Constitutional Court overturns reform of social security body

In October 2003, Austria's Constitutional Court ruled that a 2001 government reform of social partner representation on the Association of Social Security Providers (HSV), the central institution in the national social insurance system, is unconstitutional. In a case brought by a trade union official, the Court overturned the reform on the grounds that it breached the principles of self government and democratic representation.

In summer 2001, Austria’s coalition government of the conservative People’s Party ( Österreichische Volkspartei, ÖVP) and the populist Freedom Party ( Freiheitliche Partei Österreichs, FPÖ) amended the General Social Insurance Act ( Allgemeines Sozialversicherungsgesetz, ASVG) in order to reform the representational structure of the Association of Social Security Providers ( Hauptverband der Sozialversicherungsträger, HSV) ( AT0108225N). HSV, which is based on the principle of 'self government' (Selbstverwaltung), is the central institution administering all aspects of Austria’s social insurance system. In accordance with this principle, HSV's main governing bodies are composed of representatives of the social partner organisations.

The main stated goal of the government’s reform of HSV was to create a structure which was more up-to-date in terms of administrative effectiveness and transparency. Since the government regarded HSV's then board of directors, and in particular its chair, Hans Sallmutter - who is also the chair of Austria’s largest union, the Union of Salaried Employees ( Gewerkschaft der Privatangestellten, GPA) - as not being capable of carrying through such a reform, Mr Sallmutter was removed from office. This was possible in spite of the HSV’s formal self government, because the government introduced a provision whereby the members of the new HSV governing board (which replaced the previous 'main conference'), as well as its management, must not be recruited from among leading representatives of organisations - chambers and trade unions - equipped with the capacity to conclude collective agreements. This restrictive provision was also used when Wilhelm Haberzettl, the chair of the Union of Railway Employees ( Gewerkschaft der Eisenbahner, GdE), had his candidacy for a position on the HSV governing board refused. In response, Mr Haberzettl took the case to the Constitutional Court ( Verfassungsgerichtshof, VfGH), calling for this refusal to be repealed. He argued that he - as a leading representative of organised labour - had obviously been excluded from a representative position at HSV only for political reasons.

Meanwhile, critics state that the HSV reform has enabled the government to replace many former leading representatives on HSV bodies with people more closely linked to the two coalition parties. In comparison with the progress made on these organisational changes, substantial reforms appear to have reached a stalemate. For instance, a reform of the health system promised by the government has not yet been realised. Several reforms (which Mr Sallmutter had refused to implement), such as the taxation of accident benefits and the introduction of 'ambulatory' treatment fees, proved partly ineffective and had to be withdrawn on grounds of constitutional law. However, the government has managed to achieve one notable social security reform, that of pensions in 2003 ( AT0305201N) - though this reform was drawn up almost without HSV involvement.

With regard to the organisational reform of HSV, the VfGH presented its ruling on 10 October 2003. It ruled that the refusal of Mr Haberzettl's application for a position on HSV’s governing board was unlawful, since there are no factually justified reasons for excluding leading representatives of the parties to collective bargaining from leading HSV positions. Moreover, the Court ruled that almost the whole organisational structure of the 'new' HSV, including the management and the governing board, is in conflict with the Austrian Constitution. This is because the HSV reform substantially undermines the principle of self government by excluding the most important representatives of insured people from participating within the HSV's structure and disregarding the principles of democratic representation. According to the VfGH, there are two alternative options for reforming HSV in a way which is in line with the Constitution: re-establishing the system of self government or transforming HSV into a state authority. The VfGH has laid down a deadline of 31 December 2004 for the creation of a new structure which is compatible with the Constitution.

The two parties of the parliamentary opposition have welcomed the VfGH judgment. For their part, the social partner organisations, and in particular the Austrian Trade Union Federation ( Österreichischer Gewerkschaftsbund, ÖGB) which is denied any high-level participation in the current HSV structure, have demanded the restoration of the HSV’s full self government.

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