New monthly minimum wage for private sector

As of 1 January 2009, almost all of Austria’s private sector has been covered by a monthly minimum wage of €1,000. This is due to a 2007 initiative of the national-level social partner organisations to introduce such a minimum wage provision by January 2009 at the latest. However, the few areas of the national economy where no collective agreement has been concluded thus far remain outside of the minimum wage regulation, as well as parts of the liberal professions and agriculture.

Background

In July 2007, the then presidents of the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB) and the Austrian Federal Economic Chamber (Wirtschaftskammer Österreich, WKO) signed a so-called ‘agreement in principle’. Accordingly, a nationwide minimum monthly gross wage rate of €1,000 for full-time employment was to be introduced by 1 January 2009 at the latest. The explicit aim of this initiative was to urge the responsible bargaining units at sectoral and branch level to secure such minimum pay standards across all sectors of the national economy for all pay grades through sector or branch-level collective agreements.

The social partners estimated that, in 2007, between 20,000 and 30,000 employees were earning a gross wage lower than €1,000 a month – although these figures contrast with data provided by Statistics Austria (Statistik Austria), adjusted for working time, which indicate that more than 100,000 workers earned below this amount in 2007. The main social partners also agreed that they would enforce the new pay provision through a national cross-sectoral agreement (Generalkollektivvertrag) if the sectoral bargaining parties failed to reach the goal of implementing these minimum standards in all segments of the economy. Moreover, the 2007 agreement provides for the creation of a special monitoring commission in order to observe the effective and timely implementation of the minimum wage provision (AT0707019I).

New minimum wage provisions

According to the social partners, virtually the entire private sector has been covered by minimum wage standards of €1,000 a month by 1 January 2009. In some branches of the economy, this has been agreed retrospectively. Economic sectors that established these standards for the first time for all pay grades in 2007–2009 include, for instance, the food processing industry, the paper and board processing industry, textiles, and passenger transport (including taxi drivers).

However, in a few branches, no evidence of the actual establishment of the €1,000 minimum wage rate for all pay grades could be provided. This is evident in the cinema industry in some provinces (Länder) of Austria, as well as in garage and service station enterprises, textile cleaning companies and some other small branches of activity. Moreover, those segments of the economy where the sectoral social partners have failed to conclude any collective agreement thus far are similarly outside of the minimum wage provisions. This situation applies to those working as cosmeticians and pedicurists, real estate agency employees, those working in private broadcasting companies, some categories of artists and cabaret establishment staff, movie actors and private teachers. Despite the multitude of branches – under the umbrella of WKO – which are outside of the minimum pay provisions, the number of employees still being paid gross wages below the monthly threshold of €1,000 is estimated not to exceed several hundreds of workers across the country.

Absence of cross-sectoral agreement

It is probably for this reason that the peak-level social partners have refrained from concluding a national cross-sectoral agreement on the nationwide implementation of the minimum wage provision. Strikingly, ÖGB and WKO did not even establish the monitoring commission, as provided for in the 2007 agreement. According to its designated tasks, such a commission would have gathered comprehensive information on whether or not the minimum wage target had been fulfilled – information which is currently only available on an inconsistent basis. Critics claim that the failure to establish such a commission indicated an only limited interest by the social partners to fully capture and document the country’s actual pay situation.

Workers earning below minimum wage threshold

Apart from the several hundreds of employees estimated to be still receiving wages below the €1,000 minimum wage rate, who are employed by companies under the umbrella of the WKO employer organisation, there is still an indefinite number of poorly paid employees engaged in liberal professions and in agriculture. This is because these occupations are organised in separate chambers outside of WKO – such as those pertaining to lawyers, doctors and civil law notaries. Therefore, WKO has no means of forcing these associations to enter into negotiations over higher minimum wage standards. Nevertheless, a high proportion of the provincial subunits of these chambers have thus far concluded minimum pay rates of at least €1,000 – in most cases, as a result of trade union pressure.

However, in so far as the phenomenon of the ‘working poor’ continues as a result of the increasing incidence of part-time work among women (AT0610049I) and of ‘minimal employment’ (AT0308201N), the beneficial effect of the new minimum pay standards has to be considered as marginal.

Ines Hofbauer and Georg Adam, Department of Industrial Sociology, University of Vienna

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