Bill aims to combat organised illegal work

From 1 July 1999 measures to combat illegal employment, particularly of foreign nationals, should be enhanced substantially in Austria. The relevant bill, agreed within the coalition government and issued in January 1999, was preceded by a dispute that lasted over a year, and is the subject of fierce criticism from employers.

On 20 January 1999, the Austrian government agreed on a bill aimed at combating organised illegal work. The addition of the word "organised" - that is, with entrepreneurial intent - is the key difference from the proposal that had been circulated in October 1998 (AT9810106F). The new legislation, on the assumption that it is enacted by parliament, is planned to take effect from 1 July 1999. A number of industries, namely construction, hotels and restaurants, cleaning services and transport, will then have to report any new employee to the social security administration on the first day of employment. The administration will set up a call centre for this purpose, but it will not accept faxes or e-mails. For all other industries, the first-day rule will be effective from 1 July 2000. Currently they have three days to report. Main contractors will be responsible for the payment of regulation wages by subcontractors, and they will have to carry out at least 50% of work themselves.

The Austrian Chamber of the Economy (Wirtschaftskammer Österreich, WKÖ) is less than pleased with the proposed legislation. It resents the exclusive focus on control and sanctions, the lack of any attempt to reduce economic incentives for illegal work and the sole focus on enterprises, while illegal work arising from private, personal cooperation remains untouched. The latter, claim representatives of the WKÖ's construction crafts and trades association, is worth ATS 30 billion or ATS 40 billion per year. They maintain that state housing construction subsidies, worth ATS 24.5 billion annually, ought to be paid out only on production of receipts by licensed trades people. The government states that the primary aim of the proposed legislation is to act against illegal work and illegal employment of cross-border commuters. Fines for the repeated illegal employment of more than three foreign nationals are being doubled and all others are being raised incrementally.

There are no reliable data on the volume of illegal work in Austria. One estimate is that in 1998 it may have grown by ATS 13 billion to ATS 233 billion in value, about 9.1% of GDP, though Austria is around the bottom of the European Union "league table (EU9804197F)". The level in 1990 was estimated to be ATS 99 billion or 5.5% of GDP.