Social democrats propose basic monthly social security cover

Following the general elections, held in October 2006, the Social Democratic Party regained its position as the largest parliamentary party. Subsequently, the party proposed the idea of a ‘basic cover’ scheme, which provides for a minimum income of €800 for unemployed people and retirees. However, the proposal has received a mixed response from other political parties and the social partners.

Election victory for SPÖ

Austria’s general elections, held on 1 October 2006, resulted in the conservative People’s Party (Österreichische Volkspartei, ÖVP) conceding defeat, losing its position as the largest parliamentary party by a shortfall of eight percentage points. In its place, the opposition Social Democratic Party (Sozialdemokratische Partei Österreichs, SPÖ) regained its position as the largest party, although it also slightly decreased its share of the vote by 1.2 percentage points to 35.3%. Following the party’s victory at the polls, the Chair of SPÖ, Alfred Gusenbauer, was immediately commissioned by the country’s President, Heinz Fischer, to put together a new and stable coalition government. Subsequently, Mr Gusenbauer initiated negotiations with the ÖVP leadership in an attempt to set up a so-called ‘grand coalition’. However, the talks have proved difficult and have not yet been concluded.

Provisions of basic cover scheme

Just a few days after the party’s election win, SPÖ representatives presented a ‘basic cover’ scheme, in an effort to redeem its pre-election pledge. The scheme had been devised by a social democratic member of the provincial government of Salzburg, Erwin Buchinger. According to the SPÖ’s proposal, all people with legal claims for unemployment benefits (AT0312201N), unemployment assistance, social assistance and pensions, which are below a specified income support threshold (Ausgleichszulagenrichtsatz), should receive a minimum income of €800 per month.

However, with the exception of retirees, only people who are both impoverished and willing to resume work are set to benefit from this scheme. Unemployed people who refuse job offers from the Public Employment Service (Arbeitsmarktservice, AMS), as well as persons with considerable assets such as property, will not be in position to claim basic cover. Thus, as this scheme makes any legal claim conditional on actual impoverishment, it does not allow the individual to choose between gainful employment and basic cover benefits.

Nonetheless, the scheme has two advantages. Firstly, no retiree or jobseeker would be forced to suffer from extreme poverty. Secondly, those receiving social assistance – which is currently not part of the statutory social insurance system but organised by the provincial governments (AT0303202F) and which therefore provides for distinct levels of assistance – would automatically be brought into the realm of the AMS. This means that the AMS, instead of the regional authorities (Länder), would be responsible for all matters related to social assistance, thus becoming a ‘one-stop-shop’ for all groups of beneficiaries. According to Mr Buchinger, some 400,000 people are set to benefit from the scheme, which would cost an additional €660 million per year.

Mixed response to proposal

The needs-oriented basic cover scheme (in contrast with ‘unconditional’ schemes) proposed by the SPÖ has received a mixed response from other political parties, the social partners and particular welfare organisations. ÖVP’s General Secretary, Reinhold Lopatka, criticised the SPÖ’s proposal, arguing that the current conservative-populist government had already introduced a range of measures aimed at supporting people with the lowest incomes. Mr Lopatka deems the SPÖ scheme to be too costly and estimates additional costs of at least €1.3 billion per year. Moreover, he contended that any basic cover scheme would not reduce, but might even increase, the number of destitute people, as such schemes would be likely to diminish many people’s incentive to take a job.

The ÖVP’s position has been strongly opposed by the Green Party (Die Grünen, GRÜNE), which largely supports the SPÖ initiative, calling for amendments only in relation to specific details. On the one hand, GRÜNE criticised the proposed measures for monitoring the potential beneficiaries’ willingness to work and for calculating their assets. In this respect, GRÜNE emphasised that the SPÖ should have learned from the failures of the German ‘Hartz IV’ reform (DE0608049I), in particular in terms of its administrative costs. On the other hand, GRÜNE would like to combine the concept of basic cover with the establishment of a statutory minimum rate of pay of €7 per hour, in order to secure labour supply in the lowest wage segment of the economy.

Meanwhile, the Chamber of Labour (Arbeiterkammer, AK) and the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB) have generally approved of the SPÖ’s proposed initiative. Most of the private welfare organisations, some of which would prefer an ‘unconditional basic cover’ scheme as opposed to a needs-oriented one, are calling for an extension of the SPÖ scheme, at least in terms of the scheme’s potential beneficiaries. Interestingly, the Chamber of the Economy (Wirtschaftskammer Österreich, WKO) also signalled its readiness to discuss the proposal. It thus appears to have adopted a somewhat ‘liberal’ view, according to which a certain level of ‘basic cover’ should be acknowledged as a fundamental social right in modern societies.

Georg Adam, Institute of Industrial Sociology, University of Vienna

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