Minor employment to gain social security coverage

About 140,000 Austrian employees, mostly women, earning too little to be covered by social security are to be brought into its ambit, mostly because the phenomenon is thought to be gaining in importance.

Employment yielding less than ATS 3,740 gross per month or less than ATS 859 per week or ATS 288 per day, is defined as "minor". Below this threshold, neither employee nor employer has to contribute to the national pension or health or unemployment insurance. Only national accident insurance has to be paid. Minor employment therefore does not earn an entitlement to unemployment benefits, maternity benefits, a pension, or medical coverage. On the other hand, because of the lower cost, minor employment may be an incentive for employers to hire.

As of 1 July 1996, the last available data, 143,619 persons were known to be in minor employment, an increase of 15,230 or 11.9% over a year earlier. Of these, 103,310 (71.9%) were women. Fewer than half of the total, 63,624 of the minor employees were only in minor employment and had no other social security coverage - ie, were neither employed otherwise, nor registered unemployed, nor pensioners, nor on sick leave. They may have been covered through a spouse. The table below illustrates the growth of minor employment over 1994-6.

1994 1995 1996
Total minor employment 117,209 128,389 143,619
Only minor 52,198 55,991 63,624
Total women minor 85,196 93,479 103,310
Women only minor 43,713 47,060 51,621

Minor employment without other social security coverage grew by 21.9% between 1994 and 1996 - more slowly than the total at 22.5%. Among women, the total grew by 21.3%, and the otherwise not covered minor employees by 18.1%. The share of women declined slightly between 1994 and 1996.

The increase does not necessarily reflect a real phenomenon. The duty to report minor employment to the social security agency was only introduced from 1 January 1994. Conceivably, employment existing since before that date was never reported, while new employment is. Further, reporting might be increasing over time as the duty to do so becomes more widely known. At the same time, there have been numerous reports of additional hiring into minor employment by retailers since shop hours were widened to include Saturday afternoons in January 1997.

In May 1997, minor employment became part of the government's effort, launched in 1996, to broaden the social security base. This does not necessarily mean full inclusion (and full coverage). The focus of the debate is likely to be the employment effects. The trade unions, in an attempt to protect the "mainstream" employment relation against erosion, are likely to support inclusion, while employers' representatives have already voiced opposition.

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