Government to introduce basic social security cover in 2009

In April 2008, the Federal Minister for Social Affairs and Consumer Protection and representatives from Austria’s nine provinces agreed on the introduction of a ‘needs-oriented basic cover’ scheme from 2009. Accordingly, all people who are impoverished and willing to work are set to receive a minimum gross income of €747 a month, which will be payable 14 times a year and revaluated annually. The social partners’ response to the initiative has been largely positive, albeit somewhat mixed.

On 10 April 2008, after 14 months of intense negotiations, the Federal Minister for Social Affairs and Consumer Protection, Erwin Buchinger of the Social Democratic Party (Sozialdemokratische Partei Österreichs, SPÖ), and representatives of all nine Austrian provinces (Länder) agreed on a ‘needs-oriented basic cover’ scheme. The current ‘grand coalition’ government – comprising the SPÖ and the conservative Austrian People’s Party (Österreichische Volkspartei, ÖVP) – plans to introduce this scheme on 1 July 2009. The ‘basic cover’ scheme aims to prevent destitution among the country’s population through a range of measures.

Main features of scheme

Under the new scheme, all people who have a legal claim to unemployment benefit (Arbeitslosengeld), unemployment assistance (Notstandshilfe), social assistance (Sozialhilfe) and pensions, whose income remains below a specified income support threshold (Ausgleichszulagenrichtsatz) – which currently stands at €747 a month – will receive a minimum gross income equivalent to this amount each month. The monthly sum is payable 14 times a year and will be revaluated annually. In addition, a certain amount of supplement is payable for each child. Most notably, the current social assistance scheme, which is not part of the statutory social insurance system but organised by the provincial governments and which therefore provides for distinct levels of assistance, will be replaced by the statutory and uniform ‘basic cover’ scheme (AT0612029I).

Eligibility requirements

With the exception of retirees, only people who are both impoverished and willing to take up or resume work are set to fully benefit from the scheme. Unemployed people who refuse job offers from the Public Employment Service (Arbeitsmarktservice Österreich, AMS) will be liable to deductions of up to 50% under the scheme. People with assets, such as property, worth more than €3,500 – with the exception of household goods and vehicles needed for occupational purposes – will not be entitled to claim this ‘basic cover’. Minister Buchinger estimates that about 400,000 people will benefit from the scheme, including citizens of the European Economic Area (EEA) countries who have been living in Austria for at least three months, as well as other foreign nationals with a permanent residence permit.

Implementation of scheme

In contrast to the current social assistance scheme, people will apply for the new ‘basic cover’ scheme through the AMS. However, it is up to the provincial governments to decide whether the regional branches of the AMS will also be responsible for administering and paying out the cover; alternately, at the request of the provincial governments of Lower Austria (Niederösterreich) and Vorarlberg, the social authorities (Sozialämter) of each of these provinces will be in charge of the latter tasks. Thus, Minister Buchinger’s plan to make the AMS a ‘one-stop shop’ responsible for all matters related to social security cover across the country has been counteracted by two of the country’s nine provinces. The minister’s idea has been to reduce the overall non-take-up rate by establishing a ‘one-stop shop’ system within the AMS, which largely guarantees the anonymity of those applying for the scheme. Moreover, such a scheme is likely to enhance the beneficiaries’ job placement chances, due to their ongoing contact with the AMS.

The liability to recourse, which exists under the current social assistance scheme, will be abolished. The aim is to motivate beneficiaries to resume work without being forced to pay back allowances received during previous periods of unemployment.

Health insurance cover

All beneficiaries of the new ‘basic cover’ scheme will also be fully included in the statutory health insurance system.

Issues outstanding

Agreement has not yet been reached, however, by the responsible ministry and regional governments on a number of outstanding issues. For instance, the provincial governments of Lower Austria and Vorarlberg insist on deducting 25% of the ‘basic cover’ entitlements for beneficiaries who do not have to pay any accommodation expenses. In this respect, it appears unlikely that a uniform regulation throughout the country will be reached. Moreover, the ‘provisions of reasonableness’ (Zumutbarkeitsbestimmungen) need to be redefined; these provisions govern the conditions under which unemployed people may refuse a job offer from the AMS without losing their ‘basic cover’ entitlements (AT0312201N).

Response to new scheme

The ‘basic cover’ scheme agreed upon has received a mixed response from the parliamentary opposition and social partners. While the Green Party (Die Grünen, GRÜNE) is largely in favour of the new scheme, criticising only some details, the opposition populist parties have raised fundamental objections. In particular, the latter contend that ‘basic cover’ schemes could diminish many people’s incentive to take up a job, especially in the low-wage sectors. In contrast, employer organisations – and, in particular, organised labour – have generally approved of this initiative. They have adopted the coalition government’s argument that no retiree or jobseeker should be forced to suffer from extreme poverty.

Georg Adam, Department of Industrial Sociology, University of Vienna

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