Austria: Annual Review - 2010

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  • Published on: 11 October 2011

Bernadette Allinger

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Austria: Annual Review - 2010

1. Political developments

The year 2010 saw no federal elections and thus no change in government. In power was a grand coalition formed by the Social Democratic Party (SPÖ), which could defend its position as the largest party in the last general elections in September 2008 (winning 29.3% of the vote), and the conservative Austrian People’s Party (ÖVP, with 26.0% of the vote). Both parties had lost votes as compared to the previous elections. In 2010, the government’s policies were still aimed at stabilising employment and stimulating the country’s economy after the economic crisis had hit Austria.

Elections to the regional parliaments (Landtag) were held in Burgenland (30 May), Styria (26 September) and Vienna (10 October). The SPÖ won all three elections; however, all electoral rounds saw losses for the party, which also lost its formerly held absolute majority in Vienna for the second time only since 1945 and thus entered in a coalition government with the Green Party (Die Grünen). The ÖVP, ranking second in Burgenland and Styria, saw losses, too, and had its worst result ever in Vienna. The right-wing Freedom Party (FPÖ) on the other hand gained votes in all elections, passing the ÖVP and reaching the second place in Vienna with its second highest results in the Vienna regional parliament ever.

Furthermore, the Federal President of the Republic of Austria was voted for in April 2010 by direct vote. President Heinz Fischer, who was elected president for the first time in 2004, won this election for the second consecutive time, receiving 79.33% of the vote, against the far right-wing FPÖ candidate, Barbara Rosenkranz, a then member of parliament (Nationalratsabgeordnete). Ms Rosenkranz came under pressure to clarify her position on National Socialism, culminating in her signing an affidavit stating she would distance herself from all national socialist ideology. The ÖVP refrained from nominating a candidate of their own after the governor of Lower Austria decided not to run for presidency.

In February and March 2010, elections for the Federal Austrian Economic Chamber (WKO), the country’s main employer organisation, were held. The results brought no substantial change in the composition of the representatives. The faction affiliated to the ÖVP won the elections with 70.9% of the votes and managed to keep its absolute majority in all nine provinces (Länder). The social democratic group ranked second, holding 11.5% of the vote – this constituted a fall of 1.5 percentage points compared with the 2005 election. Voter turnout was historically low, at 41% (AT1003021I).

In 2011, only two elections are scheduled: the local state elections for the capital of Lower Austria and elections for the Austrian Students’ Union (ÖH).

Apart from the elections, other significant political events taking place in 2010 were the newly formed federal budget after the economic downturn and a dispute about the competences for teachers (federal state or provinces):

The coalition government put forward its budget proposal on 9 December, even though according to a constitutional provision it should have been presented by 22 October at the latest, in order to leave enough time for discussions before putting it into law. While the government argued the delay with ‘complex and extensive preliminary work’ and the wait for the latest economic data, the opposition parties suspected that the breach of the constitution was due to the upcoming regional parliamentary elections in Styria and Vienna. A budget which might entail major savings and increased tax burdens by the government might have had a negative effect on the provincial election results of the two governing parties, the SPÖ and ÖVP. The budget itself has been assessed ambivalently by both organised business and organised labour.

The dispute on the authority over teachers started with the demand by a majority of provincial governors (who were mostly, but not only from the ÖVP) to transfer the responsibility for all teachers to the provinces. Currently, teachers in compulsory schools (primary and secondary) are employed by the provinces (Länder), whereas teachers in higher schools are employed by the state (Bund). While the provincial-level teaching staff’s salaries are paid by the federal provinces, they are subsequently refunded by the federal state. In the discussion in the fall of 2010, the provincial governors demanded to transfer the responsibility for all teachers to the provinces, implying that they would be responsible for curricula and school type pilot projects. The education minister Claudia Schmied from the SPÖ, however, opposes this idea as do experts and favours an increased centralisation instead. This topic will be tackled much further in the coming months as part of a planned major reform of the Austrian school system.

