EMCC European Monitoring Centre on Change

Austria: ERM Comparative Analytical Report on ‘Public policy and support for restructuring in SMEs’

  • Observatory: EMCC
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  • Published on: 13 May 2013



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Bernadette Allinger
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Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

In Austria, a variety of public policy measures and support for restructuring are available. While most of them are not specifically targeted towards SMEs, almost all of them are accessible to them. The majority of available policy instruments are focused on the anticipation rather than the management of restructuring. Restructuring has always been part of the public and policy discourse; however, with the onset of the economic and financial crisis, the topic has intensified. The specific challenges SMEs had to encounter are of rather low importance in the public and policy debate, but some measures have been adapted in order to improve access to SMEs (e.g. short-time work).

QUESTIONNAIRE

Part 1: Overall policy context

1.1. Has there been public or policy debate on the specific challenges for SMEs and/or their employees in restructuring before the global recession of 2008/09? Please specify, for example:

  • If so, since when (e.g. up to 3 years before, 3-10 years before, longer), at which level (national, regional, sectoral, all of them) and in which form (‘real’ policy debate mirrored in policy documents or rather public debate mirrored in media, or both)?
  • Which policy areas (for example, SME policy, entrepreneurship policy, employment policy, social policy, regional policy etc.) were involved? Particularly: Does SME policy specifically deal with restructuring? Does ‘restructuring policy’ specifically deal with SME issues?
  • Did the public and policy discussions deal with restructuring as such or were specific types or phases of restructuring covered?
  • Which were the issues/contents that have been discussed? Which specific characteristics of SMEs in restructuring were considered in this context? Was the specific case of SMEs as subcontractors a topic for discussions?
  • Did the discussions rather deal with the enterprise perspective or with the employee perspective or both?

There has always been a public and policy debate on the challenges of restructuring for companies and their employees at all (sectoral, regional, national) levels in Austria; however, the focus has been on restructuring cases in general and large-scale job losses (mostly in larger enterprises) have received most attention in the media, as well as in the policy discussion. Restructuring in SMEs, or rather, the challenges SMEs have to deal with when encountering restructuring, has not been very specifically addressed, neither in the public, nor the policy sphere; in other words, neither does SME policy specifically deal with restructuring, nor does ‘restructuring policy’ specifically deal with SME issues. Restructuring in SMEs is rather being discussed from an employer perspective within the framework of entrepreneurship policy (for example, job creation in one-person enterprises) and within the framework of internationalisation and innovation of SMEs, from an employee perspective within the framework of labour market and employment policy (implications of lay-offs on employees and labour market programmes) and from the perspective of both employers and employees within a regional policy framework. The latter applies to the establishment of work foundations or social plans targeted towards the alleviation of the consequences of large-scale redundancies in specific areas, where e.g. the whole region is affected by the closure of a big company. Traditionally, the public discussion has focused on the management of restructuring, whereas the policy debate in the last few years has more evolved around the anticipation of change, or more specifically on the development of new instruments (especially with regards to qualification measures), as policy developments in this area show.

1.2. Did the global economic and financial crisis of 2008/09 cause any change in focus of the above (for example, increased/decreased focus on SMEs and their employees in restructuring, change in policy areas or issues covered)?

When the global recession of 2008/09 hit Austria, and the first companies experienced problems, SMEs started to be increasingly focused upon due to their major role as employers: In 2009, some 61.5 % of all employees in Austria were employed in a SME, which made up 99.65% of all companies (according to data provided by the Federal Ministry of Economy, Family and Youth BMWFJ). Some policy changes were undertaken in order to facilitate restructuring measures, or rather, the overall economic situation for SMEs; thus, SMEs were more specifically focused on than before the crisis. With the implementation of the first economic stimulus package (Konjunkturpaket I) of € 1 billion per year by the federal government in November 2008, SMEs were strenghthened through the facilitation of access to credits and loans. Furthermore, pre-existing measures, like the measure of short-time work, were adjusted in order to facilitate eligibility for SMEs. Additionally, a work foundation for young workers (Jugendstiftung) was set up within the framework of the second labour market package with the target group being young workers between 19 and 24 years of age who have lost their jobs and were employed for at least three months in SMEs or temporary work agencies before.

1.3. Are social partners or employers’ and employees’ organisations involved in public and policy debate on restructuring in SMEs?

  • If so, which (types of) organisations and at which levels?
  • What are their opinions, perspectives, recommendations?
  • Did they succeed in convincing governments or public authorities at various levels of their viewpoints?

