New basic social security cover postponed till 2010

In the summer of 2009, Austria’s current coalition government announced a delayed introduction of a ‘needs-oriented basic cover’ scheme for September 2010. Moreover, it agreed that a minimum gross income of €772.40, which will be revaluated annually, will be payable on behalf of impoverished people only 12 instead of the initially planned 14 times a year. This downgrading of the scheme has unleashed harsh criticism from trade unions and social welfare organisations.

In the spring of 2008, the then Federal Minister of Social Affairs and Consumer Protection, Erwin Buchinger, agreed with representatives of all nine Austrian provinces (Länder) to introduce a ‘needs-oriented basic cover’ scheme by the summer of 2009. The aim was to replace the different social assistance schemes of each of the nine provinces by a uniform ‘basic cover’ scheme in order to set national minimum standards of assistance and thus prevent destitution among the country’s population. At that time, the proposal stipulated that impoverished people who are willing to work would receive a minimum gross income of €747 a month, which should be payable 14 times a year and revaluated annually (AT0804019I). However, general elections held in September 2008 (which eventually led to a reinstatement of a social-democratic-conservative coalition government), the looming global economic and financial crisis as well as the permanent threat of one province, namely Carinthia, to withdraw from the planned nationwide scheme and to maintain its regional assistance scheme have together almost derailed the entire ‘basic cover’ project.

Revised government proposal

On 28 July 2009, the coalition government, comprising the Social Democratic Party (Sozialdemokratische Partei Österreichs, SPÖ) and the conservative Austrian People’s Party (Österreichische Volkspartei, ÖVP), announced that the introduction of the planned basic social security cover is to be postponed until 1 September 2010. The government claimed that the further delay in implementing the scheme was due to the necessity to amend the legislation in each of the nine provinces and to adapt the regional information technology (IT) systems. Moreover, the revised government proposal recommends that a minimum gross income of €772.40 a month should be payable only 12 times a year, instead of 14 times a year as initially suggested. According to the current Federal Minister of Labour, Social Affairs and Consumer Protection, Rudolf Hundstorfer of SPÖ, ÖVP has refused to accept a 13th and 14th payment within the ‘basic cover’ scheme, in a way analogous to the additional payments as laid down in almost all collective agreements. ÖVP fears that a too generous basic social security cover could reduce many people’s incentive to take up a job, especially in the low-wage sectors of the economy.

Main features of scheme

Under the revised version of the 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 €772.40 a month – will receive a minimum gross income equivalent to this amount each month. The monthly sum is payable 12 times a year (instead of 14 times as planned initially) and will be revaluated annually. In addition, a certain amount of supplement is payable after each dependent child of the beneficiaries. Notably, the current social assistance scheme, which is not part of the statutory social insurance system but organised by the provincial governments and therefore provides for distinct levels of assistance from one province to another, will be replaced by the statutory and uniform ‘basic cover’ scheme. Moreover, Mr Hundstorfer announced a so-called ‘ban on impairment’ which means that no potential beneficiary should receive less support compared with the current situation. This is important for beneficiaries in those provinces where the provincial government grants additional (13th and 14th) payments and/or supplements (for example, for lodging or heating).

Uniform eligibility requirements

In contrast to ‘unconditional’ schemes, the needs-oriented ‘basic cover’ scheme as proposed by the government provides that potential beneficiaries must fulfil certain requirements to gain eligibility. 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 Austria (Arbeitsmarktservice Österreich, AMS) will be liable to certain deductions under the scheme. However, this regulation does not apply to people with care duties in relation to small children or dependent relatives and young people in training and further education. Moreover, people with assets, such as property, worth more than a certain threshold (currently standing at €3,665) – with the exception of household goods, vehicles and other goods needed for occupational purposes and items required to satisfy intellectual and cultural needs – will have to exploit these assets before being entitled to claim ‘basic cover’. Another eligibility requirement, applying to foreigners, is the existence of a permanent residence permit in Austria, in order to prevent any abuse of the scheme by non-residents. It is estimated that a total of about 400,000 people will benefit from the scheme.

One-stop shop principle

In contrast to the current social assistance scheme, people will apply for the new ‘basic cover’ scheme through the AMS, which will also be in charge of administering and making payments to beneficiaries. Hence, the AMS is devised to work as a ‘one-stop shop’ responsible for all matters related to social security cover across the country. The advantage of such a centralised setting lies in the fact that the overall non-take-up rate may be reduced significantly, since establishing a ‘one-stop shop’ system within the AMS will largely guarantee the anonymity of those applying for the scheme. Furthermore, such a scheme is likely to enhance the beneficiaries’ job placement chances, due to their ongoing contact with the AMS.

Abolishment of recourse

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

Health insurance cover

All beneficiaries of the new ‘basic cover’ scheme will automatically be fully included in the statutory health insurance system. They will be equipped with the so-called E-card (which grants access to public health services) like of the rest of the population, in order to keep their economic status undisclosed.

Uniform legal procedures

A certain, uniform procedural law for all applicants across the country will guarantee equal treatment of potential beneficiaries. Decisions on the subject of dis/allowance regarding the claim for ‘basic cover’ will be issued in a standard format, within a three-month period after the date of application.

Critical response

The fact that the introduction of the ‘basic cover’ scheme is to be further postponed and, in particular, that it has been downgraded in substance compared with the original draft has met with harsh criticism from various sides. Whereas Minister Hundstorfer has vindicated the compromise by emphasising ÖVP’s unwillingness to accept a more generous ‘basic cover’ scheme, part of SPÖ, the representatives of the nine provinces, the Austrian Workers’ Federation (Österreichischer Arbeiter- und Angestelltenbund, ÖAAB) affiliated to ÖVP, the trade unions, the Chamber of Labour (Arbeiterkammer, AK), a series of non-government social welfare organisations, as well as part of the parliamentary opposition appear frustrated. They criticise the fact that the state provides support to businesses worth several billions of euro to address the economic recession, but necessary measures to combat extreme poverty might be diluted.

The representatives from the nine provinces have emphasised that the planned downgrade of the draft ‘basic cover’ scheme from 14 to 12 payments a year does not correspond to the joint decisions taken by the Länder Social Advisers Committee (Sozialreferentenkonferenz). Apart from this, the Social Platform to Combat Poverty (Armutskonferenz) questions whether the planned scheme would really bring about a harmonisation of the current distinct assistance systems across the country, since the provinces will continue to have plenty of room for manoeuvre in terms of implementation and additional voluntary allowances. The government has so far failed to clarify how it is planning to implement the promised ‘ban on impairment’ for the beneficiaries affected.

Georg Adam, Department of Industrial Sociology, University of Vienna

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment