Austria: Impact of the crisis on industrial relations

  • Observatory: EurWORK
  • Topic:
  • Published on: 17 June 2013



About
Country:
Austria
Author:
Bernadette Allinger
Institution:

Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

Austria was not as badly affected by the crisis as many other European countries. The economic downturn was relatively strong; however, the crisis was also very short. A wide range of measures were implemented after a tripartite dialogue in order to support the economy and prevent large-scale job losses. The longstanding tradition of the strong social partnership system in Austria was an asset in overcoming the crisis quickly. After the worst of the crisis was over, however, impacts on industrial relations in the country could be observed: the first strike in 25 years was taking place and collective bargaining in the influential metal industry was decentralised.

Section 1: Basic data on the impact of the crisis on industrial relations

1.1: Academic studies

There are no nationally based purely academic studies on the impact of the crisis on industrial relations in Austria. Rather, the academic studies that are available are national reports on Austria as part of larger internationally comparative research (see 1.3).

1.2: Government and social partner research

There are no research studies published by government or the social partners on the impact of the crisis on industrial relations.

Rather, there are official government accounts on the measures the government had initiated after a tripartite dialogue, published by the Federal Ministry of Labour, Social Affairs and Consumer Protection (BMASK). The social partners issued a mutual paper on “Austria and the international financial crisis” in 2009. However, the report does not even touch on the subject of the crisis’ impact on industrial relations, but rather presents conclusions and arguments for overcoming the financial crisis. The issue of ‘social partnership in the 21st century’ was discussed in the Austrian Parliament in April 2009 and includes speeches of the presidents of the social partner organisations, as well as of the ministers for labour and economy, respectively, in which they point out their (positive) views of the social partnership. A stenographic protocol is available. The impact of the crisis on industrial relations is not touched upon, but the positive effect of Austria’s strong social partnership in overcoming the crisis quickly and comparatively well is praised.

1.3: International comparative research

Three internationally comparative reports are available which discuss the impact of the crisis on industrial relations in Austria, a report commissioned by Eurofound and two reports commissioned by the ILO (see below).

Austria is considered as a country case study in the report ‘Social dialogue in times of global economic crisis’ (Guyet et al. 2012) commissioned by Eurofound. A national country report on Austria (Allinger 2011, unpublished) was written, in which the impact of the social crisis on industrial relations is discussed in more detail. In the country report, it is stated that when the crisis was imminent, the social dialogue, which had been highly institutionalised in the country for a long time, was very helpful in taking action and implementing measures and policies, e.g. amendments to the short-time work regulations. In the period following the crisis, however, the social partners drifted further apart and their positions hardened. This is shown in the report by unsuccessful negotiations on working time in the metalworking sector.

In his Austrian country report for the ILO, Hermann (2011) examines the social dialogue with an emphasis on tripartite negotiations and collective bargaining during the crisis. The report concludes that bargaining was more difficult during the crisis than at economically prosperous times; however, social dialogue helped mitigate the negative effects of the crisis tremendously.

In 2010, the ILO conducted seminars on restructuring in all 27 EU countries for which separate national background papers were written. In the Austrian report (Atzmüller/Krischek 2010), a chapter is dedicated to social partner debates regarding the economic crisis and crisis management measures; however, the impact of the crisis on the social dialogue and industrial relations in the country is not discussed.

1.4: Grey literature

No grey literature, like theses and dissertations, were identified on the topic.

1.5: Relevance of debate

a) academic debate

not very relevant

b) political debate

not very relevant

c) debate among social partners

not very relevant

Section 2: Policies, instruments and regulations

2.1 EU-level instruments

The new economic governance at the EU level resulting from the crisis had no impact on industrial relations in Austria. Austria managed to get through the crisis relatively well compared to other European nations. Also, the duration of the crisis in Austria was relatively short and the country was not concerned by regulations, initiatives, support measures or the like taken at the European level.

2.2: Governmental instruments

Several new national governmental instruments were implemented in order to mitigate the negative effects of the crisis. However, those support measures and programmes had no significant impact on the country’s industrial relations system, but rather had a positive effect on the development of the economic and labour market situation in Austria. The focus of the measures was to strengthen incomes, avoid lay-offs, improve employees’ skills and qualification levels and support the ailing economy. After an extensive tripartite dialogue, the federal government introduced two major economic stimulus packages and two labour market stimulus packages.

