Economic Sustainability
#8Key Findings
Austria performs well in international comparison (rank 8) in the category of economic sustainability.
Resource consumption levels are high, but resource productivity has improved. Austria is one of only six EU states whose greenhouse gas emissions had not fallen by 2021. The post-2020 government has set more ambitious targets, including 100% of energy from renewables by 2030. Political compromises have undermined emissions-reductions efforts.
The country has a well-developed active labor market policy, and strong vocational training and retraining systems. Unemployment benefits are broadly accessible. However, youth and long-term unemployment remain persistent issues.
The tax system generates significant revenue, primarily through labor and consumption taxes, but is criticized for weak environmental incentives. The government has committed to reducing public debt, showing some success before the pandemic led to higher spending. The country has exceeded EU research and innovation spending targets.
Resource consumption levels are high, but resource productivity has improved. Austria is one of only six EU states whose greenhouse gas emissions had not fallen by 2021. The post-2020 government has set more ambitious targets, including 100% of energy from renewables by 2030. Political compromises have undermined emissions-reductions efforts.
The country has a well-developed active labor market policy, and strong vocational training and retraining systems. Unemployment benefits are broadly accessible. However, youth and long-term unemployment remain persistent issues.
The tax system generates significant revenue, primarily through labor and consumption taxes, but is criticized for weak environmental incentives. The government has committed to reducing public debt, showing some success before the pandemic led to higher spending. The country has exceeded EU research and innovation spending targets.
Graph View
Graph View
How committed is the government to driving the transition toward a circular economy?
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9
9
The government is clearly committed to transitioning to a circular economy.
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7
6
The government is largely committed to transitioning to a circular economy.
5
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3
4
3
The government is somewhat committed to transitioning to a circular economy.
2
1
1
The government is not at all committed to transitioning to a circular economy.
Recent Austrian governments have made efforts to gradually transition toward a circular economy. The official “Austrian Circular Economy Strategy” was developed and is being led by the Federal Ministry for Climate Protection, Environment, Energy, Mobility, Innovation and Technology (BMK). The ministry closely collaborates with numerous actors from economics, science, administration, and civil society. The content creation was overseen by the Federal Environmental Agency and the Austrian Society for Environment and Technology. Activities began with an online survey involving more than 400 participants, followed by a vision workshop and over a dozen in-depth interviews with selected early adopters from various sectors. A series of online workshops provided comprehensive input on the transformation focal points selected for Austria.
The circular economy strategy is based on existing national strategies and programs, such as reports on resource use in Austria, the bio-economic strategy for the switch to renewable resources in the waste prevention program, the federal waste management plan in the area of efficient use of resources, and others. Further, there are important synergies with the energy research and innovation strategy, the national energy and climate plan (NEKP), and the mobility master plan 2030. This underscores the dominant view among Austrian decision-makers that a circular economy is essential for achieving climate goals.
Austria’s resource consumption remains high by European standards. However, economic performance – as measured by resource productivity, or GDP per ton of material consumed domestically – has consistently improved over the past 15 years. This improvement is largely due to the country’s efforts to decouple economic growth from resource consumption.
According to Eurostat, Austria’s circularity rate was 12% in 2020. By 2030, it is projected that 18% of the material resources used in the economy will come from the circular-oriented return and reuse of materials. Despite some stabilization between 2010 and 2018, Austria’s resource consumption levels remain elevated. In 2018, domestic material consumption reached 167 million tons, or 19 tons per capita per year – 5 tons above the European average.
Austria’s material footprint is significantly higher than its domestic material consumption. In 2017, the per capita footprint was 33 tons, far exceeding the European average of 23 tons. One area where Austria performs well is in the recycling rate of all waste (excluding major mineral waste). In a recent comparative assessment, Austria ranked within the top third of more than twenty European countries.
The need to develop an effective monitoring regime to ensure reasonable progress across various areas has been recognized, leading to the creation of programmatic agendas. However, the effective monitoring of these complex processes remains in its early stages. In October 2023, a new “Task-Force Kreislaufwirtschaft” (circular economy), composed of scientific experts nominated by the federal government, held its constituent meeting. The task force is designed to survey and evaluate the implementation of a circular economy in Austria. Its tasks include reporting to the cabinet, allowing the government to assess progress in implementation and decide on additional measures deemed necessary based on these reports.
Citations:
https://www.bmk.gv.at/en/topics/climate-environment/waste-resource-management/ces.html
file:///C:/Users/c4021008/Downloads/Austrian_CES.pdf
https://boku.ac.at/news/newsitem/76168
The circular economy strategy is based on existing national strategies and programs, such as reports on resource use in Austria, the bio-economic strategy for the switch to renewable resources in the waste prevention program, the federal waste management plan in the area of efficient use of resources, and others. Further, there are important synergies with the energy research and innovation strategy, the national energy and climate plan (NEKP), and the mobility master plan 2030. This underscores the dominant view among Austrian decision-makers that a circular economy is essential for achieving climate goals.
Austria’s resource consumption remains high by European standards. However, economic performance – as measured by resource productivity, or GDP per ton of material consumed domestically – has consistently improved over the past 15 years. This improvement is largely due to the country’s efforts to decouple economic growth from resource consumption.
According to Eurostat, Austria’s circularity rate was 12% in 2020. By 2030, it is projected that 18% of the material resources used in the economy will come from the circular-oriented return and reuse of materials. Despite some stabilization between 2010 and 2018, Austria’s resource consumption levels remain elevated. In 2018, domestic material consumption reached 167 million tons, or 19 tons per capita per year – 5 tons above the European average.
Austria’s material footprint is significantly higher than its domestic material consumption. In 2017, the per capita footprint was 33 tons, far exceeding the European average of 23 tons. One area where Austria performs well is in the recycling rate of all waste (excluding major mineral waste). In a recent comparative assessment, Austria ranked within the top third of more than twenty European countries.
The need to develop an effective monitoring regime to ensure reasonable progress across various areas has been recognized, leading to the creation of programmatic agendas. However, the effective monitoring of these complex processes remains in its early stages. In October 2023, a new “Task-Force Kreislaufwirtschaft” (circular economy), composed of scientific experts nominated by the federal government, held its constituent meeting. The task force is designed to survey and evaluate the implementation of a circular economy in Austria. Its tasks include reporting to the cabinet, allowing the government to assess progress in implementation and decide on additional measures deemed necessary based on these reports.
Citations:
https://www.bmk.gv.at/en/topics/climate-environment/waste-resource-management/ces.html
file:///C:/Users/c4021008/Downloads/Austrian_CES.pdf
https://boku.ac.at/news/newsitem/76168
Graph View
How committed is the government to updating and protecting critical infrastructure?
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The government is clearly committed to updating basic technical infrastructure.
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7
6
7
6
The government is largely committed to updating basic technical infrastructure.
5
4
3
4
3
The government is somewhat committed to updating basic technical infrastructure.
2
1
1
The government is not at all committed to updating basic technical infrastructure.
From a comparative perspective on 30 European countries, Austria’s overall infrastructure quality has been assessed as clearly above average (11/30; see World Forum data for 2019 and 2020). According to Eurostat, Austria has the second-highest share of trains in inland passenger transport, second only to Switzerland. However, these figures contrast starkly with the notably low high-speed internet coverage, both overall and in sparsely populated areas, where Austria fares near the bottom among European countries. Since high-speed internet is essential for economic development, it should be much higher on the agenda.
Recent Austrian governments have committed to a strategy and roadmap for updating and protecting critical infrastructure. In 2014, the federal government launched a new master plan designed to protect critical infrastructure, created by the Federal Chancellery and the Interior Ministry (Bundeskanzleramt n.d.). This master plan was developed in cooperation with other relevant portfolios, the states, key interest groups, and major companies. It documented the progress made since 2008 and defined new goals.
The principles on which all parties involved agreed were cooperation, subsidiarity, complementarity, confidentiality, and commensurability of measures. The key goal was to provide reasonable support for strategically important companies in developing a “security architecture,” which includes risk management, business continuity management, and security management. The protection aspect involves identifying vulnerabilities in critical infrastructure and improving its robustness, recovery, and restoration capacity to guard against destruction or disruption by natural disasters, criminal activity, and terrorism. In 2016, the state governors decided on a new program designed to improve cooperation between state and federal agencies.
As a case study on critical infrastructure protection against electromagnetic threats suggests, Austria has generally pursued a cooperation-based strategy, relying on the self-assessment of strategic companies and organizations (see Jager et al. 2016). Further, the authors found that Austria’s particular cooperative nature has proven beneficial for addressing complex solutions at different levels, with responsible authorities willing to acknowledge the advantages of proactively engaging in dialogue with various actors (operators and owners). Scattered stocktaking exercises in different areas, such as those concerning electricity blackouts, suggested that Austria is “fairly well” prepared to successfully handle potential challenges. However, further efforts in certain areas, such as expanding the fiber optic network, are urgently needed.
Efforts to protect critical infrastructure have been high on the current government’s agenda. The most recent step marked the launch of a bill in late 2023 to improve the resilience of civil defense organizations and ambulances.
Comparative assessments across OECD countries (see OECD Reviews of Risk Management Policies, Good Governance for Critical Infrastructure Resilience) suggest that Austria, unlike several European countries, has addressed the ongoing challenges in a reasonably serious way.
Citations:
Bundeskanzleramt. n.d. “Österreichisches Programm zum Schutz kritischer Infrastrukturen (APCIP).” https://www.bundeskanzleramt.gv.at/themen/sicherheitspolitik/schutz-kritischer-infrastrukturen.html
https://www.derstandard.at/story/3000000188348/blackout-handynetz
https://www.derstandard.at/story/2000143922969/fuer-den-blackout-nicht-gewappnet-nachholbedarf-fuer-oesterreich-bei-der
Jager, Bettina, Alexander Preinerstorfer, and Georg Neubauer. 2016. “Awareness of the Vulnerability of Critical Infrastructures to IEMI Threats: Lessons from Austria.” In Infrastructure Risk Assessment and Management, eds. G. Schleyer et al., 51-62.
https://www.oecd-ilibrary.org/sites/b1dac86e-en/index.html?itemId=/content/component/b1dac86e-en
Recent Austrian governments have committed to a strategy and roadmap for updating and protecting critical infrastructure. In 2014, the federal government launched a new master plan designed to protect critical infrastructure, created by the Federal Chancellery and the Interior Ministry (Bundeskanzleramt n.d.). This master plan was developed in cooperation with other relevant portfolios, the states, key interest groups, and major companies. It documented the progress made since 2008 and defined new goals.
The principles on which all parties involved agreed were cooperation, subsidiarity, complementarity, confidentiality, and commensurability of measures. The key goal was to provide reasonable support for strategically important companies in developing a “security architecture,” which includes risk management, business continuity management, and security management. The protection aspect involves identifying vulnerabilities in critical infrastructure and improving its robustness, recovery, and restoration capacity to guard against destruction or disruption by natural disasters, criminal activity, and terrorism. In 2016, the state governors decided on a new program designed to improve cooperation between state and federal agencies.
As a case study on critical infrastructure protection against electromagnetic threats suggests, Austria has generally pursued a cooperation-based strategy, relying on the self-assessment of strategic companies and organizations (see Jager et al. 2016). Further, the authors found that Austria’s particular cooperative nature has proven beneficial for addressing complex solutions at different levels, with responsible authorities willing to acknowledge the advantages of proactively engaging in dialogue with various actors (operators and owners). Scattered stocktaking exercises in different areas, such as those concerning electricity blackouts, suggested that Austria is “fairly well” prepared to successfully handle potential challenges. However, further efforts in certain areas, such as expanding the fiber optic network, are urgently needed.
Efforts to protect critical infrastructure have been high on the current government’s agenda. The most recent step marked the launch of a bill in late 2023 to improve the resilience of civil defense organizations and ambulances.
Comparative assessments across OECD countries (see OECD Reviews of Risk Management Policies, Good Governance for Critical Infrastructure Resilience) suggest that Austria, unlike several European countries, has addressed the ongoing challenges in a reasonably serious way.
Citations:
Bundeskanzleramt. n.d. “Österreichisches Programm zum Schutz kritischer Infrastrukturen (APCIP).” https://www.bundeskanzleramt.gv.at/themen/sicherheitspolitik/schutz-kritischer-infrastrukturen.html
https://www.derstandard.at/story/3000000188348/blackout-handynetz
https://www.derstandard.at/story/2000143922969/fuer-den-blackout-nicht-gewappnet-nachholbedarf-fuer-oesterreich-bei-der
Jager, Bettina, Alexander Preinerstorfer, and Georg Neubauer. 2016. “Awareness of the Vulnerability of Critical Infrastructures to IEMI Threats: Lessons from Austria.” In Infrastructure Risk Assessment and Management, eds. G. Schleyer et al., 51-62.
https://www.oecd-ilibrary.org/sites/b1dac86e-en/index.html?itemId=/content/component/b1dac86e-en
Graph View
How committed is the government to fully decarbonizing the energy system by 2050?
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The government is clearly committed to transitioning to a decarbonized energy system.
8
7
6
7
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The government is largely committed to transitioning to a decarbonized energy system.
5
4
3
4
3
The government is somewhat committed to transitioning to a decarbonized energy system.
2
1
1
The government is not at all committed to transitioning to a decarbonized energy system.
Austria has been heavily affected by ongoing climate change. The rise in temperature (+2.3 °C in 2022) was nearly double the global average (Umweltbundesamt 2023), and all serious projections anticipate this trend will continue. This will have significant consequences, particularly in economic terms, with specific impacts on winter tourism in the alpine region.
Austrian governments have been largely committed to transitioning to a decarbonized energy system, although with medium-strong success. Greenhouse gas emissions have remained strikingly high. An official report by the Austrian Federal Audit Office from early 2021 suggests that greenhouse gas emissions grew by 5% in Austria over the past 30 years – making the country one of just six EU member states that have failed to achieve any improvement – while during the same period, the average for all EU member states decreased by 24%. Energy and industry remain the largest contributors to carbon dioxide emissions (Umweltbundesamt 2023). Economic growth and cheap carbon market certificates for carbon dioxide are the principal causes of the increase in carbon dioxide emissions in this sector.
According to an estimate by Wifo-Institut, Austria invested between €4.1 billion and €5.7 billion in climate-damaging subsidies from 2016 – 2020 (Kletzan-Slamanig et al. 2022). During the recent “gas crisis” this amount allegedly rose temporarily to €14.5 billion.
The participation of the Greens in the government formed early in 2020 and the appointment of a Green climate minister have marked a tangible change in Austria’s performance. The ÖVP-Green government launched several ambitious national targets. First, 100% of domestic electricity consumption will be covered by renewable energy sources by 2030. Second, the government is committed to achieving climate neutrality by 2040. Whether the government will achieve these targets remains to be seen. Perhaps the most spectacular measure of the recent past was the introduction of an annual “climate ticket” in late 2021 (for about €1,100), which allows ticket holders to use all forms of public transport (trains, buses, trams and subways) across the country. The pricing of CO2 emissions, as stipulated in a major tax reform package introduced in late 2021, marked another important step forward.
Furthermore, in late 2023 the government suggested scrapping several subsidies, particularly those for commuters and on diesel. However, no concrete measures have been taken yet.
However, the temptation to compromise on agreed measures has remained a characteristic feature of Austrian energy policy. For example, the fees for CO2 emissions per ton were set to increase in July 2022, but that increase was postponed for several months to ease the financial burdens on an inflation-plagued society.