All social partners (the Chamber of Labour AK and the Austrian Trade Union Federation ÖGB with its affiliated member unions on the employees’ side and the Federal Economic Chamber WKO and the Federation of Austrian Industries IV on the employers’ side) are involved in the public and policy debate on restructuring in Austria. This has to do with the fact that there is substantial social partner involvement in the Public Employment Service (AMS) which administers and provides the majority of available restructuring measures: Not only is the federal governing board of the AMS composed equally tripartitely, but there is furthermore an equal tripartite composition of decision-making AMS bodies at regional and local levels, as well. Social partner involvement in AMS and thus (also) restructuring policy takes place at all levels (regional, provincial, national). The social partners also get to assess draft bills, so whenever a restructuring measure is implemented or amended at the legislative level, they are part of the policy debate and can bring forward their perspectives and reservations or recommendations. Generally speaking, the implementation and/or modification of restructuring measures has by and large been made consensually after tripartite negotiations – even if in most cases they are compromises between differing opinions of the labour and business side. This especially holds true for so-called ‘crisis’ measures after the onset of the economic and financial crisis; the labour market packages and economic stimulus package were only implemented after extensive bi- and tripartite negotiations.

The involvement in the public and policy debate on restructuring is – generally speaking – of a more general nature and not specifically focused on SMEs. However, the WKO as employer organisation of all private-law companies in Austria (independent of the size of the company) is catering more towards SMEs, whereas the IV as representative of mostly large-scale industrial enterprises only is not involved in restructuring of SMEs but rather in restructuring in companies of their target group. One can thus say that a slighly more specific focus on SMEs comes from the employers’ side of the social partners (WKO), while the employees’ side does not specifically focus on restructuring in SMEs.

Furthermore, there are several restructuring instruments that were implemented bipartitely, by the employer side (WKO) (e.g. the programme Young Economy or Follow-up bourse) or in cooperation with the respective ministry (BMWFJ) (Go International! Programme) (for more information on these programmes, see ERM database on restructuring instruments and 2.2).

Part 2: Support instruments

2.1. Please provide an overall assessment about how accessible and suitable public and social partner based restructuring support for companies in general are for SMEs or their employees.

  • Do SMEs and/or their employees generally have access to the available instruments and are these suitable for their specific needs in restructuring?
  • Are there specific (types of) instruments (for example, targeting specific types or phases of restructuring, offered at specific administrative levels) that are more/less accessible and suitable for SMEs and/or their employees than for larger firms? If so, why?

In general, SMEs and their employees have access to all available restructuring instruments, both in the anticipation and management phases. Depending on the nature of the measure, they are more or less suitable to the specific needs of SMEs.

The measure of short-time work (managing restructuring) is generally open to all companies including SMEs. However, in practice, the measure is rather fit to large industrial enterprises engaged in production and thus not SMEs, even though in theory SMEs are eligible, as well. The WKO has concluded that both service companies and smaller companies find short-time work difficult to access due to the administrative burden involved and complex preconditions.

The programme qualification alliance (Qualifizierungsverbund) is a network of companies whose objective it is to organise mutual training courses for their employees in order to improve their qualification and skills. It is thus an anticipation measure. At least three companies need to form an alliance, of which at least 50% must be SMEs. This is sometimes a burden for bigger companies as it is difficult to find enough small enterprises to form a network with. Reasons for that are that smaller companies are often not able to send off employees to qualification measures because otherwise they would be missing manpower. Furthermore, many SMEs are not interested due to the size and/or the structure of their company and the costs that are incurred on them (even though the majority of costs – depending on the regional area around 60 to 70% - for qualification are taken over by public bodies, that is AMS and the European Social Fund ESF).

Work foundations (also know as re-employment schemes) were first introduced in the 1980s for employees affected by staff cuts in the nationalised industries. The aim was to support the employees in finding new jobs and to increase their chances on the labour market. Generally, one can differentiate between outplacement and implacement foundations. While the first are used for companies threatened by staff cuts, the latter are implemented to cope with particular staff shortages through customised qualification measures for unemployed persons, followed by entry into employment at the end of the measure. A main feature of work foundations is the participation and co-financing through local labour market authorities and the concerned companies (for both implacement and outplacement work foundations). Outplacement foundations include bankruptcy-based work foundations (Insolvenzstiftung, set up by regional authorities in case of bankruptcy of an enterprise), regional work foundations (Regionalstiftung, a work foundation of more than one company of a certain area) and company foundations (Unternehmensstiftung) for specific companies. With the onset of the financial crisis, the implementation of sectoral work foundations (work foundations set up by lawfully established interest groups) was eased. Work foundation courses consist of a profiling process, an individualised training plan with participation in courses and support in finding a new job (or starting a business). In all cases (except for insolvencies), employer funding is to be provided; thus, the measure is in practice often less attractive for smaller companies due to financial constraints.