The measures implemented as part of the two labour market packages were the amendment and extension (up to 24 months) of the (pre-existing) regulation on short-time working schemes; the introduction of a combination of short-time work and qualification; improvements for work foundations (including the establishment of a work foundation young workers); the modification of the educational leave system (facilitation of access); the facilitation of part-time work for older workers; improvements in the solidarity support allowance (workers reduce their working hours so that an unemployed person can be employed); and the introduction of subsidies for one-person entreprises. Thus, the measures implemented as part of the labour market packages were by and large targeted towards the prevention of job losses and avoiding an increase in unemployment.

2.3: Measures from social dialogue and/or bipartite and tripartite bodies

As mentioned in 2.1, the measures which were implemented by the government in order to alleviate the negative effects of the crisis were introduced after extensive tripartite dialogue. Thus, the social partners took part in designing the labour market instruments. As mentioned above, those support measures and programmes had no significant impact on the country’s industrial relations system, but rather had a positive effect on the development of the economic and labour market situation in Austria.

One reason why Austria has managed to get through the crisis relatively well was the anti-cyclical wage policy which was adopted during the crisis. In 2009, average real wages grew by 2.9% - this rise was brought about by a significantly higher rise of nominal wages combined with a fall in inflation. The result was a major anti-cyclical effect by sustaining the consumer demand during the crisis (cf. Hermann 2011). This was due to relatively high wage agreements which were negotiated by the social partners.

2.4: Severity of impact of policies, instruments and regulations

EU new economic governance

x Not applicable

National governmental instruments

x not very severe when the impact on industrial relations is considered (and not the impact on the country’s economic situation)

National social partners’ measures

x not very severe when the impact on industrial relations is considered (and not the impact on the country’s economic situation)

Section 3: Impacts of the crisis

3.1: Impacts on industrial relations actors

3.1.1 The industrial relations actors in this section will principally be the social partners at all levels, including national, regional, sectoral and company. Please describe any relevant impacts. This could include impacts such as:

  • Reorganisations of the social partners, including mergers and changes in representation
  • Changes in role and visibility of the social partners. Where relevant to your country, please also indicate any changes in the role of the social partners as stakeholders in the Public Employment Services (PES), including:
    • Changes to social partner consultation about the management and operation of the PES (for example, due to the government needing to act quickly in response to the crisis)
    • Changes in the involvement of the social partners in the PES, possibly due to the government wanting to act unilaterally in response to the crisis
  • Trends such as trade union or employer organisation membership (upwards or downwards), and how far this can be attributed to the crisis. Any impacts on other actors, such as central and local government, and NGOs, where relevant.

No mergers or changes in the representation of the social partners took place as a consequence of the crisis. Likewise, no changes in the role of the social partners as stakeholders in the PES occurred. The trade union membership decline (which has been ongoing for about 20 years) has decelerated since the onset of the crisis (see AT1104011I), with two (in 2010) and three (in 2011) of the seven unions affiliated to the Austrian Trade Union Federation (ÖGB) even increasing their membership numbers. This can be attributed to the crisis as unions were more visible for employees especially in sectors in which protest action took place (see below) and the employees’ trust in collective employee representation body is apparently increased in times of economic uncertainty and fear of job loss.

The social partners have traditionally had an important role in Austria and the social dialogue has been highly developed and institutionalised long before the onset of the crisis. The consent-based approach between the social partners was definitely an asset in the bipartite and tripartite negotiations in such as solutions and compromises could be found quickly. The visibility of the social partners might have increased as a consequence of the crisis as there was heavy media coverage of the implementation of the labour market packages and as a consequence of protest and demonstrations. However, the social partners generally have very good visibility in the political and public spectrum in the country. Their roles have not changed as a consequence of the crisis; the ties between the two opposing sides might have been intensified as the frequency of social partner meetings increased. The processes of social dialogue have reinforced and strengthened pre-existing and traditional institutional structures. All participating parties considered the measures they had agreed upon and that were implemented by the federal government as a success as they could prevent large-scale redundancies, thus keeping unemployment at a comparatively low level.

However, in the regular collective bargaining rounds following the implementation of the labour market packages, the two sides of the social partners came further apart and their positions hardened. This can be seen in the pattern-setting metalworkers’ negotiations, which traditionally start the annual bargaining rounds in autumn and which have a signalling effect on the other sectors. In the autumn round of 2009 and the spring round of 2010, working time in the sector was debated and no outcome could be reached. The issue at stake was that the employer side demanded an increased flexibilisation of working time, arguing that this way, they could retain international competitiveness. The labour side, on the other hand, demanded a shortening of working hours, thus decreasing unemployment in the sector. The issue was taken up in the following years and thus far, no changes in the working time issue have been agreed upon. In the 2011 bargaining round, conflicts on wage increases led to the first strikes in the metalworking industry since 1986. As a consequence, the employer organisations of the large sector, which had previously always formed a bargaining community, quit this community in the 2012 wage bargaining process. Thus, instead of one communal set of negotiations in which all subsectoral employer organisations would participate as in previous years, the negotiations were split up to six different subsectoral negotiations (see 3.2). Signs of divergence of the social partners in a sector that was particularly strongly hit by the crisis can thus be observed. However, no change of the actors took place.