Citations:
Umweltbundesamt. 2023. “Klimaschutzbericht 2023.” https://www.umweltbundesamt.at/fileadmin/site/publikationen/rep0871bfz.pdf
file:///C:/Users/c4021008/Downloads/Climate_neutrality_Austria_2040%20(1).pdf
https://pureadmin.unileoben.ac.at/ws/portalfiles/portal/9161065/AC16559769.pdf
https://www.german-energy-solutions.de/GES/Redaktion/DE/Publikationen/Kurzinformationen/Technologiefactsheets/2023/fs-oesterreich-w%C3%A4rme.pdf?__blob=publicationFile&v=1
https://www.derstandard.at/story/3000000198928/abbau-von-pendlerpauschale-und-dieselprivileg-oesterreich-schliesst-sich-initiative-an-die-fossile-subventionen-stoppen-will
Kletzan-Slamanig, Daniela, Angela Köppl, Franz Sinabell, Sabine Kirchmayr, Stella Müller, Alexander Rimböck, Thomas Voit, Martino Heher, Reinhard Schanda. 2022. “Analyse klimakontra-produktiver Subventionen in Österreich.” https://www.wifo.ac.at/jart/prj3/wifo/resources/person_dokument/person_dokument.jart?publikationsid=69687&mime_type=application/pdf
Austrian governments have been largely committed to transitioning to a decarbonized energy system, although with medium-strong success. Greenhouse gas emissions have remained strikingly high. An official report by the Austrian Federal Audit Office from early 2021 suggests that greenhouse gas emissions grew by 5% in Austria over the past 30 years – making the country one of just six EU member states that have failed to achieve any improvement – while during the same period, the average for all EU member states decreased by 24%. Energy and industry remain the largest contributors to carbon dioxide emissions (Umweltbundesamt 2023). Economic growth and cheap carbon market certificates for carbon dioxide are the principal causes of the increase in carbon dioxide emissions in this sector.
According to an estimate by Wifo-Institut, Austria invested between €4.1 billion and €5.7 billion in climate-damaging subsidies from 2016 – 2020 (Kletzan-Slamanig et al. 2022). During the recent “gas crisis” this amount allegedly rose temporarily to €14.5 billion.
The participation of the Greens in the government formed early in 2020 and the appointment of a Green climate minister have marked a tangible change in Austria’s performance. The ÖVP-Green government launched several ambitious national targets. First, 100% of domestic electricity consumption will be covered by renewable energy sources by 2030. Second, the government is committed to achieving climate neutrality by 2040. Whether the government will achieve these targets remains to be seen. Perhaps the most spectacular measure of the recent past was the introduction of an annual “climate ticket” in late 2021 (for about €1,100), which allows ticket holders to use all forms of public transport (trains, buses, trams and subways) across the country. The pricing of CO2 emissions, as stipulated in a major tax reform package introduced in late 2021, marked another important step forward.
Furthermore, in late 2023 the government suggested scrapping several subsidies, particularly those for commuters and on diesel. However, no concrete measures have been taken yet.
However, the temptation to compromise on agreed measures has remained a characteristic feature of Austrian energy policy. For example, the fees for CO2 emissions per ton were set to increase in July 2022, but that increase was postponed for several months to ease the financial burdens on an inflation-plagued society.
Citations:
Umweltbundesamt. 2023. “Klimaschutzbericht 2023.” https://www.umweltbundesamt.at/fileadmin/site/publikationen/rep0871bfz.pdf
file:///C:/Users/c4021008/Downloads/Climate_neutrality_Austria_2040%20(1).pdf
https://pureadmin.unileoben.ac.at/ws/portalfiles/portal/9161065/AC16559769.pdf
https://www.german-energy-solutions.de/GES/Redaktion/DE/Publikationen/Kurzinformationen/Technologiefactsheets/2023/fs-oesterreich-w%C3%A4rme.pdf?__blob=publicationFile&v=1
https://www.derstandard.at/story/3000000198928/abbau-von-pendlerpauschale-und-dieselprivileg-oesterreich-schliesst-sich-initiative-an-die-fossile-subventionen-stoppen-will
Kletzan-Slamanig, Daniela, Angela Köppl, Franz Sinabell, Sabine Kirchmayr, Stella Müller, Alexander Rimböck, Thomas Voit, Martino Heher, Reinhard Schanda. 2022. “Analyse klimakontra-produktiver Subventionen in Österreich.” https://www.wifo.ac.at/jart/prj3/wifo/resources/person_dokument/person_dokument.jart?publikationsid=69687&mime_type=application/pdf
Graph View
To what extent do existing labor market institutions support or hinder the transition to an adaptive labor market?
10
9
9
Labor market institutions are fully aligned with the goal of an adaptable labor market.
8
7
6
7
6
Labor market institutions are largely aligned with the goal of an adaptable labor market.
5
4
3
4
3
Labor market institutions are only somewhat aligned with the goal of an adaptable labor market.
2
1
1
Labor market institutions are not at all aligned with the goal of an adaptable labor market.
The Austrian labor market’s development over the past 15 years has been characterized by a substantial increase in labor supply and influenced by cyclical economic factors. Although the total hours worked did not rise, the number of employees did increase. Unemployment levels have fluctuated in accordance with economic trends. Despite a relatively developed active labor market policy, unemployment has increasingly concentrated on certain groups over time.
The overall number of employees in 2022 was 3.9 million, higher than ever in Austrian postwar history, with a 15.5% increase over 2008. Over the past 15 years, the labor supply increased more than labor demand, with certain groups specifically affected by this development. The share of long-term unemployed people increased from 21% in 2008 to 39% in 2022.
Politically, measures concerning active labor market policies, including the creation and maintenance of an adaptable labor market, have faced minimal contestation between different parties and social partners. All relevant actors have strongly supported a broad and inclusive set of measures, including qualification and support (see AMS 2022; BMAW 2022). Active labor market policies have been continuously expanded since the 1990s. Regarding public expenditures in this field, Austria has ranked No. 5 among OECD countries (see BMAW 2022).
Short-time work schemes have played a significant role in recent Austrian labor policy. They have had a notably positive impact on the employment rate during the COVID-19 pandemic (see BMAW 2022).
However, the Austrian Court of Audit noted the exceptional generosity of the various programs and highlighted the tremendous costs and the considerable danger of misuse by employers (Rechnungshof 2022).
In late 2023, the Chamber of Labor harshly criticized the government for wide-ranging cuts in active labor market policy. The reduction of about one-fifth of the resources previously devoted to this field was considered to obstruct the necessary steps in qualifying the Austrian workforce to meet new challenges, such as social-ecological transformation, digitalization and artificial intelligence.
The Austrian industry benefits from a robust apprenticeship system that provides comprehensive vocational training for low-educated workers, both on and off the job. This extensive vocational system enables workers to remain flexible throughout their careers. The apprenticeship system should be systematically reformed to integrate new occupations.
Citations:
Fink, M. 2023. “Arbeitslosigkeit, Unterbeschäftigung und Arbeitsmarktpolitik.” In A. Buxbaum, U. Filipič, S. Pirklbauer, N. Soukup, and N. Wagner, eds., Soziale Lage und Sozialpolitik in Österreich 2023: Entwicklungen und Perspektiven, 25-39. Wien: ÖGB-Verlag. https://nbn-resolving.org/urn:nbn:de:0168-ssoar-86874-5
BMAW. 2022. Aktive Arbeitsmarktpolitik in Österreich 2014 bis 2022. Dokumentation. Wien.
Bundesministerium für Arbeit und Wirtschaft. “Online verfügbar unter.” https://www.bmaw
gv.at/dam/jcr:2a6dff0d-f5f4-456d-99c9-07d9c2baf353/Final_Aktive%20AMP%20in%20
%C3%96sterreich%202014%20-%202022_Dokumentation.pdf
Rechnungshof. 2022. “COVID-19-Kurzarbeit: Konzept zur gezielten Aufdeckung von Missbrauch fehlte.” https://www.rechnungshof.gv.at/rh/home/news/news/aktuelles/COVID-19-Kurzarbeit.html#
https://www.ots.at/presseaussendung/OTS_20230915_OTS0142/baustellen-in-der-arbeitsmarktpolitik-arbeiterkammer-kritisiert-minister-kochers-kuerzungswahn
https://www.oecd.org/employment-outlook/2022/#country-notes
https://eures.europa.eu/living-and-working/labour-market-information/labour-market-information-austria_en
The overall number of employees in 2022 was 3.9 million, higher than ever in Austrian postwar history, with a 15.5% increase over 2008. Over the past 15 years, the labor supply increased more than labor demand, with certain groups specifically affected by this development. The share of long-term unemployed people increased from 21% in 2008 to 39% in 2022.
Politically, measures concerning active labor market policies, including the creation and maintenance of an adaptable labor market, have faced minimal contestation between different parties and social partners. All relevant actors have strongly supported a broad and inclusive set of measures, including qualification and support (see AMS 2022; BMAW 2022). Active labor market policies have been continuously expanded since the 1990s. Regarding public expenditures in this field, Austria has ranked No. 5 among OECD countries (see BMAW 2022).
