Early retirement in former state agencies

New legislation, adopted in late 1997, facilitates early retirement schemes in former state agencies wishing to reduce the number of employees over 55. An agreement between management and the trade union in the post office is at the core of the legal changes.

Posts and Telecommunications Austria (PTA AG) was recast as a wholly state-owned joint stock company in 1996 and will be privatised in 2001. In order to prepare for the liberalised telecoms market, as well as for the public share offer, it needs to shed some of the excess employment it built up during the years of monopoly. Like other state agencies, the post office was then used politically in order to absorb some of the unemployment. Now employment is to be reduced by 9,500 staff, of whom 6,000 are immediately to be offered incentives to participate in an early retirement scheme. The snag is that all of them are legally civil servants, and the early retirement scheme required a change of law in order to be permissible within the boundaries of the employment contracts of civil servants. After a basic agreement between management and the Post and Telecoms Trade Union (Gewerkschaft der Postbediensteten) in August 1997, parliament passed the necessary legislation later in the year. The legislation applies not only to the post office but to all state agencies being made into independent companies. However, while there are only about 3,000 federal civil servants employed in five other new companies, PTA AG employs 42,000 (out of a total of 57,600 employees at the end of 1996).

Participants in the early retirement scheme must be over 55 and have to agree to retire at the age of 60. During the period of early retirement, they will be paid according to a works agreement concluded on the basis of the new legislation. For PTA AG, it was agreed that income will be 80% of the last normal wage or 75% of their last wage including allowances and supplements (but excluding regularly worked overtime), whichever is greater. From this income, which will be taxed as a benefit payment, the employees will have to pay social security contributions. The law permits works agreements to include other benefits payable monthly which do not count against social security, and it also permits companies to take on some of the social security payments. Participants will be precluded from other gainful employment earning more than ATS 3,740 gross per month. The state will receive ATS 130,000 per participant from PTA AG. This is to cover state pension contributions, since the Government had insisted the scheme must be cost-neutral for the state. The scheme runs for five years from the promulgation of the law.

Management expects that 4,000 to 5,000 PTA employees will choose early retirement in 1998.

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