Outgoing government introduces youth employment programme

With youth unemployment rising, in September 2002 the Austrian government (just prior to leaving office) agreed with the social partners a range of measures aimed at improving employment opportunities for young people, and especially apprentices. The measures include incentives for companies to employ apprentices, and the extension of qualification programmes for young people.

Due to the current economic recession, Austria's unemployment rate has increased notably of late, in particular among people under the age of 25 years. At the same time, the number of apprenticeships offered by employers has fallen - by 17% to 3,252 in the year to August 2002. At present, there is a shortage of some 5,200 apprenticeships.

Alarmed by these figures, presented at the beginning of September 2002, the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB) called for government measures to correct this tendency. With the coalition government of the conservative People’s Party (Österreichische Volkspartei, ÖVP) and the populist Freedom Party (Freiheitliche Partei Österreichs, FPÖ) resigning in September 2002 because of internal conflicts, and new elections scheduled for autumn 2002, the outgoing Chancellor, Wolfgang Schüssel, took up the unemployment issue, recognising it as a possible key issue in the coming election campaign. The Chancellor invited the social partners to negotiate on a youth employment programme which was – after only a few days of hasty negotiations – approved by parliament on 17 September 2002, at its last sitting before its dissolution.

The main provisions of the youth employment plan passed by parliament are as follows:

  • employers providing apprenticeships will receive a payment of EUR 1,000 per apprentice employed for the next three years. The estimated EUR 120 million cost of this measure will be met from the surplus means of the Insolvency Payment Insurance Fund (Insolvenz-Ausfallgeldfonds);
  • employers providing apprenticeships will not have to pay occupational injury insurance contributions in respect of the apprentices. In addition, employers’ unemployment insurance and health insurance contributions for apprentices will be dropped for the first two years of their apprenticeship; and
  • under the Law on Qualification Programmes for Young People (Jugendausbildungssicherungsgesetz), the government will extend the capacity of 'qualification courses' for young people from 2,000 to 3,000 places. These courses target young people who have failed to find an apprenticeship. In addition, older unemployed people up to the age of 24 who left education early will be entitled to join special qualification programmes. The expenditure for these measures will be covered by the reserves (EUR 116 million) of the public Employment Service (Arbeitsmarktservice, AMS).

Mr Schüssel stated that these provisions, including some additional measures to boost the economy, will cost some EUR 600 million over the next few years, but only half of this cost will directly burden the state budget. Although representatives of organised labour have agreed to the youth employment programme, they have harshly criticised the accompanying incentives for business introduced by the government, not regarded them as an effective means of improving the employment situation. Criticism has also been expressed by a number of experts, who argue that the measures taken are not tailored to the specific problems of youth unemployment. They argue that, instead of generally promoting any kind of apprenticeships and giving incentives to the employers offering them, it would have been more useful to focus on training for specific occupations, and on those qualifications which are scarce and most strongly demanded by business.

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