Short-time work schemes have played a significant role in recent Austrian labor policy. They have had a notably positive impact on the employment rate during the COVID-19 pandemic (see BMAW 2022).
However, the Austrian Court of Audit noted the exceptional generosity of the various programs and highlighted the tremendous costs and the considerable danger of misuse by employers (Rechnungshof 2022).
In late 2023, the Chamber of Labor harshly criticized the government for wide-ranging cuts in active labor market policy. The reduction of about one-fifth of the resources previously devoted to this field was considered to obstruct the necessary steps in qualifying the Austrian workforce to meet new challenges, such as social-ecological transformation, digitalization and artificial intelligence.
The Austrian industry benefits from a robust apprenticeship system that provides comprehensive vocational training for low-educated workers, both on and off the job. This extensive vocational system enables workers to remain flexible throughout their careers. The apprenticeship system should be systematically reformed to integrate new occupations.
Citations:
Fink, M. 2023. “Arbeitslosigkeit, Unterbeschäftigung und Arbeitsmarktpolitik.” In A. Buxbaum, U. Filipič, S. Pirklbauer, N. Soukup, and N. Wagner, eds., Soziale Lage und Sozialpolitik in Österreich 2023: Entwicklungen und Perspektiven, 25-39. Wien: ÖGB-Verlag. https://nbn-resolving.org/urn:nbn:de:0168-ssoar-86874-5
BMAW. 2022. Aktive Arbeitsmarktpolitik in Österreich 2014 bis 2022. Dokumentation. Wien.
Bundesministerium für Arbeit und Wirtschaft. “Online verfügbar unter.” https://www.bmaw
gv.at/dam/jcr:2a6dff0d-f5f4-456d-99c9-07d9c2baf353/Final_Aktive%20AMP%20in%20
%C3%96sterreich%202014%20-%202022_Dokumentation.pdf
Rechnungshof. 2022. “COVID-19-Kurzarbeit: Konzept zur gezielten Aufdeckung von Missbrauch fehlte.” https://www.rechnungshof.gv.at/rh/home/news/news/aktuelles/COVID-19-Kurzarbeit.html#
https://www.ots.at/presseaussendung/OTS_20230915_OTS0142/baustellen-in-der-arbeitsmarktpolitik-arbeiterkammer-kritisiert-minister-kochers-kuerzungswahn
https://www.oecd.org/employment-outlook/2022/#country-notes
https://eures.europa.eu/living-and-working/labour-market-information/labour-market-information-austria_en
To what extent do existing labor market institutions support or hinder the transition to an inclusive labor market?
10
9
9
Labor market institutions are fully aligned with the goal of an inclusive labor market.
8
7
6
7
6
Labor market institutions are largely aligned with the goal of an inclusive labor market.
5
4
3
4
3
Labor market institutions are only somewhat aligned with the goal of an inclusive labor market.
2
1
1
Labor market institutions are not at all aligned with the goal of an inclusive labor market.
Out-of-work benefits are easily accessible, and there is an established system designed to allow people to acquire new qualifications and skills and find a job. However, the high share of long-term unemployed people – nearly one-third of all unemployed – points to the limits of this regime.
Critics have further pointed out that a lack of infrastructure in some regions makes it extremely difficult to maintain or re-enter the labor market while also managing family-related responsibilities, which particularly affects women.
Youth unemployment has been a persistent issue. In Austria, approximately 140,000 young people aged 15 – 29 fall into the category of NEETs – those not in education, employment, or training. About half of this group is actively seeking employment rather than simply being inactive. However, by international standards, the proportion of Neets in Austria is quite low (see the 2023 OECD “Education at a Glance” report). Additionally, the percentage of unemployed individuals with disabilities has continuously increased, reaching the highest level on record.
Overall, the ÖVP-led governments since 2017 have been criticized by trade unions for putting increasing pressure on various types of unemployed individuals rather than investing in supportive measures.
Regional imbalances in labor supply and demand play a role. Jobs in the tourism industry in the west often cannot be filled by the unemployed in the east (Vienna). This issue particularly affects young people and individuals with a migration background or refugees, who predominantly settle in Vienna.
Citations:
https://www.behindertenrat.at/arbeitsmarkt/
https://fm4.orf.at/stories/3037633/
https://www.ots.at/presseaussendung/OTS_20230629_OTS0134/langzeitarbeitslose-menschen-gezielt-unterstuetzen-statt-mehr-druck-ausueben
https://kurier.at/politik/inland/behinderung-ams-rauch-kocher-arbeitsunfaehigkeit-schulungen/402495039
https://kurier.at/wirtschaft/warum-viele-jugendliche-weder-arbeiten-noch-eine-ausbildung-machen/402609971
https://www.oecdbetterlifeindex.org/topics/work-life-balance/
https://doi.org/10.1787/e13bef63-en
Critics have further pointed out that a lack of infrastructure in some regions makes it extremely difficult to maintain or re-enter the labor market while also managing family-related responsibilities, which particularly affects women.
Youth unemployment has been a persistent issue. In Austria, approximately 140,000 young people aged 15 – 29 fall into the category of NEETs – those not in education, employment, or training. About half of this group is actively seeking employment rather than simply being inactive. However, by international standards, the proportion of Neets in Austria is quite low (see the 2023 OECD “Education at a Glance” report). Additionally, the percentage of unemployed individuals with disabilities has continuously increased, reaching the highest level on record.
Overall, the ÖVP-led governments since 2017 have been criticized by trade unions for putting increasing pressure on various types of unemployed individuals rather than investing in supportive measures.
Regional imbalances in labor supply and demand play a role. Jobs in the tourism industry in the west often cannot be filled by the unemployed in the east (Vienna). This issue particularly affects young people and individuals with a migration background or refugees, who predominantly settle in Vienna.
Citations:
https://www.behindertenrat.at/arbeitsmarkt/
https://fm4.orf.at/stories/3037633/
https://www.ots.at/presseaussendung/OTS_20230629_OTS0134/langzeitarbeitslose-menschen-gezielt-unterstuetzen-statt-mehr-druck-ausueben
https://kurier.at/politik/inland/behinderung-ams-rauch-kocher-arbeitsunfaehigkeit-schulungen/402495039
https://kurier.at/wirtschaft/warum-viele-jugendliche-weder-arbeiten-noch-eine-ausbildung-machen/402609971
https://www.oecdbetterlifeindex.org/topics/work-life-balance/
https://doi.org/10.1787/e13bef63-en
To what extent do existing labor market institutions support or hinder the mitigation of labor market risks?
10
9
9
Labor market institutions are fully aligned with the goal of protecting individuals against labor market risks.
8
7
6
7
6
Labor market institutions are largely aligned with the goal of protecting individuals against labor market risks.
5
4
3
4
3
Labor market institutions are only somewhat aligned with the goal of protecting individuals against labor market risks.
2
1
1
Labor market institutions are not at all aligned with the goal of protecting individuals against labor market risks.
A person may claim unemployment benefit (“Arbeitslosengeld”) if he or she loses a job and becomes unemployed. Someone may claim unemployment assistance (“Notstandshilfe”) if he or she has exhausted entitlement to unemployment benefit and remains in a situation of need.
The aim of unemployment benefits is to secure a person’s livelihood while they are looking for work. To be entitled to unemployment benefits, a person must be unemployed, able and willing to work (to accept suitable employment), be at the disposal of the job office, and not have exhausted their entitlement.
The basic amount of unemployment benefit is currently 55% of daily net income. Depending on the amount of income considered, this can be increased to up to 80% through supplementary and family benefits.
Importantly, entitled persons must have a minimum period of insurance. This applies if someone has been covered by unemployment insurance for at least 52 weeks during the last 24 months or 26 weeks within the last 12 months for people under 25 years old.
Individuals earning above the marginal earnings threshold (Geringfügigkeitsgrenze) of €500.91 per month (in 2023) are covered by unemployment insurance. There is no option for voluntary insurance for employees. However, self-employed persons may join the unemployment insurance system on a voluntary basis.
Workers generally benefit from protection through effective representation by powerful trade unions and the Chamber of Labour. The Austrian trade union movement has addressed increased cross-border mobility by insisting on enforcing labor standards. Unions have primarily pursued this issue through the Austrian social partnership, which fostered a comprehensive regulatory response. However, incidents of noncompliance, especially involving cross-border subcontracting, remain a challenge under the radar of inclusive bargaining institutions. As a nationally bounded enforcement strategy necessarily reaches its limits in transnational labor markets, unions have increasingly complemented their partnership approach with more emphasis on transnational cooperation and initiatives geared toward including mobile workers.
