2004 Annual Review for Austria

This record reviews the main industrial relations developments in Austria during 2004.

Political developments

A series of elections to the regional (Länder) parliaments (Landtage) were held during 2004. On 7 March, the Social Democratic Party (Sozialdemokratische Partei Österreichs, SPÖ) won - for the first time in this province - the regional elections in Salzburg, receiving 45.4% of the vote (up 13.1 percentage points from the previous election in 1999). The conservative People’s Party (Österreichische Volkspartei, ÖVP), which had been the province’s largest party and thus in power during the whole post-war period until then, lost 0.8 percentage points and for the first time fell to the second position (with 37.9%). As a consequence, Gabi Burgstaller, the head of Salzburg’s SPÖ, became the first ever social democrat and woman to be inaugurated as the province’s governor (Landeshauptfrau). Whereas the populist Freedom Party (Freiheitliche Partei Österreichs, FPÖ) lost more than the half of its 1999 vote, receiving 8.7% of the vote, the Green Party (Die Grünen, GRÜNE) increased its share of the vote from 5.4% to 8.0%.

Regional elections took place also in Carinthia (Kärnten) on 7 March 2004. These elections, however, produced a completely different picture, resulting in a consolidation of support for the FPÖ and its governor Jörg Haider, with a vote of 42.4% (up 0.3 points from the previous election in 1999). Whereas both the SPÖ and the GRÜNE (which thus gained representative status in the regional parliament for the first time) significantly increased their vote by 5.5 and 2.8 points (receiving 38.4% and 6.7%, respectively), the ÖVP lost almost half of its 1999 vote, receiving only 11.6%.

Elections to the regional parliament were held in Vorarlberg in September 2004. These elections saw the ÖVP regain an absolute majority in terms of both votes (54.9%) and seats (21 of 36), which has been interpreted as a significant mark of confidence on the part of the Land’s constituency for the governor Herbert Sausgruber. Whereas the SPÖ and the GRÜNE also markedly improved their share of the vote (although receiving no more than 16.7% and 10.2%, respectively), the FPÖ lost 14.5 percentage points, receiving 12.9%.

The elections to the European Parliament, held on 13 June 2004, saw the SPÖ emerge with the highest support (receiving 33.3% of the vote), with the ÖVP (32.7%) closely behind. The 'Hans-Peter Martin list', founded by a former member of the Social Democratic group in the European Parliament, stood for the first time as a candidate and surprisingly won 14.0% of the vote and thus slightly more than the GRÜNE (12.9%), whereas the FPÖ lost almost three-quarters of its 1999 vote, receiving only 6.3%.

The most significant election in 2004 was that of the new Federal President in April 2004 by direct vote. Heinz Fischer, the long-standing Vice-president of the Austrian parliament and a member of the SPÖ, won this election, receiving 52.4% of the vote, against the ÖVP candidate, Benita Ferrero-Waldner, the then Federal Minister for Foreign Affairs. Ms Ferrero-Waldner was appointed Commissioner for European Neighbourhood Policy in the autumn of 2004.

Apart from all these elections, the most significant political events in 2004 were:

  • an ongoing disputes over a so-called Convent for Austria, which is a special committee composed of representatives of the major actors/institutions in society, which has been set up and commissioned by the parliament and other authorities to draft a new, modern federal constitution. However, it appears that this body will fail to find a compromise, particularly in the area of a new distribution of powers and competences between the federal state and the provinces (Länder) to be laid down in a new constitutional framework;
  • the introduction of a harmonisation of the various pensions systems for different occupational groups (AT0409203F) in the autumn;
  • the introduction of a tax reform that provides for significant reductions of taxes on corporate profits and moderate income tax relief for employees (AT0402103F); and
  • a public debate over the employers’ demands for longer (statutory and/or collectively agreed) working hours (AT0407201N), from the summer of 2004 (see below).

