2003 Annual Review for Austria

This record reviews 2003's main developments in industrial relations in Austria.

Political developments

On 24 November 2002, a general elections was held, which had become necessary due to conflicts within the coalition government of the conservative People’s Party (Österreichische Volkspartei, ÖVP) and the populist Freedom Party (Freiheitliche Partei Österreichs, FPÖ). These elections saw the ÖVP emerge as the clear winner. It increased its vote by more than 15 percentage points to 42.3%, thus becoming the largest party in parliament for the first time since 1970 (AT0301204F). After a three-month period of negotiations with all parties represented in parliament, on 21 February 2003 the ÖVP decided to continue its previous coalition government with the FPÖ, which had lost almost two-thirds of its 2000 vote, receiving only 10.0%.

On 6 March, after the inauguration of the new government, Chancellor Wolfgang Schüssel of the ÖVP and Vice-Chancellor Herbert Haupt of the FPÖ presented the government’s programme for the coming legislative period (AT0303202F). This programme aims to continue the 'austerity policy' previously pursued by the government. The core issues are: reforms of the state pensions and taxation systems; the reduction of (non-wage) labour costs; and the privatisation of the remaining state-owned industries. Moreover, the government announced its willingness to transform the existing national unemployment assistance scheme (Notstandshilfe) into a new social assistance scheme (Sozialhilfe) which is part of the social security system run by the regions (Länder). Also, amendments were planned which would unemployed people to accept offers of jobs which are a long distance away and unrelated to their previous occupation.

In 2003, three significant elections to the regional (Länder) parliaments (Landtage) were held. At the end of March, the ÖVP won the regional elections in Lower-Austria (Niederösterreich), receiving 53.3% of the vote (up 8.4 points from the previous election in 1998). Whereas both the Social Democratic Party (Sozialdemokratische Partei Österreichs, SPÖ) (33.6%) and the Green Party (Die Grünen, GRÜNE) (7.2%) slightly increased their share of the vote, the FPÖ lost 11.6 percentage points, winning only 4.5%. The regional elections held in Tyrol (Tirol) and Upper Austria (Oberösterreich) in late September had similar outcomes for the FPÖ (which lost about two-thirds of its previous vote). The Green Party increased its share of the vote by approximately one-third and thus overtook the FPÖ. The ÖVP slightly improved its electoral results in Tyrol and obtained an absolute majority in the regional parliament, but its vote was static in Upper Austria (43.4%). The SPÖ slightly increased its share of the vote in Tyrol (25.9%) and rather more in Upper Austria (38.3%), where it gained six extra seats, increasing its representation from 16 to 22. This latter result was seen as being due to the success of the regional SPÖ leader in taking advantage of the highly unpopular final sell-off of the remaining state share in the VOEST-Alpine company, which is based in Upper Austria's capital, Linz. This important steel-producing company, which employs some 14,500 people, had been completely privatised by the ÖVP-FPÖ government only a few weeks before the elections (AT0312204F).

The most significant political events in 2003 included the pensions reform and the far-reaching restructuring of the state-owned Austrian Federal Railways (Österreichische Bundesbahnen, ÖBB), both provoking country-wide industrial action (see below under 'Industrial action').

In 2004, a series of elections will take place, beginning with regional elections to the representational bodies of the Chamber of Labour (Arbeiterkammer, AK) in Salzburg and Tyrol in January and February 2004. These will be followed by elections to the regional parliaments in Salzburg and Carinthia (Kärnten) in March 2004. A new Federal President will be elected in April 2004, on the expiry of the term of office of the current incumbent. It is likely that there will be two serious candidates for this office: Heinz Fischer, the long-standing Vice President of the Austrian parliament and a member of the SPÖ; and Benita Ferrero-Waldner, the ÖVP Federal Minister for Foreign Affairs in the current administration.

Collective bargaining

In Austria, collective bargaining is almost exclusively conducted at sectoral level. According to the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB), this resulted in about 450 separate agreements in 2003. Due to tendencies to negotiate agreements for narrower branches (or to split up sectors into subsectors) on the one hand, and to extend the coverage of collective bargaining to new sectors on the other, the number of agreements grows slightly each year. For instance, in November 2003 the first nationwide agreement was signed for the private social and health services sector, covering about 35,000 workers (AT0312202F).


In response to the ongoing slowdown of the Austrian economy (with GDP growth of 0.9%) and a notable oversupply of labour, manifested in an unemployment rate of 4.4%, the social partners agreed moderate pay increases in 2003.

The wage bargaining system is traditionally strongly coordinated across the economy, and the metalworking industry usually sets the pace for all other sectors. The 2003 metalworking agreement, concluded in October 2003 for some 210,000 employees, provides a minimum pay increase of 2.1% (or at least EUR 35 per month) for blue- and white collar workers. As in previous years, the 2003 agreement includes a so-called 'distribution option' entitling the employer to distribute flexibly parts of the increase among employees. If it takes up this option, the employer has to pay a minimum wage increase of 2.4% (instead of 2.1%) on average. Moreover, individual pay increases must not be lower than 1.8%.