It aligns with Austria’s advanced welfare state regime that its population is considerably more concerned about social security issues than people in other European countries. At the same time, Austria has a significantly lower share of people who can imagine working abroad.
Austria’s contributory pensions and payments are disbursed internationally. Non-contributory benefits – such as specific supplements that may be paid to pensioners with small pensions and little or no other income – cannot be paid outside Austria. The rate of contributory benefits is linked to the amount of contributions and the final salary before becoming eligible for benefits.
Citations:
https://ec.europa.eu/social/main.jsp?catId=1101&langId=en&intPageId=4410
d’Addio, Anna Cristina, and Maria Chiara Cavalleri. 2015. “Labour Mobility and the Portability of Social Rights in the EU.” CESifo Economic Studies 61 (2): 346-376.
Krings, Torben. 2021. “From ‘Protecting Indigenous Workers’ towards Protecting Labour Standards?: Austrian Trade Unions and the Transnationalisation of Labour Markets in the EU.” Zeitschrift für Sozialreform 67 (4): 362-384.
The aim of unemployment benefits is to secure a person’s livelihood while they are looking for work. To be entitled to unemployment benefits, a person must be unemployed, able and willing to work (to accept suitable employment), be at the disposal of the job office, and not have exhausted their entitlement.
The basic amount of unemployment benefit is currently 55% of daily net income. Depending on the amount of income considered, this can be increased to up to 80% through supplementary and family benefits.
Importantly, entitled persons must have a minimum period of insurance. This applies if someone has been covered by unemployment insurance for at least 52 weeks during the last 24 months or 26 weeks within the last 12 months for people under 25 years old.
Individuals earning above the marginal earnings threshold (Geringfügigkeitsgrenze) of €500.91 per month (in 2023) are covered by unemployment insurance. There is no option for voluntary insurance for employees. However, self-employed persons may join the unemployment insurance system on a voluntary basis.
Workers generally benefit from protection through effective representation by powerful trade unions and the Chamber of Labour. The Austrian trade union movement has addressed increased cross-border mobility by insisting on enforcing labor standards. Unions have primarily pursued this issue through the Austrian social partnership, which fostered a comprehensive regulatory response. However, incidents of noncompliance, especially involving cross-border subcontracting, remain a challenge under the radar of inclusive bargaining institutions. As a nationally bounded enforcement strategy necessarily reaches its limits in transnational labor markets, unions have increasingly complemented their partnership approach with more emphasis on transnational cooperation and initiatives geared toward including mobile workers.
It aligns with Austria’s advanced welfare state regime that its population is considerably more concerned about social security issues than people in other European countries. At the same time, Austria has a significantly lower share of people who can imagine working abroad.
Austria’s contributory pensions and payments are disbursed internationally. Non-contributory benefits – such as specific supplements that may be paid to pensioners with small pensions and little or no other income – cannot be paid outside Austria. The rate of contributory benefits is linked to the amount of contributions and the final salary before becoming eligible for benefits.
Citations:
https://ec.europa.eu/social/main.jsp?catId=1101&langId=en&intPageId=4410
d’Addio, Anna Cristina, and Maria Chiara Cavalleri. 2015. “Labour Mobility and the Portability of Social Rights in the EU.” CESifo Economic Studies 61 (2): 346-376.
Krings, Torben. 2021. “From ‘Protecting Indigenous Workers’ towards Protecting Labour Standards?: Austrian Trade Unions and the Transnationalisation of Labour Markets in the EU.” Zeitschrift für Sozialreform 67 (4): 362-384.
Graph View
To what extent do existing tax institutions and procedures support or hinder adequate tax revenue flows?
10
9
9
The tax system is fully aligned with the goals of ensuring adequate tax revenues.
8
7
6
7
6
The tax system is largely aligned with the goals of ensuring adequate tax revenues.
5
4
3
4
3
The tax system is only somewhat aligned with the goals of ensuring adequate tax revenues.
2
1
1
The tax system is not at all aligned with the goals of ensuring adequate tax revenues.
The Austrian government receives reasonable tax revenues, sufficiently funding its comparatively generous welfare schemes. Currently, there is no legal minimum salary in Austria, so taking up an occupation might involve accepting a poorly paid job. However, as in other countries, very low salaries are not taxed, and most salaries have a lower bound due to collective bargaining agreements that cover almost all employees. In 2023, an annual salary of up to €11,693 was not taxed. Income taxes are particularly high in Austria, which is detrimental to employment in general. In contrast, taxation on wealth is almost nonexistent compared to international standards (Arbeiterkammer 2023).
The overall burden of taxes and other levies is very high in Austria, placing the country in the top tier of European nations (ranked 3 out of 29 countries, surpassed only by Denmark and France). The Austrian government is committed to addressing tax avoidance seriously, but the amount lost due to tax evasion has clearly exceeded €1 billion – nearly 4% of the country’s health budget or 5.6% of the education budget (Wirtschaftskammer 2023).
In a recent comparative study assessing different countries’ “capacity of tax administrations to collect and process data for investigating and ultimately taxing those people and companies who usually have most means and opportunities to escape their tax obligations,” Austria featured in the top tier of countries, with a score of 65 in 2022 compared to an average score of just 47 (see Tax Justice Network).
However, in its 2023 report, the Austrian Court of Audit criticized the serious lack of trained personnel in this field, which undermines the government’s declared ambition to avoid different forms of tax avoidance or evasion. Early in 2022, fewer than 200 of the scheduled 236 full-time positions had been filled. Additionally, newly planned IT resources were not considered to be functioning as intended (Rechnungshof 2023).
Citations:
https://www.arbeiterkammer.at/beratung/steuerundeinkommen/dazuverdienen/Steuerberechnung_fuer_Zuverdienst.html
https://www.wko.at/oe/oesterreich/chart-of-the-week-2023-11-10.pdf (Wirtschaftskammer 2023)
https://www.bundesfinanzministerium.de/Content/DE/Downloads/Broschueren_Bestellservice/die-wichtigsten-steuern-im-internationalen-vergleich-2022.pdf?__blob=publicationFile&v=6
Rechnungshof. 2023. “Personalmangel große Hürde bei Reform im Bereich Finanzstrafsachen.” https://www.rechnungshof.gv.at/rh/home/news/news/news_3/Personalmangel_Huerde_bei_Reform_Finanzstrafsachen.html#
https://taxjustice.net/country-profiles/austria/
https://www.ots.at/presseaussendung/OTS_20220406_OTS0129/finanzpolizei-2021-bei-28000-kontrollen-36-mio-euro-strafen-beantragt
The overall burden of taxes and other levies is very high in Austria, placing the country in the top tier of European nations (ranked 3 out of 29 countries, surpassed only by Denmark and France). The Austrian government is committed to addressing tax avoidance seriously, but the amount lost due to tax evasion has clearly exceeded €1 billion – nearly 4% of the country’s health budget or 5.6% of the education budget (Wirtschaftskammer 2023).
In a recent comparative study assessing different countries’ “capacity of tax administrations to collect and process data for investigating and ultimately taxing those people and companies who usually have most means and opportunities to escape their tax obligations,” Austria featured in the top tier of countries, with a score of 65 in 2022 compared to an average score of just 47 (see Tax Justice Network).
However, in its 2023 report, the Austrian Court of Audit criticized the serious lack of trained personnel in this field, which undermines the government’s declared ambition to avoid different forms of tax avoidance or evasion. Early in 2022, fewer than 200 of the scheduled 236 full-time positions had been filled. Additionally, newly planned IT resources were not considered to be functioning as intended (Rechnungshof 2023).