In addition, the ÖVP-FPÖ government maintained its policy line of privatising the remaining state-owned industries during 2004. Currently, the Postbus company and the VA Technology concern (AT0312204F) stand to be partially or completely privatised.

No major political events are expected during 2005, with the exception of elections to the regional parliaments in Burgenland and Styria (Steiermark) and the possible introduction of a fundamental amendment to Austria’s constitution (see above).

Collective bargaining

Multi-employer collective bargaining at sectoral/industry level prevails in Austria and company-level agreements are rare. According to data and statistics provided by the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB), approximately 400 collective agreements are concluded each year. In addition, each year there are some industries in which no follow-up agreement is concluded, in which case the 'old' agreement remains valid. Altogether, this resulted in approximately 450 collective agreements in force in 2004.

In terms of current trends regarding the number of agreements, there are two contrary tendencies, which are hard to assess accurately. On the one hand, there is a tendency to negotiate agreements for narrower branches (or to split up sectors into subsectors) and to extend collective bargaining coverage to as yet uncovered sectors (AT0401203F). On the other hand, since the early 1990s the signatory parties to collective agreements have tended to 'centralise' bargaining, concluding sectoral agreements for the whole national territory instead of conducting separate, parallel bargaining for each province. Whereas the former tendency has an upward effect on the number of collective agreements, the latter has a downward effect.


Against the background of a slow recovery in the Austrian economy (GDP growth was around 2% in 2004 compared with 0.8% in 2003) and a continuing oversupply of labour (an unemployment rate of 4.5%), the social partners again agreed moderate pay increases in 2004.

In November 2004, the sectoral social partners in the metalworking industry concluded a new collective agreement for around 194,000 employees. This sector traditionally opens Austria’s annual autumn bargaining round and sets the tone for all other sectors. The 2004 metalworking agreement provides for a pay increase of 2.5% (AT0412201N), which has widely been perceived as moderate, given an inflation rate of 2.1% in 2004. By contrast to previous years, the metalworking collective agreement does not include a provision for a company-level 'distribution option' (AT0111229N).

The average collectively agreed minimum pay increase in 2004 is estimated to be slightly below of that of the pattern-setting metalworking industry, at around 2.3%.

Working time

The 2004 autumn bargaining round was overshadowed by an intense working time debate following a demand from employers and business groups for a further relaxation of collectively agreed working time regulations for competitive reasons (AT0407201N). The demand was for new working time schemes to be agreed, allowing a more uneven distribution of normal working hours within longer reference periods. Such proposals would have resulted in net working time extensions and net income losses due to cuts in overtime pay. For this reason, unions firmly rejected the demands and eventually succeeded in winning the battle. However, it should be noted that such an initiative that would result in an extension of working time reflects a significant change of the balance of power between the two sides of industry during the last years: up until the 1990s, collective agreements were instruments that could combine regulations on greater flexibility in the area of working time (which suits employers) with a reduction in weekly working hours (AT0410202F). Working time extensions were almost inconceivable at that point.

Job security

As in previous years, the overall unemployment rate in 2004 continued to rise slightly, which was exclusively the result of a sharp increase in unemployment among women. This trend is strongly linked to deteriorating employment conditions for women, in particular in terms of flexibility (AT0407203F). Despite these trends, job security was not taken up as a significant issue by the bargaining parties. This relates to the fact that Austria’s system of collective bargaining does not have a tradition of dealing with such 'qualitative' issues.

Equal opportunities and diversity issues

Although a few trade unions, such as the Union of Salaried Employees (Gewerkschaft der Privatangestellten, GPA) and the Metalworking and Textiles Union (Gewerkschaft Metall - Textil, GMT), have implemented comprehensive gender-mainstreaming plans or adopted gender-mainstreamed collective bargaining guidelines, gender equality issues were dealt with only marginally in the 2004 bargaining round.

