Austria: Latest working life developments Q3 2018

The consequences of the recent amendments to the Working Time Act and the presentation of a draft bill by the government on a far-reaching social security reform are the main topics of interest in this article. This country update reports on the latest developments in working life in Austria in the third quarter of 2018.

New working time law dominates social dialogue

The recent major amendments to the Working Time Act, which were enacted on 5 July 2018 and came into effect on 1 September, continue to shape social dialogue in Austria. The new working time regulations significantly enhance working time flexibility, enabling a 12-hour working day and a 60-hour working week. Although the trade unions threatened to take industrial action and organised – together with other civil society organisations – a protest in Vienna with about 100,000 participants, the working time amendments could not be prevented. Nevertheless, the unions announced they would be mobilising large-scale actions aimed at mitigating the effects of the new regime, in particular during the annual collective bargaining rounds that started in autumn 2018.

On 18 September, more than 900 collective bargaining negotiators from the most prominent trade unions met for a conference in Vienna. The conference was organised by the Austrian Trade Union Federation (ÖGB) and negotiators were informed in detail about the new working time regulations. They agreed upon a set of trade union goals that they aim to achieve through collective bargaining in all branches of the economy:

  • working time arrangements that are predictable for the individual employee and self-determined

  • a reduction in the volume of working hours

  • legal entitlement to:

    • a four-day working week

    • a sixth week of holiday for all workers

    • paid rest breaks during the working day

    • a minimum period of four weeks notice when weekend work is required

In order to reach these goals, the trade unions have been pressing for extra bargaining rounds on working time issues for all branches in parallel, in addition to the annual (wage) bargaining rounds. [1] However, the business side has largely ignored this request so far.

Social security reform has far-reaching implications

In spring 2018, the Austrian coalition government (consisting of the conservative Austrian People’s Party (ÖVP) and the right-wing populist Freedom Party (FPÖ)) announced a far-reaching reform of the county’s social insurance system. This was followed by the presentation of a draft bill on the Social Insurance Organisation Act on 14 September.

This legislative initiative proposes reducing by means of mergers the number of funding institutions in the areas of health, industrial injuries and pensions insurance from 21 to 5. It also aims to save €1 billion in administrative costs by 2023 by trimming 75% of public servant posts and reducing the number of administrative bodies from 90 to 50. Within a 10-year period, about 30% of all 19,000 administrative staff will disappear, insofar as vacant posts will not be staffed anymore. [2]

Austria’s social insurance system is currently based on the principle of self-administration. While the government states this will not be curtailed, the draft bill provides a clear shift in decision-making power from labour to business. This is because the composition of the relevant decision-making bodies within the new social insurance institutions will be significantly changed, to the detriment of the unions. Public evaluation of the draft bill is open from 14 September to 19 October 2018.

The reaction of the social partners and experts has been divided. The Chamber of Labour (AK) warns against dismantling a traditional and well-functioning system of units geared towards each other. It estimates that the social security reform will cost €2.1 billion due to merger expenditures, costs related to a new overall health insurance agreement to be concluded with the Chamber of Doctors (ÖÄK), and costs resulting from extra services and cuts in employers’ social insurance contributions. According to the AK, those additional costs are likely to be passed on to the insured in the form of retentions, outpatient fees and cuts in medical services.

Furthermore, some legal experts question whether the planned reform is constitutional. They feel that the fact that businesses may decide about the provision of services deriving from employees’ health insurance conflicts with the principle of self-administration.

The business side has, by and large, tentatively welcomed the government proposal.

Metalworking unions kick-start collective bargaining

On 20 September 2018, this year’s autumn collective bargaining round started with the metalworking unions delivering their wage demands to the employer side (the metalworking industry traditionally sets the pace for all other bargaining rounds in Austria’s economy). The demands include a pay increase of five percentage points and a series of improvements in the framework agreement regarding working time. This is to compensate for the perceived deterioration of the provisions in the amended Working Time Act.

The first reaction of the metalworking employers to the demands was a negative one.

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