2.2. Do there exist specific public or social partner based support instruments explicitly targeting at SMEs and/or their employees in restructuring? Please specify, for example:

  • If so, by whom are they offered (public vs. social partners/employers’/employees’ organisations) and at which administrative levels (national, regional)?
  • Are the activities of different support service providers coordinated? If so, how and how well does this work?
  • Which phases of restructuring do they target?
  • Which types of restructuring do they target?
  • Do they target SMEs in general, or specific size classes, sectors, regions, legal forms, roles (for example, as subcontractors) etc.? Do they target employees of SMEs in restructuring?
  • What type of support do they provide? What specific challenges for SMEs in restructuring do they address?
  • Is there some information about how well they are known among SMEs and their advisors and about how they are generally assessed by the SME sector? What are their strengths and weaknesses? Are there recommendations for improvement?

There are several support instruments that explicitly target SMEs and their employees in restructuring, most of them targeting the anticipation phase of restructuring. No differentiation is made as to specific size classes, sectors, regions, legal forms or roles. All of the measures are of public nature, with some social partner involvement (on behalf of the employers) in some of the measures. They are all offered at the national level and are well coordinated due to the fact that they are all funded by public authorities, mostly by the AMS. Support provided differs according to the type of measure; access to funding, subsidies, consultancy services and networking are the most common ones.

With the onset of the financial and economic crisis, a work foundation for young workers (Jugendstiftung) was set up. The target group of this foundation were young workers between 19 and 24 years of age who had lost their jobs and were employed for at least three months in SMEs or temporary work agencies before. The company had to contribute € 1,000 per person made redundant. The period of receiving unemployment benefits was extended to the whole duration of the programme, which is variable as it is dependent on the length of the training measure (up to four years at the longest). This ensures that the affected young people did not have to claim unemployment assistance (Notstandshilfe) after the period of receiving unemployment insurance benefits was over. On top of that, the concerned young workers received a stipend of € 100 per month. This measure, which was implemented in the face of the crisis, has by now (spring 2012) expired; however, a new similar implacement work foundation for young persons has been launched (see good practice in part 3) since then, which is aimed at the management of restructuring for SMEs.

SMEs are target groups for specific types of loans and credits. They are, however, no explicit restructuring measures, but rather facilitate the access to funds for companies which under normal circumstances would not get credits easily. A micro credit scheme by the Federal Ministry of Labour, Social Affairs and Consumer Protection (BMASK) for one-person enterprises and business partnerships on the one hand and the provision of credits for SMEs with favourable interest rates in order to support business development by the federal business development bank aws (Austria Economy Service) on the other hand can be used for company expansion and thus for job creation.

Qualification consultancy for enterprises is specifically targeted towards SMEs with up to 50 employees. The programme provides (free) consulting services to employers in relation to human resources development. The programme is provided and funded by the AMS which has stated that the implementation of the programme has proved to be rather difficult. The expectation that this measure would be used by small companies which would otherwise not have been able to afford this consultancy service was not met. The acquisition of clients, that is companies, proved rather costly and time consuming.

In 2009, a new funding instrument was implemented in order to foster the creation of jobs in one-person enterprises, which can be considered a specific form of micro-enterprise. The one-person entrepreneur needs to employ a person who has been unemployed for at least a month and is under 30 years of age. A quarter of this employee’s gross income is then being paid by the AMS for the duration of one year.

The programme ‘i2 – Exchange of business angels’ (Börse für Business Angels) is a programme available to SMEs only. Private investors with experience and business skills are brought together with SMEs. The programme is administered by the aws which applies a strict selection process.

The programme Go international! is provided by the BMWFJ and the WKO and is targeted towards the establishment of export relationships or to open new markets abroad. A specific focus is put on SMEs.