2. Legislative developments

In June, the parliament passed an amendment to the ‘Vocational Training Law’ (Berufsausbildungsgesetz), following a provision from the government’s work programme and the evaluation of regulations of ‘integrative vocational training’ (Integrative Berufsausbildung) which targets lower-performing adolescents. The amendment brought about a possible reduction of daily/weekly working hours based on health grounds. Furthermore, a young workers’ council (Vertrauensrat), representing the interests of the students towards management, is to be elected in all training facilities.

In July, a small amendment on the construction workers’ vacation entitlements and severance payments law (Bauarbeiter-Urlaubs- und Abfertigungsgesetz) was passed, increasing the qualifying period for vacation entitlement from previously 47 weeks to 52 weeks, thus adjusting the law to the general vacation law. Furthermore, the calendar year was to be set as the vacation year and the so-called ‘Saturday rule’, stipulating that in case a statutory holiday falls on a Saturday during a construction worker’s holidays, he/she would instead receive an extra holiday, was suspended, among other smaller changes.

In August, the Social Insurance Act was amended (Sozialversicherungs-Änderungsgesetz), which includes the replacement of the social assistance scheme by a new means-tested minimum income scheme. Analogically, in December, a settlement between the state and the provinces (Länder) was passed, which stipulates provisions to establish this new means-tested minimum income scheme (AT1009011I). Everyone with a legal claim to unemployment benefit, unemployment assistance, social assistance and pensions, and whose income is below a specified income support threshold, will receive the means-tested minimum income of €744 a month. The scheme was implemented in three provinces in September 2010 already, and all but two provinces have implemented the scheme by 1 January 2011.

3. Organisation and role of the social partners

After two union mergers in the previous two years, no organisational changes occurred among the Austrian trade unions in 2010.

On the employer side, no change in the organisation and role was reported for 2010. After the WKO elections (see above), new presidents and boards of all WKO federal and provincial sectoral and subsectoral organisations were elected, but no major organisational change took place.

4. Collective bargaining developments

The conclusion of collective agreements in Austria is essentially confined to the private sector. These agreements are negotiated, with almost no exception, at the multi-employer sectoral level, since Austrian labour law significantly privileges multi-employer bargaining to single-employer bargaining. The public sector is excluded from formal collective bargaining, but negotiations between public-sector trade unions and government representatives take place, with parliament eventually determining the terms of employment (AT0703019Q).

There are no official statistics available as to the number of collective agreements concluded in 2010. Neither the Austrian Trade Union Federation (ÖGB) nor the WKO provide for exact numbers of collective agreements; however, estimates suggest that more than 450 collective agreements are concluded each year, most of them at the national level and several dozen at the regional (provincial) level. The majority of collective agreements comprise comparatively small numbers of employees in narrowly defined sectors. Furthermore, there is an indefinite number of additional agreements which are valid longer than one year. Thus, the total number of agreements valid in 2010 is supposed to be significantly higher than 450.

  • Pay (including both general trends and the level of collectively-agreed pay increases)

The collective bargaining rounds in autumn 2009, which set the new collectively agreed wages for 2010, were held against the background of the economic downturn and thus the social partners agreed on only very moderate pay increases. Data by Statistics Austria (Statistik Austria) show that the annual rate of change of collectively agreed gross minimum wage s and salaries were at a historically low increase of 1.6% (after 3% in 2008 and 3.4% in 2009). While the gross minimum income increase for blue-collar employees was at 1.7%, it was at 1.6% for white-collar worker s and at only 1.1% for public employee s. There is also some variation according to the sectors; the highest increase was in the hotel and restaurant industry with 2.2%, the lowest growth rates are to be found in public administration (a plus of 1.1%), the education sector and transport and communications (a plus of 1.2%).

