Social partners cooperate to improve Vienna's labour market

The provincial social partners have been playing an important role in improving conditions on the Vienna labour market, largely through cooperation in public sector investment decisions. In 1999, the Austrian capital seems at last to be joining other provinces in central and southern Austria in witnessing rising rates of employment and falling rates of unemployment.

Over the two-year period 1997-9, the social partners in Vienna and its city government have joined forces to develop a more innovative approach to Austria's most problem-ridden and least responsive labour market. In 1997 it contained more than half of the unemployed people whose unemployment lasted longer than 12 months and 42% of those whose unemployment lasted more than six months. The number of people registered as unemployed at some time over the year had risen by 1.4% over the 1996 level and made up 23% of the Austrian total, roughly equivalent to the capital's share in employment. However, the average number of people registered as unemployed stood at 29% of the Austrian total. Employment kept being created outside the city limits, centred in particular on the airport and the shopping and business parks. Industrial employment was continually being relocated to "greenfield" sites. No end to these structural disadvantages seemed in sight.

Policy approach

The effort to come to terms with the situation was launched by the city's newly formed coalition government. The finance department (social democrat) and the urban planning department (christian democrat) became the key players. A strategy was worked out aiming to make Vienna a centre of technological innovation and high-grade services. Specific investment plans were agreed and are now being implemented. Traditionally the city has been a location for industries supplying the local market under tariff protection, which is why it has been losing employment continuously throughout the 1990s. At the same time the various levels of government phased out their role as employers of last resort. The new policy favours ventures likely to generate self-sustaining employment growth in the future. The cooperation of the social partners was of key importance in working it out.

The provincial chambers - Chamber of the Economy (Wirtschaftskammer Wien, WK) and Chamber of Labour (Kammer für Arbeiter und Angestellte, AK) - are involved in the policy, alongside the provincial organisations of the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB) and the Association of Industrialists (Industriellenvereinigung, IV). The key operational roles are divided between the Public Employment Service (Arbeitsmarktservice, AMS), which is governed by the social partners, and the Vienna Employee Promotion Fund (Wiener ArbeitnehmerInnen-Förderungsfonds, WAFF). The federal government, though important in financing the effort, does not play an active role. The WAFF was created in June 1995 on the initiative of the Vienna Chamber of Labour and the ÖGB. It subsequently became a Territorial Employment Plan (TEP) in 1997 and also coordinates the 1998 TEP (AT9906151F). Since its creation, the Fund has acquired many new tasks, not least in implementing European Social Fund programmes, and has grown rapidly in size and political importance.

The 1998 TEP figures prominently in the implementation of the overall policy. The goal is to reduce unemployment from a 1997 share of 8.3% of the labour force (excluding the self-employed) - 5% by EU standards of measuring unemployment - to 7.5% by 2002, a task made harder by its increase to 8.7% in 1998. On an annual average, there were 73,300 unemployed people in Vienna in 1998. ATS 730 million will be spent in 1999, with the federal government and the city each pledging ATS 200 million and the AMS the remaining ATS 330 million.

Addressing unemployment

The reduction in the rate of unemployment is meant to be achieved partly through employment growth and partly by reducing unemployment. In 1999 8,500 unemployed people are to be targeted specifically, of whom it was agreed that 53% should be women as this is their share of the city's population. Companies recruiting long-term unemployed people will receive subsidies of up to ATS 10,000 per month. The main target groups are workers unemployed for more than 12 months, returnees to the labour market, people with disabilities and school leavers without formal training placements. As of 1 March 1999, there were 1,331 participants in courses under the TEP, of whom 65% were women.

Older unemployed people are teamed together in so-called "active groups" or "job clubs". Here they are trained in how to write job applications and behave in job interviews. They also analyse each other's strong and weak points and support each other in their job search.

Occupation-specific "placement pools" are another measure. Members meet for weekly training and are given immediate notice of the arrival of a suitable job offer by the AMS.

Special courses are being offered to qualify people for work in call centres, a sector that offers the flexible hours that many women with children seek. The AMS has begun - for the first time ever - to train people in computer applications, such as SAP's R/3 software, for which a specific demand exists. Estimates speak of about 10,000 jobs remaining unfilled in the computer and communications industry because the required skills are not available on the labour market. Other estimates place the number as high as 30,000. The computer and software-oriented training will therefore be intensified, but in this area results take some time.

Improvements in employment

Employment in Vienna had decreased from 780,000 in 1995 to 764,000 in 1997, but rose by about 2,500 in 1998. The reversal appears to be continuing in 1999. Total employment at the end of April was 4,500 higher than in 1998. Vienna seems to be joining other provinces in central and southern Austria that began to see rising rates of employment and falling rates of unemployment in 1998.

Employment growth is to be achieved primarily by improving the city's locational qualities for inward investment. More funds are being allocated to research in engineering and communications and to closer interaction between industry and the universities. Road and rail infrastructure is also high on the agenda. Local entrepreneurial activity has picked up too. The computing services sector, mostly software, has been growing rapidly from small local beginnings.

The recent improvement in employment levels owes much to measures taken outside the city and even outside Austria. The liberalisation of the telecommunications market is deemed to have created about 2,000 high-value service sector jobs in the city since 1996. All the national mobile phone operators and most of the fixed-line operators have their headquarters in Vienna. Air transport liberalisation is also contributing (AT9906150F), while energy liberalisation is too recent and too partial yet to have had any effect. At the same time, an unanticipated expansion of part-time employment is taking place in commerce and other service industries.


To reduce unemployment by about 10% over a period of three or four years, as in Vienna, may not seem too ambitious a goal. However, unemployment at the end of May 1999 was 3% lower than a year earlier, after the Vienna labour market had for years proved resistant to all sorts of political and administrative interventions. This is due to market liberalisation, especially in telecoms, which the Austrian or Viennese social partners would never by themselves have contemplated. Policy measures including the TEP accompany these developments and help, by furthering employability, not to stunt the new growth. Typically, the social partners' assistance was not intervention in employment conditions or wage setting. Instead they focused on public sector investment decisions to improve skills and infrastructure. (August Gächter, IHS)

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