Government challenges social partnership

May 2003 saw Austria's largest strike action in 50 years, as almost half a million workers protested against the conservative-populist ÖVP-FPÖ government's proposals for public pensions reform. In contrast to Austria’s long tradition of social partner involvement in significant changes in social security, the government has launched this far-reaching reform without such involvement, thus challenging the system of tripartite consultation and social partnership.

On 6 May 2003, hundreds of thousands of workers participated in tens of thousands of assemblies and 'defence strikes,' protesting against the government’s plans for substantial cuts in public pensions (AT0305201N). These protests, which were carried out across all sectors and initiated by the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB), were the largest strike actions in Austria for more than 50 years. Since the government has refused to consider ÖGB’s demands, further actions are to be expected. In view of the magnitude and rapid implementation of the pensions reform, which critics believe will lead to a deterioration in the public pensions system for all persons in employment, 62% of the Austrian population support the protest actions, according to recent surveys. This is notable in that Austria has had almost no tradition of industrial action during recent decades, due to a highly developed 'corporatist' system.

Successful tradition of social partnership

Industrial relations in Austria are have mainly been shaped by a specific and highly developed system of social partnership (AT0109201F). This corporatist system of reconciling the interests of business and labour has proved very effective in terms of political and social stability, due to its influence on socio-economic policy-making. In particular, pay and incomes policy has always been highly attuned to economic requirements. This pattern of corporatist cooperation has contributed to Austria’s outstanding socio-economic performance, in terms of relatively low unemployment rates and 'social peace'.

On the employees’ side, the key actors within this corporatist system are ÖGB and the Federal Chamber of Labour (Arbeiterkammer, AK). On the employers’ side, they are the Chamber of Economy (Wirtschaftskammer Österreich, WKÖ) and the Federation of Austrian Industry (Österreichische Industriellenvereinigung, IV). These organisations have close links with the political parties through a practice of multiple office-holdings. On this basis, there are special relations between ÖGB and AK and the Social Democratic Party (Sozialdemokratische Partei Österreichs, SPÖ), and between WKÖ and the conservative Austrian People’s Party (Österreichische Volkspartei, ÖVP). These links contributed to a broad acceptance of social partnership across society, at least as long as these two political parties almost fully represented Austria’s population and dominated the post-war governments up to the end of the 1980s. Conversely, governments could augment their legitimacy by relying on the social partners’ support in matters of public policy.

Decay of tripartite corporatism

Since the emergence in the late 1980s of a 'neo-liberal' government policy - which replaced the 'social democratic era' characterised by a special macroeconomic policy mix (often designated as 'Austro-Keynesianism') - the influence of the social partners on public policy-making has declined. In particular, the subordination of welfare policy goals to the core issue of a consolidated state budget (due to EU obligations) has weakened the employees’ side.

Moreover, the coalition government of the ÖVP and the populist Freedom Party (Freiheitliche Partei Österreichs, FPÖ), which first came into power in February 2000, has overtly challenged social partnership. Attacks on the system have been launched especially by the FPÖ, since this party has never been able to gain influence in the system of social partnership. One leading FPÖ representative (now a minister in the current government) even suggested abolishing the trade unions. The government has adopted a new type of unilateral policy-making which, according to commentators, implies dismantling social partnership as a factor in public policy. For instance, a 2001 reform of the structure of the central organisation of the public social insurance system (Hauptverband der Sozialversicherungsträger, HSV) was widely interpreted as a replacement of the HSV governing board members - delegated by the social partners, namely the unions - with government representatives especially from the FPÖ (AT0108225N). Another case in point was the restructuring of the national Labour Market Service (Arbeitsmarktservice, AMS) in 2001.

According to the government, parliament should enact the pension reform by early June 2003. In response, the social partners offered to draft their own joint reform plan by early autumn. This initiative was refused by the government. Although the influence of social partnership has gradually declined over recent decades as outlined above, this refusal is a first in Austria. Until now, no government has refused a joint initiative of the social partners in such important matters of economic and social policy.

Since this government policy line implies diminishing the influence not only of organised labour but also of WKÖ, the latter does not support the government's approach despite its close links with the ÖVP. On the one hand, this may generate tensions within the ÖVP in the future. On the other hand, WKÖ finds itself in a rather strange situation: it is cooperating with ÖGB in terms of finding an alternative to the government's reform proposals; but, at the same time, ÖGB’s strike actions aimed at combating the reform inevitably hit WKÖ’s member firms.

Commentary

The current leaderships of the ÖVP and the FPÖ are clearly willing to carry out a fundamental reform of Austria’s public pensions system by June 2003. This is in spite of the protests of the parliamentary opposition, the social partners and even significant parts of the governing parties, which feel that they have been passed over in this matter and want to postpone any decision until autumn 2003, and although almost half a million employees have participated in strikes and protest actions.

Since it may be doubted that enacting a pension reform in either spring or autumn this year will make much difference, some commentators argue that the government is using this issue as an opportunity to dismantle the system of social partnership completely. In principle, this would mean an end of social partnership only with regard to public policy matters which in formal terms fall within the purview of the state's responsibilities. Nevertheless, the climate of confrontation may spill over to collective bargaining, in that the current strike action against the government may break with the long tradition of peaceful relations between the two sides of industry. In these circumstances, social partnership may not easily recover, even when another government takes office. (Georg Adam, University of Vienna)

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