Government plans seven-year transitional period for workers from central and eastern Europe

In February 2004, the Austrian government presented draft legislation whereby access to the country's labour market will continue to be restricted, for a seven-year transitional period, for workers from new central and eastern European Member States joining the EU in May 2004. Employers are unhappy with the planned transitional period itself, while trade unions have criticised the lack of any attendant measures to improve Austria’s general labour market situation.

On 24 February 2004, the cabinet council agreed a transitional regulation which aims to ensure a medium-term continuation of the current restrictions on entry to the Austrian labour market for workers from the EU acceding countries in central and eastern Europe, during the first years of their EU membership. In the face of the forthcoming accession of 10 new EU Member States on 1 May 2004, the coalition government of the conservative People’s Party (Österreichische Volkspartei, ÖVP) and the populist Freedom Party (Freiheitliche Partei Österreichs, FPÖ) has drawn up a regulation which seeks to continue the present restrictive access regime for entry to the Austrian labour market for workers from outside the current European Economic Area (EEA) (AT9703104F). In more detail, the government plans to enact an EU Enlargement Adaptation Act (EU Erweiterungs-Anpassungsgesetz) which will prohibit employees from most of the new EU Member States from entering Austria’s labour market without restriction from 1 May 2004, for a transitional period of up to seven years (as permitted under arrangements agreed by the EU and new Member States in central and eastern Europe). Chancellor Wolfgang Schüssel of the ÖVP stated that this regulation will, for the next few years, protect resident employees from cheaper (ie low-wage) foreign competitors.

According to the government's plans, workers from all new Member States except for Malta and Cyprus will remain subject to the current restrictive immigration regime for the next few years. This means that they will be entitled to enter or remain in Austria’s labour market only if they are granted by the authorities some kind of work permit under the Aliens Employment Act (Ausländerbeschäftigungsgesetz, AuslBG). Only employees who have been legally employed in Austria for more than 12 months (at the date of accession of their country to the EU) will be eligible to move freely in Austria’s labour market. Moreover, the regulations for seasonal workers will continue to apply to employees from the acceding countries. Accordingly, Czech employees, for instance, will be entitled to work as seasonal workers in Austria only if they fall within the limited quota for foreign seasonal workers (AT0109128N) fixed by ministerial decree.

In addition, in certain branches of the economy, there will also be a transitional period for companies domiciled in the prospective new Member States wishing to move their operations to Austria. In particular, in the construction and the social services sectors, companies from these countries will be prohibited from taking orders in Austria for a period of up to seven years in order to prevent competitive disadvantages for Austrian enterprises due to their significantly higher labour costs.

The restrictions on the Austrian labour market planned by the government have been criticised by the Chamber of the Economy (Wirtschaftskammer Österreich, WKÖ) employers' organisation. Christoph Leitl, the president of WKÖ, argues that Austria’s enterprises will suffer serious damage if their labour demand is not met as a result of these restrictions. Where the Labour Market Service (Arbeitsmarktservice, AMS) fails to provide enough resident (Austrian) employees for vacancies, employers should be entitled to engage additional foreign workers from the acceding countries, Mr Leitl demands. At the least, the government should conclude bilateral agreements with Austria’s neighbouring countries (analogous to the only existing agreement, concluded with Hungary in 1998) on cross-border commuters in order to provide (short-term) labour if needed by Austria’s enterprises.

Organised labour has stated that merely introducing transitional periods before completely opening up the Austrian labour market, without launching attendant measures, will not resolve the country’s increasing problems in terms of unemployment and labour market segmentation. Therefore the trade unions have been calling for active labour market instruments and substantial social partner involvement when preparing the opening of Austria’s labour market to workers from the new Member States. In particular, each labour market segment should be jointly evaluated by both the government and the social partner organisations with special regard to its adaptability, and with special consideration of border areas. Any further decisions on when and how to open up these labour market segments should be contingent on the results of these evaluations, the unions argue.

However, so far, the government has neither responded to the social partners’ positions nor presented any plan to prepare for the complete opening of Austria’s labour market to workers from the central and eastern European EU Member States before 2011 at the latest.

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