate between ministries, trade unions, and provincial governments, the national Government submitted a reform package covering the Arbeitslosenversicherungsgesetz(Unemployment Insurance Act), the Fremdengesetz(Aliens Act), the Aufenthaltsgesetz(Residence Act), the Ausländerbeschäftigungsgesetz(Aliens Employment Act), and the Asylgesetz(Asylum Act). The aim is to homogenise the laws, to reduce immigration to an absolute minimum compatible with human rights and the Geneva Convention on the Rights of Refugees, and to improve the integration of the resident foreign population. The reform package is now open to public debate, and will be submitted to Parliament before the summer. Changes are intended to take effect as of 1 January 1998.

The current situation

Foreign nationals are estimated to make up 9% of Austria's population. Third-country nationals (ie, from outside the European Economic Area) are estimated to comprise 7.8% of the population, around 10% of the employable population, and 8.1% of the labour force (employed plus unemployed). In a number of areas they are legally distinct from Austrian nationals:

  • they can vote in works council elections but they do not have the right to stand for election. The same is true of the five-yearly Chamber of Labour elections. An identical limitation is contained in the statutes of all 14 trade unions;
  • while foreign nationals have to contribute to unemployment insurance in the same manner as Austrians, their entitlement to benefits is restricted. In the event of unemployment, 43% of third-country employees are entitled to between 72 and 104 weeks of benefits, around 22% to 30 weeks, and around 27% to 20 weeks. As among Austrian citizens, about 8% have no entitlement. Austrian nationals, by comparison, if they remain willing and available for work, have in effect an entitlement of unlimited duration;
  • the right for all members of the same household to remain in the country is conditional upon proving that the household's income per capita remains above the threshold that would trigger subsistence support. If household per capita income falls below this level, or if the household's per capita living space falls below what is deemed common locally, all household members lose their residence permits; and
  • over and above the residence permit, third-country nationals require a labour market permit, if they want to work. Access to such permits has been limited to narrowly defined groups, especially key personnel, Bosnians, and young people under certain conditions.

The first three points are true regardless of the duration of residence, age or place of birth.

The time constraint imposed on foreign unemployed people has an impact on the employment relationship. The constraint stems partly from the curtailed duration of benefits, but more importantly from the danger of becoming destitute once benefits run out, with the attendant danger of expulsion. This lack of residential security is the pivot of the whole Austrian system of immigrant employment. It translates into pressure to find a new job quickly and to hold on to the job as long as possible.

Research at the Institute for Advanced Studies (IHS), Vienna, suggests that this pressure is likely to contribute in an important way to the comparatively low unemployment rate of foreign nationals, and to the recently observed lack of wage assimilation after more than two years of residence in Austria. Further, it is thought to make foreign employees more accommodating in the employment relationship, thus explaining at least part of the tendency regularly reported by the Central Statistical Office for immigrant workers to be found in jobs with greater health risks.

A recent study by the Institute for Economic Research (WIFO) observes that the link between income and residency rights means that continued residence becomes part of the wage, and foreign nationals will accept a deduction from the money wage in return for it. This can usefully be labelled "social dumping". As with all such dumping, it poses a danger to the employment, incomes, and working conditions of local workers, who then need to be protected against it. So far this has been done by limiting the number of foreign nationals, resident or not, permitted access to the labour market. The alternative route, removing the legal causes of the social dumping, has not been considered.

Proposed changes

The last three of the four points above are addressed by the proposed legislative changes. It became necessary to complement the equal obligations described in point two with equal rights after the European Court of Human Rights, in September 1996, declared current Austrian law incompatible with the European Convention for the Protection of Human Rights and Fundamental Freedoms. The proposed new regulations maintain a distinction between initial benefits (Arbeitslosengeld) -- to which access was always equal -- and further benefits (Notstandshilfe) where access and duration depended on citizenship. Now access to further benefits will be independent of citizenship, but it will be based on other criteria. A claimant will have to fulfil one of the following four criteria in order to qualify:

  • be born in Austria;
  • have made eight years of payments into the unemployment insurance fund during the last 10 years;
  • be under 25 years old, have received half their compulsory schooling in Austria and have finished school in Austria; or
  • have spent half their life-time in Austria.

For all who qualify, benefits will in effect be of unlimited duration.

It is expected that a sizeable proportion of the naturalised population - and especially EEA citizens - will lose entitlements to further benefits they have had so far. The same will be true of a small number of non-naturalised Austrian citizens and of a share of the foreign nationals who had a limited-duration entitlement to further benefits (ie, of those entitled to between 72 and 104 weeks of benefit until now). On the other hand, some foreign nationals with only limited-duration access to further benefits will now have unlimited access, and some will gain access for the first time. On balance, the results are likely to be favourable for younger and older foreign nationals, and to be detrimental for the middle age bracket.

Residence rights will become less secure for recent immigrants and more secure for earlier ones:

  • foreign workers, during their first year of settled residence, will be ordered to leave the country, if they accumulate more than four months of non-employment while they were available for work;
  • after the first year, until the end of the eighth, they will be ordered to leave, if they remain without work for more than 12 consecutive months. This can be avoided, if they change their residence permit to a non-work purpose before the end of the 12 months. This would be commensurate with an exit from the labour market. Re-entry would be difficult;
  • whether workers or not, during the first five years of residence foreign nationals will be ordered to leave, if they become destitute;
  • in the sixth, seventh and eighth year, destitution will result in expulsion only if the person does not exhibit the wish to work for his or her support, or the authority deems it impossible that the person could return to work; and
  • after eight consecutive years of residence, neither destitution nor lack of employment can result in expulsion.

During the first eight years, residence will now be less secure than hitherto, especially for workers. Afterwards, security will be substantially greater than up until now. In addition, persons with more than eight consecutive years of residence will in future be included among the groups with access to the labour market. The eight-year limit was chosen deliberately with reference to the major immigration that began in 1989 bringing in workers in 1990, family members in 1991 and war refugees from 1992 until 1994.


Workers with less than eight years of residence will be under more severe pressure than before to be accommodating in the employment relationship. Their tolerance for poor working conditions, low wages, withheld overtime payments, excessive hours, high working time flexibility and so on will grow accordingly. In this way the pressure on other workers of whatever nationality will also be increased. However, it is the clear aim of current legislation as well as the proposed changes to reduce new immigration to near zero. In due time, around 2002, the number of non-EU foreign nationals with less than eight years of residence will become very small.

Workers with more than eight years of residence will now be able to avoid dangerous, unhealthy and poorly-paying employment as well as degrading treatment. To the degree that they will make use of this opportunity, they will be relieving the pressure on all workers to accept poorer conditions. By the same token they will be unemployed in greater numbers than before.

Clearly the package proposed takes a long-range view. Over a period of four to six years it attempts to create a relatively homogeneous labour market by strictly limiting new immigration and tying a coherent bundle of rights to a threshold duration of residence. Meanwhile, any new immigrants will at first be in a very insecure position. A market-driven selection process with narrow tolerances will designate those to be expelled from the country. The Government, in this way, hopes to reduce racism and to stymie any efforts by the extreme right to further make use of the immigration issue. It is likely to discover that more is needed than closing and "maturing" the labour market. Positive measures facilitating the progress of immigrants into the middle class will be necessary, as will a constructive approach to the presence of illegal immigrants. Both problems are now completely denied. (August Gächter, IHS)

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