Part 3: Good Practice

  • Name of the instrument in national language and English
  • Justification for selecting this measure as Good Practice
  • Date of launch of the instrument and end date (if applicable)
  • Initiator/administrator (organisation)
  • Other involved actors and their roles
  • Source of funding
  • Target group/eligibility/coverage
  • Phase of restructuring targeted
  • Type of restructuring targeted
  • Purpose/content/characteristics/description of services provided
  • Outcome of the instrument (e.g. number of beneficiaries, effects)
  • Strengths/success factors of the measure
  • Weaknesses/bottlenecks of the measure
  • Was the instrument formally monitored/evaluated? If so, please specify (by whom, how, what were the finding and how were the findings used etc.)
  • Weblink
  • Information sources used for filling this section

The youth work foundation (Jugendstiftung) ‘JUST Implacement’ is considered a good practice support instrument as it targets both the shortage of skilled workers which many companies encounter and the unemployment of young workers. Young persons have comparatively higher unemployment rates (March 2012: 8.6%) as compared to other age groups on the national labour market (4.0% overall unemployment rate, LFS measurement) and are thus currently a specifically prioritised group in the Austrian labour market policy programme. The measure was implemented on 1 September 2011 in all nine Austrian provinces, following tripartite talks between the social partners and the Federal Ministry of Labour, Social Affairs and Consumer Protection (BMASK) starting in autumn 2010. The work foundation is administered by the not-for-profit organisation Aufleb (which is sponsored by the social partners WKO and ÖGB) in cooperation with all federal provinces (with the exception of Vienna, for which the WAFF (Vienna Employment Promotion Fund) – a Fund by the City of Vienna – is participating), the BMASK, the AMS, the ÖGB and the WKO. The sources of funding for the work foundation which is calculated with a total of € 15.5 million is provided by the companies themselves, the insolvency contingency fund (Insolvenzentgeltfonds IEF), the AMS and the provinces. While the IEF, the AMS and the provinces pay for the qualification costs, the companies provide for the administrative costs and the stipend that every participant receives on top of the unemployment benefit payment. The target group of the measure are young adults between 19 and 24 years of age who are registered as unemployed with the AMS and have a low to medium level of education (up to apprenticeship or vocational school diploma). In case of long-term unemployment (more than six months), young unemployed with a higher educational level (school leaving diploma Matura) may participate in the work foundation, as well. Additionally, prospective participants who meet these criteria must be interested in further qualification and training and aspire to a position in a particular SME, in which the on-the-job training takes place or for which the qualification is taken. The participating companies on the other hand have a need for qualified young staff members. Primarily, SMEs are the target of the JUST work foundation. The measure runs for 14 months on average (they last 18 months on average when apprenticeship training is taken up, and six months when other qualification measures are taken). The runtime of the foundation is two years; the latest possible entry is August 2013. The phase of restructuring targeted is the anticipation phase, with the aim of job creation: Companies which have a need for qualified personnel can participate and are thus involved in the selection of future employees, while the qualification costs are taken over by the public. The companies need to pay an administrative fee of € 350 per month (€ 250 in the first month) plus a monthly stipend ranging from € 50 to € 200 (depending on the runtime of the qualification measure) which the participants receive on top of the unemployment benefit (sums are per participant). The total funding provided is calculated for about 1,500 participating persons for the whole runtime of the programme, which is two years (see above). The aim of the work foundation is a permanent position for the participants in the respective company after the successful completion of the implacement foundation programme. The BMASK has stated that the measure can be considered a success for labour market policy if at least 70% of the participants have a valid employment relationship three months after the end of the measure. Due to its – so far – short runtime, the measure is yet to be evaluated (and will be). The strength of the programme is that it combines the goal of reducing youth unemployment and provides SMEs encountering labour shortages with qualified personnel. Potential weaknesses of the measure might be that companies are not willing to invest in potential new employees during their phase of qualification due to the risk of drop-outs or that the need for employees might not be imminent any more after the completion of the measure.

Weblink: http://www.aufleb.at/index.php?n=m_4_0

Information sources used: WKO, AMS, Aufleb

Commentary

Public policy and support measures are widely available for SMEs in Austria, even if the majority of the measures are not specifically targeted towards SMEs, but rather towards companies of all size classes. With the onset of the financial and economic crisis, SMEs were more focused upon as they started to experience difficulties: Additional support was provided to SMEs in the form of an adaptation of short-time work in order to facilitate access for SMEs and extra funds were provided for credits and loans. Specific measures for SMEs only target the anticipation of restructuring via qualification measures in order to improve human resources development. Consulting service which is available to companies with up to 50 employees has proved to be less successful than expected, however; the success of the implementation of an implacement work foundation for young unemployed adults in SMEs yet needs to be evaluated. All restructuring measures are funded publicly through the AMS and have almost exclusively been developed with social partner involvement.

Bernadette Allinger, FORBA (Working Life Research Centre)

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