Citations:
https://www.arbeiterkammer.at/beratung/steuerundeinkommen/dazuverdienen/Steuerberechnung_fuer_Zuverdienst.html
https://www.wko.at/oe/oesterreich/chart-of-the-week-2023-11-10.pdf (Wirtschaftskammer 2023)
https://www.bundesfinanzministerium.de/Content/DE/Downloads/Broschueren_Bestellservice/die-wichtigsten-steuern-im-internationalen-vergleich-2022.pdf?__blob=publicationFile&v=6
Rechnungshof. 2023. “Personalmangel große Hürde bei Reform im Bereich Finanzstrafsachen.” https://www.rechnungshof.gv.at/rh/home/news/news/news_3/Personalmangel_Huerde_bei_Reform_Finanzstrafsachen.html#
https://taxjustice.net/country-profiles/austria/
https://www.ots.at/presseaussendung/OTS_20220406_OTS0129/finanzpolizei-2021-bei-28000-kontrollen-36-mio-euro-strafen-beantragt
To what extent do existing tax institutions and procedures consider equity aspects?
10
9
9
The tax system is fully aligned with the goal of ensuring equity.
8
7
6
7
6
The tax system is largely aligned with the goal of ensuring equity.
5
4
3
4
3
The tax system is only somewhat aligned with the goal of ensuring equity.
2
1
1
The tax system is not at all aligned with the goal of ensuring equity.
In several critical assessments of both horizontal and vertical equity, Austria has been found to offer much room for improvement. Specifically, most of the state’s revenues come from taxes on labor and value-added taxes, while very little is generated by any form of wealth taxes.
Also, the Austrian practice of public and private employers paying 13th and 14th salaries per year – which are effectively less taxed – has been considered to particularly benefit recipients of higher salaries (Reflektive 2018). Apart from that and relatively high value-added taxes, tax progression is rather high. The Gini coefficient drops significantly from pre-tax to post-tax income (Rocha-Akis 2023).
With an average rate of income tax and employees’ social security contributions for single persons with no children at 31.19%, Austria ranked 24th out of 30 countries in a recent survey. With an effective average tax rate for companies at 23.10% in 2021, Austria ranked 19th out of 27 countries in a recent survey (OECD 2023; Mannheim Tax Index).
The most significant equity effects are achieved not by taxation but by redistribution, where Austria stands out among the countries with the highest levels of post-tax redistribution. Considering child-related benefits and tax provisions, the net average tax rate for an average married worker with two children in Austria was 10.7% in 2022. This rate is the 28th lowest in the OECD and compares with the OECD average of 14.1% (OECD 2023).
Citations:
https://www.oehgb.at/wp-content/uploads/2014/12/Eigentuemertag_2014_Ladner.pdf
https://www.momentum-institut.at/system/files/2022-02/PB%202022.01%200101%20Steuerstruktur.pdf
Rocha-Akis, Silvia, Jürgen Bierbaumer, Benjamin Bittschi, Julia Bock-Schappelwein, Martina Einsiedl, Marian Fink, Michael Klien, Simon Loretz, Christine Mayrhuber. 2023. “Umverteilung durch den Staat in Österreich 2019 und Entwicklungen von 2005 bis 2019.” https://www.wifo.ac.at/news/umverteilung_durch_den_staat_in_oesterreich
OECD. 2023. Taxing Wages 2023: Indexation of Labour Taxation and Benefits in OECD Countries. Paris: OECD Publishing. https://doi.org/10.1787/8c99fa4d-en
https://www.reflektive.at/weihnachtsgeld-als-steuergeschenk-fuer-besserverdienende/
Mannheim Tax Index: https://www.zew.de/mannheim-tax-index
Also, the Austrian practice of public and private employers paying 13th and 14th salaries per year – which are effectively less taxed – has been considered to particularly benefit recipients of higher salaries (Reflektive 2018). Apart from that and relatively high value-added taxes, tax progression is rather high. The Gini coefficient drops significantly from pre-tax to post-tax income (Rocha-Akis 2023).
With an average rate of income tax and employees’ social security contributions for single persons with no children at 31.19%, Austria ranked 24th out of 30 countries in a recent survey. With an effective average tax rate for companies at 23.10% in 2021, Austria ranked 19th out of 27 countries in a recent survey (OECD 2023; Mannheim Tax Index).
The most significant equity effects are achieved not by taxation but by redistribution, where Austria stands out among the countries with the highest levels of post-tax redistribution. Considering child-related benefits and tax provisions, the net average tax rate for an average married worker with two children in Austria was 10.7% in 2022. This rate is the 28th lowest in the OECD and compares with the OECD average of 14.1% (OECD 2023).
Citations:
https://www.oehgb.at/wp-content/uploads/2014/12/Eigentuemertag_2014_Ladner.pdf
https://www.momentum-institut.at/system/files/2022-02/PB%202022.01%200101%20Steuerstruktur.pdf
Rocha-Akis, Silvia, Jürgen Bierbaumer, Benjamin Bittschi, Julia Bock-Schappelwein, Martina Einsiedl, Marian Fink, Michael Klien, Simon Loretz, Christine Mayrhuber. 2023. “Umverteilung durch den Staat in Österreich 2019 und Entwicklungen von 2005 bis 2019.” https://www.wifo.ac.at/news/umverteilung_durch_den_staat_in_oesterreich
OECD. 2023. Taxing Wages 2023: Indexation of Labour Taxation and Benefits in OECD Countries. Paris: OECD Publishing. https://doi.org/10.1787/8c99fa4d-en
https://www.reflektive.at/weihnachtsgeld-als-steuergeschenk-fuer-besserverdienende/
Mannheim Tax Index: https://www.zew.de/mannheim-tax-index
To what extent do existing tax institutions and procedures minimize compliance and collection costs?
10
9
9
The tax system is fully aligned with the goal of minimizing compliance and collection costs.
8
7
6
7
6
The tax system is largely aligned with the goal of minimizing compliance and collection costs.
5
4
3
4
3
The tax system is only somewhat aligned with the goal of minimizing compliance and collection costs.
2
1
1
The tax system is not at all aligned with the goal of minimizing compliance and collection costs.
The Austrian tax system is comparatively complex but has become slightly easier to navigate over time. As always, complexity benefits high-income individuals or firms more than low-income individuals, and in the former case, relying on tax consultants is common practice.
In a World Bank survey on the ease of paying taxes indicator, Austria ranks 19th out of 30 countries, though its score has improved significantly over the past decades. According to a study by PwC (n.d.) for 2020, taxpayers spent 46 hours on corporate income taxes, 50 hours on labor taxation, and 35 hours on VAT. In comparison, taxpayers in Germany spent 41, 134, and 43 hours, respectively, while those in Switzerland spent 15, 40, and 8 hours, respectively.
In another cross-country comparison by the European Parliament focusing on tax compliance costs for businesses in absolute values, Austria ranked slightly below the European average.
On the two specific questions of whether “fast-changing legislation and policies are a problem when doing business” and whether “the complexity of administrative procedures is a problem when doing business,” Austria ranked slightly below the European average. This suggests the existence of a fairly workable regime in place.
Citations:
https://www.europarl.europa.eu/RegData/etudes/STUD/2023/642353/IPOL_STU(2023)642353_EN.pdf
https://www.bmf.gv.at/en/the-ministry/internal-organisation/Tax-Authority-Austria.html
https://www.rydoo.com/compliance/austria/austrian-paperless/
pwc. n.d. “Interactive tax data explorer.” https://www.pwc.com/gx/en/services/tax/publications/paying-taxes-2020/explorer-tool.html
In a World Bank survey on the ease of paying taxes indicator, Austria ranks 19th out of 30 countries, though its score has improved significantly over the past decades. According to a study by PwC (n.d.) for 2020, taxpayers spent 46 hours on corporate income taxes, 50 hours on labor taxation, and 35 hours on VAT. In comparison, taxpayers in Germany spent 41, 134, and 43 hours, respectively, while those in Switzerland spent 15, 40, and 8 hours, respectively.
In another cross-country comparison by the European Parliament focusing on tax compliance costs for businesses in absolute values, Austria ranked slightly below the European average.
On the two specific questions of whether “fast-changing legislation and policies are a problem when doing business” and whether “the complexity of administrative procedures is a problem when doing business,” Austria ranked slightly below the European average. This suggests the existence of a fairly workable regime in place.
Citations:
https://www.europarl.europa.eu/RegData/etudes/STUD/2023/642353/IPOL_STU(2023)642353_EN.pdf
https://www.bmf.gv.at/en/the-ministry/internal-organisation/Tax-Authority-Austria.html
https://www.rydoo.com/compliance/austria/austrian-paperless/
pwc. n.d. “Interactive tax data explorer.” https://www.pwc.com/gx/en/services/tax/publications/paying-taxes-2020/explorer-tool.html
To what extent do existing tax institutions and procedures internalize negative and positive externalities?