In the 2010 autumn collective bargaining rounds, higher wage increases than those awarded in 2009 were agreed on due to the improved economic situation. Collective bargaining was started in the pattern-setting metalworking industry where wage increases of 2.5% for minimum wages (or a minimum increase of €45 per month (gross), whichever is the higher) and 2.2% for actual wages were negotiated. The new minimum wage agreed on in this sector, covering 165,000 workers, now lies at €1,515.84 per month (AT1012011I). Collective bargaining in the retail sector, affecting 450,000 white-collar employees (making it the collective agreement covering the largest single group of employees), brought about the agreement on a new minimum wage for full-time employment of €1,300 per month (gross). Furthermore, incremental wage increases of between 2% and 2.3% were agreed upon.

The average collectively agreed minimum pay increase for the whole economy in the bargaining round 2010-11 is estimated to largely correspond to the wage increase in the metalworking industry, standing at around 2.5%. Given that the inflation rate in 2010 was at 1.9%, the nominal increases are rather moderate.

  • Working time (including working time reductions and flexibility agreements).

In the latest collective bargaining rounds in the metalworking industry, a discussion on working time came up. During the bargaining round in autumn 2009, in the face of the crisis, the trade unions had to commit themselves to work out proposals on how to make working time more flexible in the sector by the end of March 2010 (AT1002029I). In the spring bargaining round, no solution could be agreed upon despite a series of new negotiating sessions. The WKO called off the negotiations with the manufacturing union PRO-GE and the Union of Salaried Employees, Graphical Workers and Journalists (GPA-djp) due to new counter claims by them regarding the shortening of working time (AT1004011I). The trade unions came up with that claim after the frequent use of short-time working schemes (which entail a reduction of working time of between 10 and 90%) in the sector which was hit especially hard by the crisis. While the unions demand a reduction of working hours in order to allow the employment of more workers and thus decrease unemployment, organised business opposes the idea. According to the employers groups, it would prove to be a disadvantage and would decrease the competitiveness of Austrian companies. They would rather opt for an even greater flexibilisation of working hours. In the latest bargaining round in autumn 2010, the employers’ side unexpectedly waived their demand for increased flexibility, thus avoiding the controversial issue of working time (AT1012011I). The topic will most certainly be tackled again in the next round of collective bargaining, though.

  • Other conditions of employment (these might include training and skills, job security, occupational pensions, equal opportunities and diversity issues)

In the metalworking and mining collective agreement, gender-neutral language was used for the first time targeted towards combating discrimination (AT1012011I). Furthermore, the collective agreement for blue-collar workers in the food and beverage industry, which was negotiated in late 2010, is the first collective agreement which implemented the equal treatment of married persons and homosexual partners who live in a registered partnership. This generally implies equal claims under labour law for both couples living within marriages and registered partnerships. These stipulations were taken up in the collective agreement as a consequence of the Federal Registered Partnerships Act which went into effect on 1 January 2010. The collective agreement concerns 26,000 workers in 28 sectors.

For further information on developments in pay and working time in the course of 2010 please see the relevant annual updates at /ef/search/node/eiro OR annualreports?oldIndex

5. Responses to economic downturn

No new measures targeted towards fighting the negative effects of the economic crisis were implemented in the course of 2010, but the measures implemented in 2008/2009 continued to be valid in 2010 (and occasionally also beyond that). In late 2008 and in the course of 2009, the Austrian government implemented measures aimed at stimulating the economy and the labour market after an extensive tripartite social dialogue. The main focus of these measures was to strengthen incomes, avoid lay-offs, improve employees' qualification levels and support the ailing economy. After close cooperation and consultation with the social partners, two major economic stimulus packages and two labour market stimulus packages were implemented by the government (AT0903029I, AT0907019I). Additionally, a banking rescue aid package to the amount of EUR 100 billion was passed at the very onset of the crisis in October 2008.

