Austria: Latest working life developments – Q1 2018

New regulations on working life, federal budget cuts to the Public Employment Service, a pay rise for workers in the private health and social care sector, and an increase in female trade union membership are the main topics of this article. This country update reports on the latest developments in working life in Austria in the first quarter of 2018.

New working life rules come into force

Several new regulations concerning working life came into force at the start of 2018.

First, listed companies (irrespective of the number of employees) and companies not listed but with more than 1,000 employees are now required to achieve 30% female supervisory board memberships. Companies in which women make up less than 20% of the workforce and firms with supervisory boards of fewer than six people are exempt. Firms which miss the quota will not face sanctions, although they will not be able to fill vacant mandates.

Second, there is a new minimum six-week notice period for all white-collar employees, irrespective of their working hours. The change abolishes the two-week notice period for ‘minimally employed’ personnel (those working fewer than eight hours per week i.e. below social insurance thresholds). The new regulation affects huge numbers of employees, primarily in the tourism and retail sectors.

Third, apprentices no longer have to pay accommodation costs to attend theoretical training in vocational schools. The employer must now cover the expense, although the Austrian Insolvency Remuneration Fund (IEF) will reimburse them in full. Until 2017, apprentices generally covered the expense themselves, while training companies had to pay the balance between actual boarding expenditure and the apprentices’ remuneration. Several collective agreements had already transferred the costs to the employer, although the new regulation extends the change to all sectors.

Finally, inpatients (and their relatives, heirs or beneficiaries) are no longer responsible for paying for their residence in nursing and care homes. Before 2018, inpatients had to use their income (retirement pensions and cash benefits for long-term care), personal assets and savings to pay for their accommodation before social assistance would step in to cover any remaining costs. Under the new rules this recourse to inpatients' assets has been abolished. However, it is important to note that the reform does not extend to mobile care or care at home, where costs must be borne by the individual. Demand for inpatient places has increased sharply since the new regulation came into force.

Government cuts Public Employment Service budget

On 21 March 2018, Finance Minister Hartwig Löger of the new federal coalition government presented the annual budget to parliament. The budget, which prioritises achieving a budget surplus in 2019 (amid an economic upturn), includes severe cuts to the Public Employment Service (AMS). The previous government had budgeted more than €1.9 billion for the AMS for 2018. Mr Löger initially offered only €1.034 billion, which, following heavy criticism from AMS representatives and trade unions, he subsequently increased to €1.406 billion.

The government also found €430 million in savings by cancelling the ‘Aktion 20,000’ programme for older people who are long-term unemployed (see Q3 2017) and a further €105 million by cutting budgets for integrating refugees.

Cuts in both areas have been criticised by the Austrian Trade Union Federation (ÖGB) and the Chamber of Labour (AK), while the Federal Economic Chamber (WKO) and the Federation of Austrian Industry (IV) have welcomed the budget.

The new coalition government was elected in October 2017 and consists of the conservative People's Party (ÖVP) and right wing Freedom Party (FPÖ).

Health workers get a raise after tough talks

The 2018 annual collective bargaining round, which started in autumn 2017, continued into 2018. The most controversial negotiations centred on the private health and social care sector, which employs some 100,000 people. Six negotiation rounds, works council conferences, a protest march and warning strikes preceded an eventual settlement on a 2.5% pay increase. There was also an adjustment to pay thresholds, which will correspond to a wage increase of above 3% for the lowest paid. The deal is comparable to agreements secured by other service sectors. Employers have failed to acknowledge unions' demand for a working time reduction to 35 hours (at full compensation).

Meanwhile ÖGB data, published in March, showed a 0.4% increase in the trade union federation's membership during 2017 (to 1.2 million workers). The proportion of female members rose to an all-time high of 36%.

Commentary

In the next quarter, the spring collective bargaining round will be underway in some large industrial sectors (e.g. the electrical and electronics industry and the chemical industry). The statutory representative bodies (including the WKO and the AK) will also present the government with reform programmes designed to bring about efficiency gains and financial benefits for their members. The government will then decide whether it considers the reforms sufficient or whether it will present statutory measures.