New regulations increase part-time work among older employees

In 2000, new statutory provisions on part-time work for older employees were adopted in Austria as a means of combating unemployment among this group. By autumn 2001, these regulations, in combination with complementary collective agreements, have resulted in a high level of take-up of the part-time work scheme, which has attractions for both older employees and their employers.

Since 2000, new statutory provisions on part-time work for older employees (Altersteilzeit) have been in operation in Austria (TN0109184S). These provisions were enacted in connection with a pension reform (AT0008228F) which increased the age at which an early retirement pensions can be claimed. The new provisions on part-time work were devised to reduce the risk of unemployment among older workers resulting from this reform. The basic principle of the new regulations on part-time work is that older employees can reduce their working time without damaging their entitlements concerning pension and severance pay. Furthermore, the Public Employment Service (Arbeitsmarktservice) provides for income compensation, so that the income levels of the workers concerned remain unaffected, unless they exceed a certain upper limit.

Regulations and link with collective bargaining

The regulations on part-time work for older workers are laid down in § 27 of the Unemployment Insurance Act (Arbeitslosenversicherungsgesetz) and in § 37b of the Public Employment Service Act (Arbeitsmarktservicegesetz). Most essentially, they define the prerequisites for establishing part-time work for older employees. Accordingly, the regulations can be applied to women from the age of 50 and to men from the age of 55, for a maximum duration of 6.5 years. The working time of the employees concerned must be reduced to 40%-60% of the standard working week. Furthermore, a collective agreement, a works agreement (between management and works council) or an individual contract must be concluded in order for the scheme to be applied. The law also prescribes certain provisions these agreements have to contain. Above all, this includes the following rules:

  • an employee who shifts from standard working time to part-time work must receive a compensation of at least 50 % of the loss of income caused by the shorter working time, as compared with the standard working time. There is, however, a ceiling for the amount of compensation, which is set at the upper limit of earnings liable to social insurance contributions (Höchstbeitragsgrundlage in der Sozialversicherung);
  • the amount of social insurance contributions the employer is obliged to pay does not change, in that this is still calculated on the basis of the standard working time, regardless of the employee's move to part-time work; and
  • the amount of severance pay the employee is entitled to receive after termination of the employment relationship is also still calculated on the basis of the standard working time, regardless of the employee's shift to part-time work.

The employer receives a subsidy for this kind of part-time work (Altersteilzeitgeld) from the Public Employment Service which compensates for the employer's wage costs, above those proportional to the employee's new working time, caused by the provisions set out above.

Incidence of part-time work under new regulations

Following the introduction of this legislation, collective agreements on part-time work for older employees were concluded for the following sectors: the metalworking industry (white- and blue-collar employees); the chemicals industry (white- and blue-collar employees); the textiles industry (white- and blue-collar employees); the wood-processing industry (white- and blue-collar employees); the food-processing industry (white-collar employees); the leather industry (white-collar employees); the industrial manufacture of electrical and electronic equipment (white-collar employees); electricity supply (white-collar employees); airports (white-collar employees); the paper and pulp industry (blue-collar employees); and the oil industry (blue-collar employees).

These agreements set a framework for contracts on part-time work which are then concluded between the employer and the individual employee involved. The content of the agreements is highly standardised since their provisions explicitly refer to the underlying statutory regulations. Hence, each collective agreement contains the provisions already mentioned. However, the agreements usually add other provisions. The following are relatively widespread:

  • flexible working time is possible, in particular an arrangement under which the employee continues to work on a full-time basis for a period and accumulates compensatory time off which is then used for a period of total time off work until the employee is entitled to receive an early retirement pension;
  • recommendations on providing for the possibility of a return to full-time work under certain conditions. In particular, this includes important personal reasons on the side of the employee, a waiver of the employer's obligation to return the subsidies already received for the part-time work arrangement, and the absence of any conflict between the employee's return to full-time work and company requirements; and
  • the works council must be informed before an employer and employee conclude an individual contract on part-time work.

The spread of collective agreements on part-time work indicates that the underlying legislation has been accepted by the social partners. This broad acceptance also applies to individual employers and employees. The number of employees who have taken the opportunity to shift to part-time work significantly exceeds what was originally expected. The scheme was estimated to create annual costs of ATS 170 million for the Public Employment Service (implying a total number of about 1,000 employees using it). By contrast, the actual incidence of part-time work under these regulations, as recorded up until summer 2001, will cost approximately ATS 3 billion.

Commentary

The new regulations have significantly stimulated part-time work among older employees since they meet the interests of both employees and employers. Older employees can enjoy more leisure without facing corresponding losses of benefits and income. Employers can use the scheme for economic restructuring and socially acceptable staff reductions. This is because employers are not obliged to replace the older employees working part time. Hence, the new regulations do not simply work as a means of combating unemployment, but in fact meet other goals as well. This explains why their costs are so unexpectedly high. It remains to be seen whether the government will maintain the regulations under these circumstances. (Franz Traxler, University of Vienna)

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