EMCC European Monitoring Centre on Change

Perceptions of globalisation: attitudes and responses in the EU — Austria

  • Observatory: EMCC
  • Topic:
  • Published on: 02 March 2008



About
Country:
Austria
Author:
Georg Adam
Institution:

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

This report explores the employment impact of globalisation and reviews the attitudes and responses of national governments and the European social partners to this phenomenon in Austria.

Institutional responses to globalisation

Government action to prevent or reduce the extent of off shoring/relocation

Are there any recent examples in your country (i.e. over the past 3-4 years) of the government intervening to prevent particular activities from being relocated abroad or to reduce the scale of this?

Yes/No

If so, please give summary details and indicate the activities concerned

Although the previous conservative-populist and the current ‘grand coalition’ government of the Social Democratic Party (Sozialdemokratische Partei Österreichs, SPÖ) and the conservative Austrian People’s Party (Österreichische Volkspartei, ÖVP) have committed themselves to pursue a so-called ‘headquarter strategy’, the governments of the recent years have not actually intervened to prevent particular activities from being relocated abroad. According to this ‘headquarter strategy’ initially launched in 2004, Austria needs to provide effective incentives for multi-national enterprises to move their R&D units or even their headquarters to Austria; likewise, the strategy’s aim is to prevent skill-intensive activities from being relocated abroad. For Austria, such a strategy is widely perceived as being of utmost importance, since the country’s national economy is dominated by small firms, while – in contrast to other small countries such as Switzerland, Finland and Sweden – there are virtually no large multinationals with their headquarters domiciled in Austria. In 2005, the volume of the ‘headquarter strategy’ programme sponsored by the government amounted to € 20 million and was claimed to have created some 350 new R&D-related jobs.

Another obligation of the government to take into account ‘national interests’ derives from the 2000 State Public Holding Company Act (Österreichische Industrieholding Aktiengesellschaft Gesetz, ÖIAG-Gesetz). Accordingly, the ÖIAG, which is Austria’s executive privatisation agency with the task to carry out the privatisation of the remaining (partially) state-owned companies on behalf of the government (AT0312204F), is obliged to seek for privatisation solutions where the key shareholders – if possible – should be Austrian nationals. However, regarding the most recent cases of privatisation, this goal has been reached only insufficiently.

Social partner attitudes towards off-shoring/relocation

Have there been cases over the past 3-4 years where the possibility – or threat – of relocation of production has featured as a factor in collective bargaining?

Yes/No

If so, please indicate the cases concerned, how the possibility has been used and whether its use has become a more frequent occurrence.

The possibility to relocate (part of) their production abroad provides companies, in particular in labour-intensive sectors, with enormous bargaining power. Business representatives have, during the recent years, increasingly threatened to relocate their activities unless organised labour would make concessions in bargaining. However, it is important to note that in Austria collective bargaining is conducted almost exclusively at sectoral, multi-employer level rather than at single-employer level, which makes threats of individual companies less immediate.

Are there any cases over the past 3-4 years where trade unions have successfully resisted plans to relocate production abroad or have managed to reduce the extent of this?

Yes/No

If so, please indicate the cases concerned and outline their main features

In 2004, the then Minister of Financial Affairs, Karl-Heinz Grasser, aimed to fully privatise Austria’s largest telecommunications provider, Telekom Austria. The plan was to sell the remaining state’s 27.4% share in the company to Swisscom, the main provider of Switzerland. Commentators considered the planned transaction as a relocation of the operative decision-making power from Austria to Switzerland. The Austrian unions have claimed to have brought the then government round, which eventually refrained from fully selling off Telekom Austria, after the unions had launched a public campain to retain public ownership of the company. Partially as a result of this campain, the then privatisation plans proved very unpopular, as an opinion poll revealed.

Are there any cases where trade unions have accepted the need for the relocation of production – or part of it – abroad as a means of maintaining or improving the viability of companies and so of preserving some jobs and even ultimately expanding them?

Yes/No

If so, please briefly describe the cases concerned

In recent years, each case of relocation of production abroad has been criticised by the unions as narrow-minded management decision for the sole purpose of maximising profits, without taking into consideration any impact on the national economy and the employees concerned. The Austrian trade unions have always resisted any announcements and attempts to relocate production abroad. The Austian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB) stresses that it is essential for Austria’s status as business location to create and keep Austrian headquarters and thus safeguard jobs. Referring to cases of relocation during the last years – such as of Semperit (AT0201209N) and Austria Tabak – union officials claim that outward relocation of companies does not only affect the company’s workforce but also the supplier industry and related services. In this context organised labour strongly opposes the privatisation of remaining state-owned key industries.

Government policy on foreign-owned firms controlling significant sections of the economy

Does the Government in your country have an explicit policy on restricting the acquisition of domestic companies in certain sectors by foreign-owned firms?