3.1.2 Overall, how severe do you think the impact of the crisis has been on industrial relations actors in your country? Please tick the relevant box.

x not very severe

3.2: Impacts on industrial relations processes

In the metalworking industry, encompassing 180,000 workers and six different subsectors, a decentralisation process came about with the 2012 autumn bargaining round. The sector’s largest (mandatory) employer organisation and subsectoral organisation of the WKO, the Association of Austrian Machinery and Metalware Industries FMMI, opted out from the communal bargaining process. For forty years, a (voluntary) collective bargaining community on the employer side had taken part in the sectoral collective bargaining process, consisting of six different employer organisations, which are all subsectoral units of the WKO, including the FMMI. Instead, the specific WKO subsectoral employer organisations all conducted separate negotiations with the respective trade unions. Six different agreements were then negotiated; however, they all resemble each other and the wage increases agreed upon are in the same range in all six subsectors (increase of minimum wages of 3.3 to 3.4% and of actual wages of between 3 and 3.3%). Nonetheless, the labour side has stated that this is an effort to ‘divide and rule’ and thinks that this move was part of a strategy to punish the employees for the relatively labour friendly outcomes of the 2011 bargaining round.

The introduction of opening clauses has been very rare in Austria. Unions have traditionally been reluctant to grant opting-out clauses for companies in economic difficulties and this trend continued during the crisis. However, in some cases, the unions agreed to temporary exemptions for companies encountering economic difficulties. This was the case in the electronics industry in which companies that could prove that their turnover fell by at least 15% in the first quarter of 2009 had the option of limiting the wage increase to 1.4% instead of 2.2% as was negotiated for the sector.

arrangements for employee information, consultation and participation;

  • organisation of industrial action;
  • procedures for dispute resolution;
  • changes in the relationship between the social partners, either leading to closer cooperation or more conflict.

The crisis had no impact with regards to changes in the arrangements for employee information, consultation and participation. However, these instruments were to some extent used to a different degree than before the onset of the crisis. Industrial action was first used in the metalworking sector (as shown above); there had been no strikes in the country since 2004, when an unofficial small-scale strike, involving only some 30 employees of Austrian Airlines, took place, and 2003, which saw the largest post- World War II strike in Austria, involving 780,000 workers in all sectors who protested first and foremost against the government’s pension reform plans (AT0411202F). What could also be observed as a consequence of the crisis is that at first, a closer cooperation between the social partners came about, and disputes increased with the recovery of the economic situation. The role of works councils proved especially important during the crisis (and especially in short-time work arrangements). Their role had been strengthened as they were open towards employers' demands and played a positive role in the balance between both the employees' and companies' needs when e.g. short-time work agreements were signed or when they made concessions with regards to flexibility.

3.2.2 Overall, how severe do you think the impact of the crisis has been on industrial relations processes in your country? Please tick the relevant box.

x not very severe

3.3: Industrial relations outcomes

3.3.1 Please describe any impacts on collective agreements at national, regional, sectoral or company level.

These impacts could take the form of agreements of shorter length, non-renewal of collective agreements, pay pauses, or the implementation of parts of collectively agreed increases only.

Generally speaking, one can say that collective bargaining processes were more confrontational in times of crisis than usual and more protest action on behalf of the trade unions were resorted to. This started with the employers’ side claim for zero wage agreements and special collective agreements in spring 2009; however, the unions responded to this with protest actions and demonstrations. The wage increases negotiated in the 2009 bargaining rounds (for 2010) were still comparatively lower than in the preceding and following years (see above), but no zero wage agreements were implemented. In the aftermath of the immediate crisis that had hit the country and which was of relatively short duration (last quarter 2008 until mid-2009), wage negotiations proved nonetheless difficult. In several sectors, like the finance and social services sectors, demonstrations took place, and in the metalworking sector, employees went on strike before an agreement was reached. In the graphic industry (including printing plants), the employers cancelled the collective agreement before a new one had been negotiated. Some printing shops of newspaper publishers left the Federal Employer organisation of Printing and Media Technology Activities (Verband Druck und Medientechnik) which was engaged in collective bargaining, but returned several months after. Only after several bargaining rounds and warning strikes, a new collective agreement could be reached. The printers had argued that the wages were too high as compared to Germany and thus they would have a competitive disadvantage. Collective bargaining for journalists has also been highly controversial with the Austrian Newspaper Association (VÖZ) cancelling negotiations which had been ongoing for about three years in order to reach better working conditions also for freelance and online journalists.