The bargaining rounds in most other private sector areas generally resulted in minimum pay increases of between 1.9% and 2.3%, with a few exceptions including a 1.7% rise in the glass industry and 2.5% in the electrical and electronics subsector.

The average collectively agreed minimum pay increase in 2003 is estimated to be 2.2% (compared with 2.5% in 2002), which exceeds the inflation rate of 1.5% for 2004, forecast by the Institute of Advanced Studies (Institut für Höhere Studien, IHS).

Working time

In 2003, the statutory part-time work scheme for older employees (which was introduced in 2000 in order to keep older employees in work) was amended for budgetary reasons. In order to reduce the number of workers who are eligible, the period of entitlement to this scheme was reduced from six-and-a-half to five years. Moreover, the possibility of flexible distribution of the older worker's work over the period of part-time employment was linked to the employment of an additional worker by the employer, to cover the working time released by the worker participating in the scheme (AT0209202F). As a result, a number of collective agreements dealing with this issue had to be adjusted to the new regulations in 2003.

Another important working time issue addressed by collective bargaining was an amendment to the Shop Opening Hours Act (Öffnungszeitengesetz) enacted in July 2003. Since 1 August 2003, retailers have entitled to open their shops for 66 hours per week (as was the case under the old regulation), but now within an extended standard framework period: between 05.00 and 21.00 on weekdays and between 05.00 and 18.00 on Saturdays (AT0307201N). Owing to this extension of shop opening hours, the collective agreement covering employees in the retail sector had to be adjusted (valid from 1 January 2004 onwards) in terms of more flexible working hours arrangements and higher premium payments for evening work.

Job security

As was the case in 2002, the overall unemployment rate in 2003 continued to rise, especially among young people and older workers aged over 50. Despite this, job security did not prove to be a particular bargaining issue. However, for the first time, some collective agreements included clauses aimed at promoting employees entering unpaid training leave schemes by granting them the right to return to their job afterwards.

Equal opportunities and diversity issues

In general, equal opportunity issues were - if at all - dealt with only marginally in the 2003 bargaining round. However, the agreement for the electrical and electronics sector concluded in December (AT0402202F) introduced a common pay scheme for all employee groups, ie both white- and blue-collar workers, which is unique in Austria’s bargaining system. This scheme provides for a more precise definition of grades in order to prevent unfair and unequal classifications of men and women with the same formal qualifications.

Training and skills development

Training was not a particular matter of interest in 2003's bargaining (though see above under 'Job security').

Other issues

In October 2003, the collective bargaining parties in the paper and pulp industry concluded an agreement that provides for the introduction of an occupational pension scheme for the entire sector in May 2004. This agreement is noteworthy, since collective bargaining on occupational pension schemes has until now been largely limited to the banking and savings banks sectors.

Legislative developments

Apart from the far-reaching pensions and ÖBB reforms (see below under 'Industrial action'), the main legislative developments in 2003 were the amendment to the Shop Opening Hours Act (see above under 'Working time') in July and the abolition of fees on some health services, which were generally perceived as unfair and costly in terms of administration, in April. Although the government presented two draft bills in order to adjust national legislation to the requirements of the EU framework equal treatment Directive (2000/78/EC) (EU0102295F), it had not implemented this Directive by the end of the year (AT0308204T). Likewise, legislative proposals aimed at combating illicit work (AT0302202F) and reforming the national unemployment assistance scheme (see above under 'Political developments') proved controversial, and were not enacted during 2003.

The organisation and role of the social partners

Unlike in 2002, when the social partners were repeatedly encouraged by the government to participate in drafting proposals and bills relating to specific issues, as in the case of new severance pay regulations (AT0207201N), government decisions in 2003 tended to bypass social partnership. In spring 2003, the ÖVP-FPÖ government launched its far-reaching pensions reform without any involvement of the social partners. Moreover, it even refused a joint initiative of ÖGB and the Chamber of Economy (Wirtschaftskammer Österreich, WKÖ) to draft their own joint pensions reform plan by autumn 2003. The government was determined to carry out its own pensions reform immediately, and this resulted in major industrial action. Until this occasion, no Austrian government had ever refused a joint initiative by the social partners in such important matters of economic and social policy (AT0305202F).

In view of the large-scale protests organised by the unions, the government took some account of the social partners’ positions when it enacted the pensions reform on 11 June 2003. Furthermore, it encouraged the social partners to develop proposals for the harmonisation of the various public pensions systems (for different occupational groups) and to draft jointly a new regulation on unemployment benefit entitlement (AT0312201N).

However, some commentators suggest that such consultation may have been offered by the government for the sole reason of appeasing the social partners, and, in the case of the unions, to prevent further industrial action. In the event, none of the social partner proposals had been implemented by legal measures by the end of the year.

Whereas the WKÖ’s ongoing internal organisational reform (aimed at consolidating its budget by 2005, with a reduction in membership contributions of 30% - AT0105215N) made progress during 2003, a merger process between five ÖGB-affiliated unions, which was planned to be finalised in 2005 (AT0212202F), was delayed by other union activities, such as organising industrial action.