Yes/No

If so, please give summary details and indicate which sectors this applies to as well as whether any distinction is made between companies according to their nationality (e.g. whether non-European companies are treated differently from European ones)

The Austrian government does not pursue a strategy on restricting the acquisition of domestic companies by foreign-owned firms. This is due to the predominance of small firms and the absence of large multinational corporations headquartered in Austria. Therefore relocations or closures which affect thousands of employees as reported from other countries are rare in Austria (AT0508202S). As outlined above, the government pursues a strategy of ‘national interests’ only with respect to the sell-off of (partially) state-owned enterprises through the ÖIAG. This is to secure a ‘strategic private ownership structure’ of key companies which are considered – in terms of the national economy including social and welfare goals – to be of public interest. However, as recent cases of privatisation show, the government’s commitment to take into account national interests when privatising key companies has proved more of a kind of rhetoric appeasement towards the public opinion and the unions rather than an effective and consistent policy line.

Are there any restrictions on foreign-owned companies setting up branches or subsidiaries in your country either generally or in specific sectors?

Yes/No

Please indicate the sectors concerned and the stated reasons for the restrictions. Please also indicate whether the restriction apply to companies from other parts of the EU as well as from outside

There are no restrictions on foreign-owned companies setting up branches or subsidiaries in Austria. On the contrary, the government has established a government-operated consulting firm (i.e. the Austrian Business Agency, ABA) which offers services and advice to potential foreign investors in the country.

Are there any sectors of the economy in which the acquisition of a domestic company has not been allowed over the past 3-4 years?

Yes/No

If so, please indicate the sectors concerned and the nationality of the foreign companies involved as well as the reasons given for the decision

Restrictions on the acquisition of domestic companies by other domestic or foreign-owned enterprises may be imposed by Austrian or EU-level authorities/courts only in case of the breach of competitive law and cartel legislation. However, there is no (authorisation for) political interference in cross-border merger and acquisition activities, as long as all legal requirements are met.

Social partner responses to the take-over of domestic firms by foreign-owned ones

Have there been any recent cases (i.e. over the past 3-4 years) where trade unions have resisted foreign acquisition of domestic companies explicitly because of the nationality of the company concerned?

Yes/No

If so, please give summary details, indicating whether there is any evidence of different attitudes being shown towards European firms as opposed to companies from outside Europe

The Austrian unions resist foreign acquisition of (larger) domestic companies as a matter of principle, irrespective of the nationality of the company concerned.

Have there been any recent cases (i.e. over the past 3-4 years) where domestic companies have resisted acquisition by a foreign-owned firm on the grounds of its nationality?

Yes/No

If so, please give summary details, indicating the nationality of the company concerned and whether there is any evidence of European and non-European companies being regarded differently in this regard.

There is no information available on that issue.

Attitudes to globalisation

Have employers’ associations in your country adopted a stated position as regards the main aspects of globalisation – i.e. outsourcing or the relocation of production abroad and the acquisition of domestic companies by foreign-owned ones?

Yes/No

If so, please give summary details, indicating whether or not the position varies across sectors of the economy

There is no official position paper or any other official declaration of the Austrian Federal Economic Chamber (Wirtschaftskammer Österreich, WKO) or the Austrian Federation of Industry (Industriellenverreinigung, IV) explicitly dealing with globalisation and its main aspects. However, both the WKO and the IV have repeatedly called for a significant reduction of company taxes and non-wage labour costs in order to keep or even improve the international competitiveness of domestic companies. In 2004, the then conservative-populist government introduced a tax reform which reduced, from 2005, the tax rate on corporate profits from 34% to 25%. This measure was strongly supported by the business associations, by arguing that such tax reductions are likely to provide almost equal competitive conditions for Austria’s companies in international comparison, in particular with respect to the new EU Member States. The employer organisations have emphasised that with the implementation of the tax reform in 2004-5 the government has substantially contributed to preventing relocations of companies from Austria abroad and thus secured jobs in the Austrian labour market (AT0402103F).

However, the other main demand of the country’s businesses, in particular of the numerically dominant SMEs (which usually have not drawn any significant benefit from the reduction of the corporate profits tax), has not been met by the government so far: the call for relieving them from some of the burden of non-wage labour costs. By international standards, the corporate tax rates were relatively low in effect even before the 2004-5 tax reform, whereas wage-related levies and taxes (from social insurance contributions to municipal rates) are comparatively high in Austria. Therefore even some representatives of larger companies would have preferred reductions in non-wage labour costs to the cut in the corporate profits tax. Moreover, the WKO is still demanding reductions of administrative levies imposed on companies by 25%. Only the realisation of the whole of the business demands, WKO representatives claim, would effectively prevent outsourcing and relocation of production on a large scale.

With respect to the acquisition of domestic companies by foreign-owned ones, the employer associations appear to have not taken a consistent stance.