However, the new collective agreement signed in the metalworking industry (see above) introduces a common pay system for blue- and white-collar workers, which to a great extent resembles the one agreed in the electrical and electronics sector one year before (AT0402202F). Both employee categories will thus be treated equally in terms of job classification and automatic pay increments. Due to the metalworking’s pattern-setting role in bargaining, this settlement may trigger negotiations on pay harmonisation in other sectors of the economy (AT0412201N).

Training and skills development

Qualitative issues such as training and skills development are of only minor significance in Austrian collective bargaining. Correspondingly, there were no relevant developments in this area.

Other issues

The management of Austria’s largest bank, the BA-CA bank, announced in October 2004 that it was leaving the savings bank employers’ association and joining the commercial banks association in order to switch from the more expensive savings bank collective agreement to the cheaper commercial banks agreement. This was the first case of 'agreement hopping' known in Austria. The BA-CA works council and the GPA oppose the move and have initiated legal proceedings in order to stop such practices of 'fleeing' binding collective agreements and works agreements (AT0411201N).

Legislative developments

On 6 May 2004, a comprehensive tax reform was endorsed by parliament, with the support of the governing parties only. This amendment to Austria’s tax law, which came into effect on 1 January 2005, aims to reduce the tax on corporate profits and to relieve the income tax burden on employees. However - in contrast to the government’s programme - it does not provide for a reduction in non-wage labour costs, a move which most employers would have preferred.

Apart from this, harmonisation of the various pensions systems for different occupational groups was adopted by parliament on 18 November 2004. This amendment (temporarily) settled a dispute over a far-reaching pensions reform that had been initiated by the ÖVP-FPÖ government in late 2002 and resulted in major strike actions mainly organised by ÖGB in the spring of 2003. Both the parliamentary opposition and organised labour have criticised the fact that the 2003 pensions reform in combination with the 2004 harmonisation will entail substantial welfare cuts for future beneficiaries (AT0409203F).

Furthermore, an amendment to the criminal law, which provides for tougher penalties for organised 'social fraud' (ie tax and social security fraud committed by employers), passed parliament on 10 December 2004. As this amendment was significantly modified compared with the original, tougher draft following intervention by employers, the parliamentary opposition voted against.

The organisation and role of the social partners

In September 2004, the ÖGB president, Fritz Verzetnitsch, announced the definitive failure of a long-standing union merger plan involving originally five and finally four ÖGB affiliates. Differing 'corporate cultures' among the unions and inter-union conflicts over the distribution of power and posts are considered to have been the key factors in the merger’s failure (AT0410201N). Observers believe that this failure may - in the long run - weaken the unions’ position in respect of the employers and the government, due to a possible lack of future coordination of bargaining and strategic orientation.

Between January and May 2004, around 2.6 million employees were called upon to elect their representatives in the Chamber of Labour (Arbeiterkammer, AK). The elections resulted in overall gains for candidates representing the political factions affiliated to the parliamentary opposition, in particular the SPÖ. Overall, this faction won 63.4% of the vote (up 5.9 points from the previous 1999/2000 elections), whereas the faction affiliated to the ÖVP lost 2.4 percentage points, receiving 23.7% of the vote (AT0406202F). The electoral support for the FPÖ’s faction was halved to only 4.8%, and the faction affiliated to the GRÜNE won 4.3% of the vote (up 0.7 points).

Industrial action

Unlike 2003, when strike activity in Austria reached its highest level since the Second World War - mainly resulting from union mobilisation in opposition to the government’s pensions reform plans (AT0411202F) - industrial action was quite rare during 2004. Altogether, only two cases of industrial action were recorded during the year. The first was the result of a long-standing conflict between the government and the management of the Postbus company (Austria’s largest and still state-owned bus operator) on the one side and Postbus employees on the other (AT0206202N). On 30 June 2004, most of the employees stopped work in order to attend works meetings and to protest against government plans to sell one third of the company to private bus companies (AT0408201N).