10
9
9
The tax system is fully aligned with the goal of internalizing externalities.
8
7
6
7
6
The tax system is largely aligned with the goal of internalizing externalities.
5
4
3
4
3
The tax system is only somewhat aligned with the goal of internalizing externalities.
2
1
1
The tax system is not at all aligned with the goal of internalizing externalities.
The steering function of the Austrian tax regime – its ability to incentivize changes in economic behavior to preserve the sustainability of natural resources and environmental quality – has long been notably weak. However, the ecological-social tax reform passed by the government in October 2021 marked the start of a new era, including the pricing of CO2. The newly established CO2 pricing regime has been criticized for being too lenient to make a significant impact on shaping citizens’ behavior, and many issues remained unaddressed by the reform, such as lower taxation of diesel. Additionally, the scheduled incremental increase in fees has been delayed to mitigate the hardships of high inflation.
Ecologically harmful subsidies include subsidized commuting (Pendlerpauschale) and diesel for agriculture.
More recently, the government has significantly expanded subsidies introduced to internalize positive externalities. This has been particularly evident with incentives to replace older heating systems with new non-fossil options. In 2023, the government tripled the federal-level subsidies available, allowing up to 75% of costs to be refunded and, in cases of social hardship, even up to 100%.
Austria has an established regime for providing subsidies for basic research (“Grundlagenforschung”), but the resources have not been sufficient to fund all submitted applications deemed “excellent” by external and international peer reviews.
Citations:
https://www.bmk.gv.at/service/presse/gewessler/20231129_heizungstausch.html
https://www.derstandard.de/story/2000145801814/1-1-milliarden-fuer-grundlagenforschung-in-oesterreich
Ecologically harmful subsidies include subsidized commuting (Pendlerpauschale) and diesel for agriculture.
More recently, the government has significantly expanded subsidies introduced to internalize positive externalities. This has been particularly evident with incentives to replace older heating systems with new non-fossil options. In 2023, the government tripled the federal-level subsidies available, allowing up to 75% of costs to be refunded and, in cases of social hardship, even up to 100%.
Austria has an established regime for providing subsidies for basic research (“Grundlagenforschung”), but the resources have not been sufficient to fund all submitted applications deemed “excellent” by external and international peer reviews.
Citations:
https://www.bmk.gv.at/service/presse/gewessler/20231129_heizungstausch.html
https://www.derstandard.de/story/2000145801814/1-1-milliarden-fuer-grundlagenforschung-in-oesterreich
Graph View
To what extent do existing budgetary institutions and procedures support or hinder sustainable budgeting?
10
9
9
Budgetary institutions and policies are fully aligned with the goals of sustainable budgeting.
8
7
6
7
6
Budgetary institutions and policies are largely aligned with the goals of sustainable budgeting.
5
4
3
4
3
Budgetary institutions and policies are only somewhat aligned with the goals of sustainable budgeting.
2
1
1
Budgetary institutions and policies are not at all aligned with the goals of sustainable budgeting.
As with most other European governments, Austrian administrations have committed to reducing public debt and pursuing strategies of sustainable budgeting. The years 2018 and 2019 were marked by relative successes in budgetary consolidation. However, the pandemic caused major setbacks, and in 2020, Austria witnessed a record level of public debt.
In late 2023, the Nationalrat approved the overall spending volume for 2024, which exceeded the government’s original projection of more than €17 billion. The opposition parties in the Nationalrat (SPÖ, Neos, and FPÖ) unanimously criticized the government’s budgetary policy.
Spending is largely skewed toward an aging population (pensions) at the expense of younger generations, which poses significant problems in terms of intergenerational justice (“Wie soll ich das bezahlen?”, Agenda Austria, 2020, https://www.agenda-austria.at/publikationen/wie-soll-ich-das-bezahlen/).
The 2023 annual report of the Austrian Fiskal Advisory Council (“Fiskalrat”) – an independent body responsible for monitoring the fiscal discipline of government entities in Austria, comprising 15 public finance experts mandated to act independently – concluded that Austria is on a good path toward a sustainable budget. “Unlike in its fall 2022 forecast, the Fiscal Advisory Council now considers a continuous improvement of Austria’s fiscal balance possible (…). Starting from 3.2% of GDP in 2022, Austria’s budget deficit will shrink to 2.5% of GDP in 2023 under this ‘no policy change’ assumption and is assumed to continue to decline, reaching 0.5% of GDP by 2027” (Fiskalrat 2023: 1).
Austria has no official debt brake, unlike Germany; this facilitates budgeting in complicated situations, like the COVID-19 pandemic or periods of high inflation.
In 2021, the national government introduced an SDG budgeting regime. However, this initiative is voluntary and, contrary to recommendations by the Court of Audit, not legally binding. The implementation experience since then suggests that the SDGs have not received higher priority. One reason, arguably, is that SDGs do not feature as independent budgetary goals but are subordinated to existing budgetary goals.
There have also been major differences in the prominence of various SDGs in Austrian budget planning. Gender (SDG 5) has been the most frequently addressed issue, whereas “no poverty” (SDG 1), “zero hunger” (SDG 2), “clean water” (SDG 6), and – interestingly – “affordable and clean energy” (SDG 7) have played hardly any role.
Citations:
https://www.parlament.gv.at/aktuelles/news/Budget-2024-Nationalrat-genehmigt-Defizit-von-209-Mrd-
https://www.derstandard.de/story/3000000196692/budget-im-nationalrat-mit-stimmen-der-koalition-beschlossen
Fiskalrat. 2023. “Executive Summary, Recommendations and Main Results of the Fiscal Rules Compliance Report for Austria for 2022 to 2027.” https://www.fiskalrat.at/dam/jcr:1d7da7dc-d6e8-4958-b2b8-b8216e22e0db/EN-Main%20Results-June%202023.pdf
https://www.parlament.gv.at/dokument/budgetdienst/budget/BD-Budgetanalyse-2024.pdf
https://www.awblog.at/Soziales/budget-fuer-wohlstand-sdg-budgeting-in-oesterreich
In late 2023, the Nationalrat approved the overall spending volume for 2024, which exceeded the government’s original projection of more than €17 billion. The opposition parties in the Nationalrat (SPÖ, Neos, and FPÖ) unanimously criticized the government’s budgetary policy.
Spending is largely skewed toward an aging population (pensions) at the expense of younger generations, which poses significant problems in terms of intergenerational justice (“Wie soll ich das bezahlen?”, Agenda Austria, 2020, https://www.agenda-austria.at/publikationen/wie-soll-ich-das-bezahlen/).
The 2023 annual report of the Austrian Fiskal Advisory Council (“Fiskalrat”) – an independent body responsible for monitoring the fiscal discipline of government entities in Austria, comprising 15 public finance experts mandated to act independently – concluded that Austria is on a good path toward a sustainable budget. “Unlike in its fall 2022 forecast, the Fiscal Advisory Council now considers a continuous improvement of Austria’s fiscal balance possible (…). Starting from 3.2% of GDP in 2022, Austria’s budget deficit will shrink to 2.5% of GDP in 2023 under this ‘no policy change’ assumption and is assumed to continue to decline, reaching 0.5% of GDP by 2027” (Fiskalrat 2023: 1).
Austria has no official debt brake, unlike Germany; this facilitates budgeting in complicated situations, like the COVID-19 pandemic or periods of high inflation.
In 2021, the national government introduced an SDG budgeting regime. However, this initiative is voluntary and, contrary to recommendations by the Court of Audit, not legally binding. The implementation experience since then suggests that the SDGs have not received higher priority. One reason, arguably, is that SDGs do not feature as independent budgetary goals but are subordinated to existing budgetary goals.
There have also been major differences in the prominence of various SDGs in Austrian budget planning. Gender (SDG 5) has been the most frequently addressed issue, whereas “no poverty” (SDG 1), “zero hunger” (SDG 2), “clean water” (SDG 6), and – interestingly – “affordable and clean energy” (SDG 7) have played hardly any role.