In the public sector, pay pauses were agreed upon for federal employees for 2013. Even though wages are set by law, informal negotiations between public sector trade unions and government representatives take place, and the outcomes of these negotiations eventually determine the terms of employment (especially with regards to pay) after ratification by the public authorities. While the results are binding for federal employees, they are usually taken over at the provincial and municipal levels, as well. Only very limited wage increases were agreed upon after the onset of the crisis. For 2010, the wage increases agreed upon lay at 0.9% plus an additional lump sum of €4 per month. For 2011, incremental wage increases averaging at 1.03% were negotiated. For 2012, average wage increases of 2.95% were agreed upon, thus almost reaching pre-crisis levels (as the wage increase for 2009 was at 3.55%). In order to consolidate the public budget, a stagnation of the wages for federal employees for 2013 was agreed upon as part of Austria’s austerity package in 2012, and ‘moderate’ wage increases are envisaged for 2014. The Union of Public Employees (GÖD) has consented to that proposal without further negotiations. At the provincial and communal level, however, small increases might be implemented as at least in some provinces, this has been announced. Also, the union representing communal workers (GdG-KMSfB) has announced that it will not accept a zero growth wage agreement and protests are planned.

3.3.2 Overall, how severe do you think the impact of the crisis has been on industrial relations outcomes in your country? Please tick the relevant box.

x not very severe

3.4: Severity of impact on industrial relations

Overall, how severe do you think that the impact of the crisis has been on industrial relations in your country? Please tick the relevant box.

x not very severe

Section 4: Views of the social partners

Please give details of any relevant views of the social partners on the impact of the crisis on industrial relations in your country. This should include the following:

Any relevant policy statements

Relevant texts from the national, regional and sectoral social partners.

As shown in this report, the impact of the crisis on industrial relations in Austria is very limited and thus hardly a subject of discussion, neither in policy or social partner debates, nor in academics. The reason for this negligence is that the social partnership had been strongly institutionalised before the crisis and was performing its traditional role in being part of the design and implementation process of policies targeted towards the alleviation of the crisis. The crisis thus had hardly any impact on industrial relations in the country, apart from the fact that the positions of the two sides hardened slightly in the period immediately following the crisis and that some controversy has occurred in the collective bargaining negotiations in the metalworking sector. No policy statements and texts from social partners on the impact of the crisis on industrial relations are available. Both sides agree that the social partnership was an asset in overcoming the crisis quickly and relatively successfully.

Section 5: Commentary

Please give your own views on the impact of the crisis on industrial relations in your country, grouped into the following areas.

How badly the crisis has affected your country

How severe the impact on industrial relations has been, in your view

Whether the government and/or the social partners have, in your view, been successful in any efforts they have made to try to mitigate the effects of the crisis on industrial relations.

Austria was not as badly affected by the crisis as many other European countries. The economic downturn was relatively strong (with a 5% negative economic growth in first two quarters of 2009); however, the crisis was also very short. A wide range of measures were implemented after a tripartite dialogue in order to support the economy and prevent large-scale job losses. Due to this participation in the design of the labour market instruments and the consent-based approach of the social partners, they were content with the outcomes. Austria recovered relatively quickly from the economic downturn and the unemployment rate, which had increased as a consequence of the crisis, quickly decreased again, making Austria the country with the lowest unemployment rate within the EU. Some groups, however, were more badly affected by the crisis than others; older and younger workers were among the groups hit hardest. Nonetheless, the tripartite initiatives, programmes and measures that were implemented proved to be successful in the fight against a strong worsening of the labour market situation. At first, when the crisis was imminent, its impact on industrial relations was a positive one. The longstanding tradition of the strong social partnership system in Austria was an asset in overcoming the crisis quickly. After the worst of the crisis was over, however, negative impacts on industrial relations in the country could be observed, especially in the collective bargaing processes of the influential and pattern-setting metal working industry which traditionally starts the annual bargaining rounds. The first strike in 25 years was taking place and in 2012, decentralisation processes could be observed. Also in other sectors, the positions between organised labour and business hardened. Incidences of protest action and demonstrations increased.

Bernadette Allinger, FORBA (Working Life Research Centre)

Literature

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