The second case was the result of a conflict between the management of Austrian Airlines (AUA) and its works council over a planned new, uniform collective agreement for two AUA companies, Austrian and Lauda. Since the better paid flight staff of Austrian rejected any reductions in pay and negotiations therefore seemed to be deadlocked, the flight staff took limited strike action on 13 August 2004. Notably, this action was not authorised by ÖGB (AT0408203F), which subsequently caused some internal debate within the unions concerned about the legitimacy and usefulness of 'wildcat' strikes.

Employee participation

On 16 June 2004, relatively unnoticed by the public, the European Company Statute (EU0206202F) was transposed into Austrian law by amending the Labour Constitution Act (Arbeitsverfassungsgesetz, ArbVG). With regard to the Directive on national information and consultation rights (2002/14/EC), Austria’s government regards the existing regulations on workplace-level consultation and the co-determination rights of the workforce laid down by the ArbVG as being in line with the Directive’s requirements (AT0309203T).

With EU enlargement on 1 May 2004, at least 100 additional companies headquartered in Austria have come within the scope of the Directive 94/45/EC on European Works Councils (EWCs). However, none of these companies are known to have already established a EWC, although some of them are currently conducting negotiations over agreements.

Absence from work

A public debate over possible abuse of the sickness insurance system was initiated in early 2004 when preliminary data for 2003 indicated a slight increase in sickness absence among employees, following a period of decline since 1990 (AT0402201N). Whereas employers interpreted the decline recorded during the period from 1990 to 2002 as proof of large-scale sickness absence abuses in the past, organised labour attributed the decline in sickness absence to deteriorating labour market conditions. This view has been supported by experts who have found a positive correlation between the incidence of sickness absence and GDP growth rates. Higher rates of unemployment in recent years, they argue, have given rise to pressure on employees to go to work even if they are ill.

Psychological harassment

Organised labour, in particular GPA and AK, have repeatedly drawn attention to the problem of sexual harassment rather than that of bullying. According to the Equal Opportunities Ombudswoman (Anwältin für Gleichbehandlungsfragen), around a third of people who contact this advising and supporting institution are alleged victims of sexual harassment. On 1 July 2004, an amendment to the Equal Treatment for Men and Women Act (Gleichbehandlungsgesetz) tightened the penalties prescribed for infringements of anti-discrimination law, raising minimum compensatory fines for sexual harassment to EUR 720.

New forms of work

As in previous years, there was a small increase in most forms of 'atypical' work, in particular in part-time work among women and 'minor jobs' performed by women (ie work performed by 'minimally employed' workers earning no more than EUR 316 per month in 2004).

In March 2004, the government proposed a draft bill aiming at extending unemployment insurance to self-employed people, including 'economically dependent self-employed workers', on a voluntary basis (AT0404202N). However, due to the continuing opposition of the social partners, the government refrained from enacting the draft.

Other relevant developments

After the introduction of a far-reaching restructuring of the state-owned Austrian Federal Railways (Österreichische Bundesbahnen, ÖBB) in 2003, which entailed major industrial action among the workforce concerned (AT0312103F), the ÖBB management and the trade union concerned agreed new 'service regulations' for the employment of about 47,000 railworkers in spring 2004. The government accepted the settlement, since it will bring about significant cost savings (AT0405201N).


It is likely that 2005 will see controversial debates on the following issues, which are on the ÖVP-FPÖ government’s agenda: a further privatisation of the remaining state-owned industries; a transformation of the existing national unemployment assistance scheme (Notstandshilfe) into a new social assistance scheme (Sozialhilfe) which is part of the social security system at federal state level; a reorganisation of the existing health insurance institutions at federal state level; a further relaxation of working time legislation; and a possible reduction of the obligatory AK levy (Arbeiterkammer-Umlage), currently 0.5% of AK members’ gross income. (Georg Adam, University of Vienna)

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