Measures of the first labour market package included the extension of the maximum period of short-time work to 18 months (before: 12 months); the introduction of a combination of short-time work and qualification; and improvements for work foundations (re-employment scheme s). The social partners drew up a joint proposal addressed at making the statutory short-time work scheme more flexible. This was enacted in February 2009. However, this first package did not provide the desired results. In the second labour market stimulus package, the maximum period of short-time work was again extended by six months (to 24 months maximum); the short-time allowance for employer s was increased from the seventh month of short-time work onwards; a work foundation for young workers was established; the educational leave system was modified; part-time work regulations for older workers were eased (abolishment of the requirement for employers to take on a replacement; and preference of continuous part-time work schemes instead of a 'blocking' of working time, thereby working half of the period full-time and half of the period not at all); improvements in the solidarity support allowance (Solidaritätsprämie; workers reduce their working hours so that an unemployed person can be employed) were made; and subsidies for one-person enterprises were introduced (the Public Employment Service AMS pays 25% of the gross wage for the first employee for up to 12 months). Especially with regards to the second labour market stimulus package, no major disagreements between the social partners and the government were reported; on the contrary, it was welcomed by both sides of industry. The rule amendments of short-time work can be considered the most important labour market measure implemented in the face of the crisis. During the course of 2009, over 66,000 workers were working short-time at least once, in 2010, the number decreased to under 24,000 and by the end of January 2011 only some 2,400 workers in 23 companies were registered for short-time work (which does not mean they actually will be working short hours as a great deal of registrations are taken as a precautionary measure only; thus, the actual number of workers on short-time will be much lower). The measures implemented in the framework of the second labour market package are to be applied until the end of 2013 (with the exception of the maximum duration of short-time work, which was 24 months only if registered by the end of 2010), in practice, though, due to the improved economic situation, hardly any use is made of them anymore.

The crisis brought about no major change on industrial relations in Austria. The process of social dialogue at the national level was highly institutionalised long before the economic crisis had hit the country and the social partners have always closely cooperated with each other and with the government. Only during the period of the conservative-right-wing populist government between 2000 and 2006, the Austrian system of social partnership was challenged as attacks on the system were launched especially by the FPÖ, since this party has never been able to gain influence in the system of social partnership. The crisis can therefore be considered the first 'test' of the strength of the social partners after their 'revival' with the onset of a ‘grand coalition’ between the social democrats and the conservatives in 2006. The social dialogue (which is a result of a long standing tradition of cooperation) and thus the social partners’ traditional roles have been reinforced and their consent-based approach seemed to be an asset in the face of the economic downturn. At the company level, the works council s’ role has been strengthened, as well. They have been open towards employers' needs and played a positive role in the balance between both the employees' and companies' needs when short-time work agreements were signed. In the period following the crisis, however, the two sides of the social partners came further apart and stuck more to their ideological beliefs and respective positions, as could be seen in the latest discussion on working time (shown above).