Citations:
https://www.parlament.gv.at/aktuelles/news/Budget-2024-Nationalrat-genehmigt-Defizit-von-209-Mrd-
https://www.derstandard.de/story/3000000196692/budget-im-nationalrat-mit-stimmen-der-koalition-beschlossen
Fiskalrat. 2023. “Executive Summary, Recommendations and Main Results of the Fiscal Rules Compliance Report for Austria for 2022 to 2027.” https://www.fiskalrat.at/dam/jcr:1d7da7dc-d6e8-4958-b2b8-b8216e22e0db/EN-Main%20Results-June%202023.pdf
https://www.parlament.gv.at/dokument/budgetdienst/budget/BD-Budgetanalyse-2024.pdf
https://www.awblog.at/Soziales/budget-fuer-wohlstand-sdg-budgeting-in-oesterreich
Graph View
How committed is the government to utilizing research and innovation as drivers for the transition to a sustainable economy and society?
10
9
9
The government is clearly committed to utilizing research and innovation as drivers for the transition to a sustainable economy and society.
8
7
6
7
6
The government is largely committed to utilizing research and innovation as drivers for the transition toward a sustainable economy and society.
5
4
3
4
3
The government is somewhat committed to utilizing research and innovation as drivers for the transition toward a sustainable economy and society.
2
1
1
The government is not at all committed to utilizing research and innovation as drivers for the transition toward a sustainable economy and society.
Austria has committed to a future-oriented and innovation-friendly policy. Its Research, Technology, and Innovation (RTI) Strategy is considered the foundation of sustainable growth and the increased resilience of the entire economic system (see Federal Government Republic of Austria 2020).
Austria, as a research, technology, and innovation (RTI) location, has shown dynamic development in recent years, exceeding the 3% of gross domestic product (GDP) target set by the European Union. In 2020, Austria ranked second within the EU. The Austrian research landscape comprises 22 public universities, 21 universities of applied sciences, five central non-university research institutions, 3,489 research companies, and a total of more than 5,000 research-performing units, including many leading international companies.
The strategy is based on several cross-cutting issues, including Sustainable Development Goals, digitalization, strengthening gender equality in RTI, Responsible Science, Open Science, and Open Innovation. Strategic planning, achievement, and implementation of RTI aim to be optimized through scientifically rigorous evaluations – both internal and external – designed to improve government activities concerning their relevance, efficiency, effectiveness, impact, sustainability, and coherence.
This commitment is evident in hard facts. For example, Austria recently ranked fifth out of 30 Western countries in patents for environment-related technologies as well as patents related to recycling and secondary raw materials. Additionally, Austria is ranked eighth among the 27 EU member states by the European Innovation Scoreboard (EIS 2022). Furthermore, Austria is third in the EU on the Eco Innovation Scoreboard of the European Environment Agency (EEA 2022).
Still, innovation in universities is hampered by financial constraints; venture capital is too low.
Citations:
https://www.bmk.gv.at/en/topics/innovation/policy/open_innovation_strategy.html
https://openinnovation.gv.at/wp-content/uploads/2015/08/OI_Barrierefrei_Englisch.pdf
https://www.klimafonds.gv.at/wp-content/uploads/sites/16/EN_Summary_Research_and_Innovation_Strategy.pdf
Federal Government Republic of Austria. 2020. “RTI Strategy 2030. Strategy for Research, Technology and Innovation of the Austrian Federal Government.” https://era.gv.at/public/documents/4489/RTI_Strategy_2030-1-1.pdf
EIS. 2022. “European Innovation Scoreboard.” https://op.europa.eu/en/publication-detail/-/publication/f0e0330d-534f-11ed-92ed-01aa75ed71a1/language-en/format-PDF/source-272941691
EEA. 2022. “Eco-innovation index.” https://www.eea.europa.eu/en/analysis/indicators/eco-innovation-index-8th-eap
Austria, as a research, technology, and innovation (RTI) location, has shown dynamic development in recent years, exceeding the 3% of gross domestic product (GDP) target set by the European Union. In 2020, Austria ranked second within the EU. The Austrian research landscape comprises 22 public universities, 21 universities of applied sciences, five central non-university research institutions, 3,489 research companies, and a total of more than 5,000 research-performing units, including many leading international companies.
The strategy is based on several cross-cutting issues, including Sustainable Development Goals, digitalization, strengthening gender equality in RTI, Responsible Science, Open Science, and Open Innovation. Strategic planning, achievement, and implementation of RTI aim to be optimized through scientifically rigorous evaluations – both internal and external – designed to improve government activities concerning their relevance, efficiency, effectiveness, impact, sustainability, and coherence.
This commitment is evident in hard facts. For example, Austria recently ranked fifth out of 30 Western countries in patents for environment-related technologies as well as patents related to recycling and secondary raw materials. Additionally, Austria is ranked eighth among the 27 EU member states by the European Innovation Scoreboard (EIS 2022). Furthermore, Austria is third in the EU on the Eco Innovation Scoreboard of the European Environment Agency (EEA 2022).
Still, innovation in universities is hampered by financial constraints; venture capital is too low.
Citations:
https://www.bmk.gv.at/en/topics/innovation/policy/open_innovation_strategy.html
https://openinnovation.gv.at/wp-content/uploads/2015/08/OI_Barrierefrei_Englisch.pdf
https://www.klimafonds.gv.at/wp-content/uploads/sites/16/EN_Summary_Research_and_Innovation_Strategy.pdf
Federal Government Republic of Austria. 2020. “RTI Strategy 2030. Strategy for Research, Technology and Innovation of the Austrian Federal Government.” https://era.gv.at/public/documents/4489/RTI_Strategy_2030-1-1.pdf
EIS. 2022. “European Innovation Scoreboard.” https://op.europa.eu/en/publication-detail/-/publication/f0e0330d-534f-11ed-92ed-01aa75ed71a1/language-en/format-PDF/source-272941691
EEA. 2022. “Eco-innovation index.” https://www.eea.europa.eu/en/analysis/indicators/eco-innovation-index-8th-eap
Graph View
How committed and credible is the government in its activities to guide the effective regulation and supervision of the international financial architecture?
10
9
9
The government is clearly committed to ensuring the stability of the global financial system.
8
7
6
7
6
The government is largely committed to ensuring the stability of the global financial system.
5
4
3
4
3
The government is somewhat committed to ensuring the stability of the global financial system.
2
1
1
The government is not at all committed to ensuring the stability of the global financial system.
Austrian governments have been moderately committed to regulating and supervising the international financial architecture effectively. Specifically, Austria has shown mixed performance regarding the promotion and implementation of an EU-wide tax on financial transactions, originally established in 2013. The ÖVP-led governments since 2017 have largely obstructed any significant progress in implementing this new tax.
At the same time, the government has been careful to avoid the impression that it is complacent about the challenges of an increasingly complex global financial system. For example, the country has applied to host the European Union’s new Anti-Money Laundering Authority (AMLA).
Regarding the Tax Justice Network financial secrecy score, which measures the contribution of each jurisdiction to financial secrecy on a scale from 0 (best) to 100 (worst), Austria received an average score of 54.6 among a group of other Western countries. Similarly, in terms of how a jurisdiction participates in international transparency commitments and engages in international judicial cooperation on money laundering and other criminal matters, Austria ranked in the middle compared to other Western countries, according to the same source.
This bears witness to the fact that Austria still cannot completely let go of its former “freerider” status as a rather secretive international tax haven, undercutting the stability of the global financial system, and has to make way for a serious – and most importantly fair – participant in the European Union and the international system.
At the same time, the government has been careful to avoid the impression that it is complacent about the challenges of an increasingly complex global financial system. For example, the country has applied to host the European Union’s new Anti-Money Laundering Authority (AMLA).
Regarding the Tax Justice Network financial secrecy score, which measures the contribution of each jurisdiction to financial secrecy on a scale from 0 (best) to 100 (worst), Austria received an average score of 54.6 among a group of other Western countries. Similarly, in terms of how a jurisdiction participates in international transparency commitments and engages in international judicial cooperation on money laundering and other criminal matters, Austria ranked in the middle compared to other Western countries, according to the same source.
This bears witness to the fact that Austria still cannot completely let go of its former “freerider” status as a rather secretive international tax haven, undercutting the stability of the global financial system, and has to make way for a serious – and most importantly fair – participant in the European Union and the international system.