Industrial action

Industrial relations during 2003 were overshadowed by a series of strikes and protest actions, generally directed against the government’s plans to introduce far-reaching pensions reform. The main aim of the reform was to reduce future expenditure on pension benefits, in particular affecting younger employees in the private sector. Apart from these cuts in public pensions, the government planned the abolition of the early retirement scheme as well as the introduction of cutbacks in the invalidity pension scheme. Since the government did not prove willing either to postpone its reform or to accept any alternative proposals, such as those demanded by the social partners, ÖGB and its affiliates organised a series of protest actions: a 'defence strike' on 6 May, in which hundreds of thousands of employees participated; a number of large demonstrations with more than 200,000 participants on 13 May; and nationwide strikes across almost all sectors on 3 June. These strikes were the most far-reaching protest actions Austrian has experienced since the Second World War, with about 1 million employees participating (AT0306201N). Nevertheless, on 11 June parliament endorsed the slightly modified pensions reform presented by the government, with only the ÖVP and FPÖ voting in favour.

2003 also saw major industrial action in the wake of the restructuring of the state-owned Austrian Railways (ÖBB) that was eventually carried out by the government on 4 December. In particular, the Union of Railway Employees (Gewerkschaft der Eisenbahner, GdE) organised major strikes that lasted for three days in November, in protest against the government’s plans for restructuring and splitting up ÖBB (AT0312103F).

Another significant labour dispute affected Austrian Airlines (AUA), the national air carrier. In August 2003, pilots took limited strike action to oppose the introduction of a new, less favourable payment scheme planned by management (AT0309202F). This conflict arose in response to what is seen by the union side as a growing tendency of management to 'play off' the employees of one AUA subsidiary against those of the others. This is possible since collective bargaining is conducted separately for each of the AUA group companies.

In addition, there was some limited strike action at the national post-bus company in protest against its planned splitting-up and privatisation (AT0206202N). Finally, teachers repeatedly protested against severe cutbacks in the public schools system.

Employee participation

There were no legislative or other significant developments in the area of employee participation in Austria in 2003.

Stress at work

The issue of stress at work is currently not a significant issue in legislative or collective bargaining terms. However, the Chamber of Labour conducts annual surveys on issues relevant to stress, and the findings indicate that employees continue to suffer from a lack of time to complete their work, and that time-related stress symptoms have become the most frequent subject of employee complaints. These findings have encouraged labour organisations to call for preventive health services to be offered at company level, rather than to demand further legislation on employee protection.

Undeclared work

Recent scandals involving illegal employment practices in road haulage (AT0203201N) and in the construction industry (AT0302202F) have triggered a continuing debate on measures to combat illicit work. In particular, the large-scale, organised social security and tax fraud reported to be committed by a growing number of companies has prompted labour organisations and the parliamentary opposition to call for legislation to combat these practices. According to a study conducted by Friedrich Schneider of the University of Linz in 2001, most illicit employment relationships are found in the construction industry (38% of the total), followed by hotels and restaurants (17%) and industrial production (16%). Austria’s growing informal economy is estimated to represent about 10% of its GDP. WKÖ wants to tackle the problem of illicit work by reducing economic disincentives for legal work, such as taxes and non-wage labour costs. ÖGB and AK, however, urge the government to introduce effective legislation against social fraud and tax evasion, as it has promised since 2002.

New forms of work

Since January 2002, a sectoral collective agreement for temporary work agencies has been in existence, covering about 30,000 employees (AT0202202N). On 26 November 2003, a second follow-up agreement was concluded, which is valid from 1 January 2004 and provides for a minimum pay increase of 2.1%.

As in previous years, there was a further increase in 2003 the number of 'minimally employed workers', defined as those earning no more than EUR 309 per month (in 2003). Some 220,000 employees were involved in this form of non-standard employment. About 71% of them were women, and most were working under precarious conditions in terms of social insurance and income (AT0308201N).


As announced by the government in June 2003 (in an attempt to calm the protests against the pensions reform), a harmonisation of the various public pensions systems applying to different occupational groups - private sector employees, public servants, farmers and self-employed people - is likely to be introduced during 2004. ÖGB presented its proposals in autumn 2003, most of which have been rejected by the government.

According to a settlement reached between the government and the GdE railworkers' union, new service regulations governing the employment of ÖBB staff are to be established by April 2004 (AT0405201N), either through a joint solution agreed by ÖBB management and GdE, or by the government unilaterally - in which case further industrial action is likely to follow.

In all probability, the social partners’ proposal for new regulations on unemployment benefit entitlement will result in new legislation (AT0404202N). Furthermore, it remains to be seen whether any measures to combat illicit work, as well as the overdue implementation of the EU framework equal treatment Directive, will be realised.

Last, but not least, a draft bill on tax reform, which was presented by the government in December 2003, is likely to be introduced during 2004 and to come into effect in 2005. (Georg Adam, University of Vienna)

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