6. Pensions

The two last major reforms of the Austrian pension system date back to 2003 and 2004 (AT0305201N, AT0306201N, AT0409203F) and remain valid today. The most important measures implemented with the 2003 reform were to firstly abolish the early retirement pension scheme due to unemployment and secondly, to abolish early retirement all together by April 2014; furthermore, 45 years of contributions are now needed (since 2010) in order to receive a full pension of 80% of pensionable earnings (increased from 40 years). The period of earnings on whose basis pension benefits are calculated is to be extended in stages to the 40 best-earning years by 2028 (starting in 2004, changing from formerly the 15 to 18 best-paid contribution years). In order to prevent large-scale payment losses, though, a 10%-rule was implemented, limiting the pension loss to a maximum of 10% as compared to the pension received under the old scheme. With the 2004 reform (valid from 2005 onwards), a differentiation between those born before 1 January 1955 and those after that date was made. While for those born before this effective date, the measures introduced with the 2003 reform are to be applied; the measures implemented with the 2004 reform are valid for all those born on and after 1 January 1955. The various pension systems for different occupational groups were harmonised in 2004, and a contribution-based individual ‘pensions account’ for each working person was introduced. This grants a pension of 80% of pensionable earnings at the age of 65 and is based on a period of 45 years of contributions (’45-65-80’ scheme). Furthermore, those active people who have not yet reached 50 years of age at the beginning of 2005, but who have already contributed towards their pension, are to have a ‘parallel account’, meaning that their entitlement is to be calculated on basis of both the ‘old’ and ‘new’ scheme, in line with the proportions of their working life periods spent before and after this date. Accordingly, persons under 50 years and who have not contributed before 2005 fall under the 2004 reform scheme. For women, who still have a different retirement entitlement age than men (for women, it lies at 60 years, for men at 65 years), the retirement age will be adjusted to that of males between 2024 and 2033, reaching 65 years of age then. A so-called ‘corridor’ of pension entitlement between 62 and 65 years (or up to 68 years, receiving bonus payments) was also implemented with the 2004 reform, giving eligible persons (initially men, as for women the pension age of 60 is to be increased only from 2024 onwards, as just shown) the possibility to retire before the age of 65 (with possible reduction in pension benefits as the 45-65-80 rule applies).

As a substitute for the abolished early retirement scheme, a pension scheme for long-term insured (and thus having paid pension contributions) was first implemented in 2003 and has since been a very popular measure. Women, who have paid contributions for over 40 years, can retire at the age of 55 (without reductions); the same applies to men with at least 45 years of social insurance contributions who have reached the age of 60. For public servants (for who a same-sex retirement age of 65 years applies), 40 contribution years are needed in order to retire without reductions at this age. Until the end of 2010, up to 60 months of childrearing and up to 30 months of fulfilling military service or civil service, as well as periods of sick leave are to be considered for reaching the needed years of contribution. From 2011 onwards, these so-called substitute periods can only be taken into account if a certain contribution is paid (in 2011: EUR 156.29 per month). Additionally, contributions for periods of education (school and/or university) could be paid in order to claim those times for the needed contribution years. Those contributions are to be significantly increased in 2011. From 2014 onwards, the long-term retirement scheme will be made much less attractive and eligibility will be made more difficult. The eligibility age limit will be increased by two years (to 57 years of age for women and 62 years for men) and periods of schooling and sick leave will not be calculated towards claims any more. This was agreed on in the framework of the federal budget concluded in late 2010.

7 Developments in working conditions

According to the latest results of the representative Austrian Working Climate Survey (Arbeitsklimaindex) from November 2010 (TN1004059S), the job and work satisfaction in Austria is at its lowest since 2006 for both men and women. Especially among blue-collar workers, the index has decreased from 103 to 97 points within only a year, whereas it has staid stable among white-collar employees. As a consequence of the financial and economic crisis, job satisfaction has especially decreased in those sectors that were hit hardest by the economic downturn, like in manufacturing and crafts and trades. Likewise, job satisfaction in the retail sector has decreased in the last couple of years; however, since the spring of 2010, the trend reversed again. The crisis has also negatively affected job satisfaction in the public sector.

The latest results of the representative Austrian Working Health Monitor (Arbeitsgesundheitsmonitor), for which data is collected on a quarterly basis (latest results from December 2010, for more information see AT1001029I), shows that for 46% of all dependent employees, it seems unlikely that they are able to work in their jobs up to the regular retirement age due to poor working conditions. Employees who feel they are put under great time pressure by colleagues or superiors, or who feel burdened by irregular working hours suffer from physical or mental complaints particularly frequently. Likewise, employees over 50 years of age more often suffer from health problems than their younger colleagues, caused by longstanding health burdens at the workplace.