Have trade unions in your country adopted a stated position as regards the main aspects of globalisation – i.e. outsourcing or the relocation of production abroad and the acquisition of domestic companies by foreign-owned ones?

Yes/No*

If so, please give summary details, indicating whether or not the position varies across sectors of the economy

As outlined above, outsourcing and the relocation of production lists prominently in the unions’ agenda. They stress that it is of utmost importance for Austria’s status as business location to create and keep headquarters in the national territory of Austria. Therefore they resist the privatisation of the remaining state-owned key industries and companies, by arguing that only ‘strategic public ownership’ of certain key enterprises would grant the economy being under political control. Organised labour has repeatedly expressed its fear that the sell-off of so-called key companies (which have particular strategic relevance for the national economy in terms of labour market, infrastructure, suppliers, etc.) may not only result in relocations of important parts of these companies (such as planning divisions, R&D units and highly specialised production sites) to foreign countries, or even the companies’ split-up and partial closure, but may also affect negatively the whole supplier industry and related services. In order to retain the state holding a minimum share of ‘strategic public ownership’, organised labour has urged the governments of the recent years to transform the ÖIAG’s legal status from a privatisation agency into a strategic holding company holding a minimum of 25% key shares in each establishment of choice. This 25% threshold of shares would grant the state a de facto participation in all relevant matters of management decision-making – a necessary precondition for preventing unwanted relocation activities and the acquisition of domestic key companies by foreign-owned ones.

At EU level, the ÖGB has given top priority to the introduction of a European taxation regulation since 1994. The Austrian unions consider the current system in Europe a severe constructional flaw, which enables EU net receiver countries with high growth rates to further fuel tax dumping and thus relocation processes.

*A Eurobarometer survey on globalisation was carried out in 2003 in the EU-15 Member States. This might serve as a useful point of reference for the countries concerned, to see, for example, whether or not national attitudes expressed in the survey are in line with similar surveys which have been conducted nationally. The survey findings are available at:

http://ec.europa.eu/public_opinion/flash/FL151bGlobalisationREPORT.pdf

Have there been any surveys of public opinion in your country over the past 3-4 years on attitudes towards globalisation or on the various dimensions of this (as listed above)?

Yes/No

If so, please summarise the main findings of these. Please give a breakdown, where possible, in terms of the characteristics of respondents (e.g. by sex, age, socio-economic group, education level, occupation, sector of employment or region).

The Karmasin market research institute, which is the national affiliate of the Gallup International group which carried out the 2003 Eurobarometer survey on globalisation, conducted, in 2006, a national Eurobaromenter survey only on attitudes towards the EU and its institutions. No questions about globalisation were asked in this survey. However, another market research institute, with the brand name ‘market – Marktforschung’, carried out a small survey on attitudes towards globalisation. Despite its limited scope in terms of content, the survey, which is based on telephone interviews with 400 Austrian citizens aged over 18 in June 2005 and claims to be representative, may be used to contrast some of the results of the 2003 Eurobarometer survey. According to the 2003 survey, 90% of the interviewees had already heard of ‘globalisation’, whereas the 2005 market survey revealed that only 60% (55% in 1997) of the Austrian population are familiar with this term. Disaggregated by sex, 66% of men and 55% of women indicate that they are familiar with globalisation. Among those about 39% of the interviewees who are not familiar with that term there is an over-proportionate number of blue-collar workers and people aged younger than 29. Of those respondents who are familiar with the term of globalisation about 51% are in favour of globalisation, whereas about 40% are opposed to it. These results almost exactly correspond to the outcome of the 2003 Eurobaromenter survey. According to the national ‘market’ study, the medium-aged cohorts aged in between 30 and 49 years are most sceptical about globalisation, with a rate of opposition of 53%. Disaggregated by regions, the survey shows that people living in the eastern parts of the country (including Vienna) are far more reserved to globalisation compared with the population of the rest of the country, while citizens living in smaller cities (with more than 5,000 inhabitants) are most attached to globalisation.

Have these surveys made a distinction between the different dimensions of globalisation (as listed above) or have separate surveys been carried out on these dimensions?

Yes/No

If so, please summarise the main findings of these as regards:

off-shoring(or the relocation of production abroad;

the take-over of domestic companies by foreign-owned ones and/or the growing extent of control by foreign companies of parts of the domestic economy

the establishment of new plants and offices by foreign-owned companies

Where possible, please give a breakdown in each case in terms of the characteristics of respondents (e.g. by sex, age, socio-economic group, education level, occupation, sector of employment or region)

No.

Have these surveys made an explicit distinction between globalisation and the process of European integration, by, for example, distinguishing between relocation of production to other EU Member States and relocation to countries outside the EU or between the take-over of domestic companies by EU-owned firms and take-over by a non-EU companies?

Yes/No

If so, please give summary details of the differences in response to EU integration as opposed to globalisation.

No.

Georg Adam, Institute of Industrial Sociology, University of Vienna

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