Pensions reform remains a divisive issue

The Austrian Government's pensions reform, having provoked civil service strikes in June 1997, may be leading to further industrial action. The ongoing debate is pitching the Government, trade unions and employers against each other in a three-way confrontation, but none of the three sides is internally united on the fundamental issues.

The Austrian Government is aiming to finalise its pension reform effort (AT9707118F) before the end of 1997. Essentially it consists of two components: lowering pension entitlements and widening the contributor base to the four national pension schemes. The latter is to be achieved by including the self-employed as well as part-timers earning less than the subsistence minimum, and by placing disincentives in the way of early retirement. These discincentives are designed as a trade-off between the length of the retirement and the size of the pension. For every year of retirement before the standard pension eligibility age - ie 60 for women and 65 for men - the pension is to be reduced by 2%. Expert advice was to institute a 4% reduction per year. The lowering of pension entitlements, in addition to this trade-off element, has a number of other components, chiefly the lengthening of the base period on which pensions are computed from 15 to 20 years in the case of early retirement, and a new formula for pension adjustments from the year 2000. The new formula is to be thrashed out by experts in 1998. The longer base period, according to the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB), will result in new pensions being 4% to 5% lower on average than they would be with a 15-year base period. In the civil service, no such base period currently exists, and here the Government intends gradually to introduce a 15-year base period between 1999 and 2012.

Opposition has come mostly from the trade unions. Three major complaints have driven their campaign. One is that women will suffer disproportionately from the lengthening of the base period in the case of early retirement. Here the Government proposes to give child-rearing periods greater weight in the pensions system, while the lengthening will occur incrementally between 2000 and 2012. Secondly, a number of hardship case scenarios were pointed out, which appropriate measures should aim to avoid. Thirdly, and perhaps most fundamentally, the ÖGB thinks the whole approach wrong. The aim of reform, it argues, should not be to reduce pensions but to save the existing entitlements by returning to full employment, especially of workers over the age of 50. The ÖGB's president has hinted at the possibility of taking protest action, should the trade union's position not be taken into account sufficiently. This would be likely to occur while parliament deliberates on the draft legislation.

In the civil service, the negotiations are complicated by the admixture of two further explosive issues: the 1998 pay settlement, and the future of tenured employment. The four civil service trade unions have taken the formal steps authorising industrial action should the Government's draft legislation, which is to be submitted to parliament on 10 October 1997, prove unsatisfactory (AT9706117F).

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