In January 2010, a new, income-related variant of the childcare benefit scheme (Kinderbetreuungsgeld) was implemented. This alternative to the by then exclusive flat-rate scheme was devised to encourage highly-skilled women earning a good wage to resume work earlier after parental leave and to attract a higher proportion of men to stay at home with their children (AT0812039I). While it is still too early for a proper evaluation of the new scheme, a recent FORBA study, analysing data on the use of the childcare benefit system in the month of September 2010 (data provided by the Federal Ministry for Economy, Family and Youth BMWFJ), shows that the model of the income-dependent benefit scheme was the least used of all models by fathers. At least so far, the implementation of the income related benefit scheme did not have the desired and envisaged effects and has so far not triggered a change with regards to increasing fathers’ participation in childcare.

Regarding care infrastructure, the federal state provided its provinces (Länder) with €15 million annually from 2008 to 2010 for the expansion of childcare facilities, especially for under 3-year old children. In 2008 alone, some 9,000 new child care places were created (of which more than half were for children aged 0-3), according to the BMWFJ. However, at the beginning of 2010, only 14% of all under 3-year olds were provided with a child care place (even though the EU Barcelona target was set at 33% for 2010). The Austrian government plans on doubling this rate by 2013. Part of the measure was that the provinces had to co-finance the federal state’s contributions with €20 million annually. Due to the fact that the measure has expired, an evaluation is currently planned and a continuation of the measure in 2012 or potentially already in 2011 if the evaluation results suggest it.

With regards to reaching more gender equality and in order to combat the comparatively high gender pay gap in Austria, which was at 25.5% in 2008 according to Eurostat data, making it the country with the third largest income difference between men and women within the EU27 countries (which showed an average gender pay gap of 18%), an agreement on income transparency was reached between the social partners in June 2010 (AT1008021I). Thus, a new amendment to the Equal Treatment for Men and Women Act on income transparency stands to be implemented in 2011, stipulating that companies employing more than 1,000 workers must disclose the average annual incomes of their female and male employees separately, anonymously and adjusted for working time. Over the course of the coming years, the amendment will be gradually extended to smaller companies. In 2012, all companies with 500 or more employees will be affected by the law. In 2013, it will apply to companies with more than 250 employees and, in 2014 to all companies with more than 150 employees. The law is expected to force employers into more income equality by making wage discrimination visible. Works council members will be allowed to see the income reports; in companies with no works councils, all employees must have access to them.

8. Major conflicts and restructuring cases

Please give brief details of major and significant incidences of industrial action and restructuring cases.

In Austria, no strike action was reported for 2010. Likewise, no changes to the regulatory framework concerning industrial action took place. Some form of industrial action or other forms of protest were threatened by trade unions during the collective bargaining procedure for the Lufthansa owned Austrian Airlines, but (except for a few protest actions) did not take place after the negotiations were concluded successfully.

After 2009 when there was a higher incidence of restructuring cases than usual, 2010 was quiet again. Only two major cases of restructuring (concerning more than 1,000 employees) were reported. One case concerned the creation of jobs, and the other concerned job reductions due to bankruptcy:

The electronics retailer Cosmos had to file bankruptcy on 18 February 2010 and needed to close all of its 27 electrical stores shortly thereafter, making all of its remaining 1,160 employees (after 1,400 in 2006) redundant. The workforce of the stores located in Vienna and Upper Austria was entitled to enter regional re-employment schemes. About a tenth of the Vienna employees and almost half of the employees in Upper Austria made use of these schemes (see factsheet 15218).

Magna Steyr, specialist in automotive engineering and vehicle assembly, on the other hand, has started a large hiring programme and plans on increasing its workforce from 5,300 at the beginning of 2010 to 6,300 by mid-2011 in its Styrian production site close to Graz. The automobile industry, which was hit hard by the economic and financial crisis, has picked up again and has recovered after major declines in sales and turnover. Magna plans on increasing its yearly vehicle production target from 100,000 to 130,000, thus making a business expansion necessary (see factsheet 16488).

9. Other relevant developments

No other relevant industrial relations developments have occurred in 2010.

Bernadette Allinger, FORBA (Working Life Research Centre)

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