Labour Relations in Austria

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Labour Relations in Austria

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Title: Labour Relations in Austria

1
Labour Relations in Austria

Fundacion Ideas Friedrich Ebert Stiftung
February 8, 2010 Madrid
Successful Labour Relations Models in Europe
the German, Austrian and Danish Models

2
Labour Relations in Austria

Labour Relations (Sozialpartnerschaft)
Have contributed to make Austria one of the
richest
countries in the world and still are an
important pillar.
Have contributed to cope with challenges and to
mitigate the impact of the crisis in Austria
But they are challenged by globalisation, new
capitalism,
and the subsequent shifts in power.
Confidence in Social Partners is (very) high.

3
Austria catches up

Austria catches up and ranks high in
Wealth, Growth and Competitiveness
Living standards and quality of life
Employment (relatively low unemployment)
Public opinion citizens satisfied, despite
concerns
Attractiveness to others migration, tourism,
business leaders..

4
and faces (new) challenges

Globalisation and new capitalism lead to
Increasing pressure on living and working
conditions,
On social protections systems,
Public Services (privatizations),
Rising inequalities
And Austria faces (new) challenges
The crisis gt Jobs jobs - jobs
Rising inequalities, Education, Innovation,
insufficient RD, Tax structure
Sustainable Growth Model

5
Catching up - Real GDP p.C. multiplies x 5

6
The Economy growsbut growth rates decrease

7
Unemployment rates are higher since the 1980s

8
Incomes grow a lot less since the 1980s

9
..and the wage share decreases with a
regressive impact of taxes

WIFO, Guger 2009

10
Austria moves towards the Service Society

11
Tourism is an important sector

12
Austria is competitive and exports rise(Austria
ranks 14th 17th in WCR 2003 2010)

13
Taxes and Social Security Contributions
grow(Austria ranks 6th in EU on Social
Protection Exp./GDP SSR 2009)

14
..but expenditures (still) reflect high quality
public services and have a strong
redistributional impact

15
Life expectancy increases

16
and population grows - at varying
rates(composition changes older age-groups vs
younger)

17
Very few strikes in Austria except 2003

18
Austrians have varying degrees of confidence in
institutions with Chamber of Labour ranking
first

Source Market-Marktforschung, October 2008,
Vertrauen ist ungleich verteilt
http//www.vmoe.at/rte/upload/news_vertrauen_ist_u
ngleich_verteilt_.pdf

19
Austrians are more satisfied, confident and
optimistic than Europeans on average

Eurobarometer Nr. 72, December 2009 some
contrast with other polls
Comparing Austria and EU A EU
Satisfied with life 85 78
Satisfied ec. Situation 43 23
Confidence Government 54 29
Confidence political parties 36 16
Austria
2/3 see no impact of crisis on personal situation
20 expect improvements

20
At the same time, they feel increasing pressure
on their living and working conditions (stress gt)

Index of Working Climate 2009
(Arbeitsklimaindex AKOÖ)

21
And they are quite critical towards the EU
although the crisis has changed attitudes

Referendum 1994 66 in favour of EU Accession
Source ORF 2.12.2009 Poll ÖGfE

22
How did we get there?

Despite no significant resources, small country,
lack of capital, ..
But skills, small country (cf Nordics),
institutional setup and cooperation,
Success Factors
Political Consensus learning from the past
Labour Relations negotiations replace conflict
Mixed Economy Private Public SGI Welfare
State
Austro-Keynesianism and Reforms 1970s
Technology Follower
European Integration and Enlargement
(New) Challenges globalisation and new
capitalism change logic and shift power

23
Labour Relations in Austria - an important
success factor

From Confrontation Conflict to Cooperation and
Consensus
Institutional setup
How does it work?
Key success factors
The Social Partners Recent Agreements
The Chambers of Labour
Challenges ahead

24
Labour Relations in AustriaFrom
ConfrontationConflict to CooperationConsensus

Institutions created 19th / 20th century
But lack of political and institutional
conditions for cooperation (classgroup interests
gt common goals)
Political and economic crises created a
willingness to cooperate and negotiate from 1945
on
Guided by the principle of solving conflicts of
interest primarily at the negotiating table
rather than through industrial action (strikes,
lock-outs)
To ensure economic reconstruction and social
equality in the postwar-period
Discussions and temporary setback 1980s 1990s
2003

25
Institutional Setup The System

The Austrian System of Economic and Social
Partnership
Works on different levels, based on different
grounds (legal, voluntary, bargaining)
General level The Austrian Social Partners
Sectoral Level Sectoral Unions and Federations
(Economic Chamber)
Company Level Works Councils and Management
Aims Strengthening Competitiveness and
stability, preserving and improving social
standards and protecting the ecological bases of
existence

26
Institutional Setup The Social Partners

The Austrian Social Partners
The Economic Chamber (WKÖ)
The Chamber of Labour (BAK)
The Chamber of Agriculture (LKÖ)
The Austrian Trade Union Federation (OGB)

27
How does it work the Framework

The Institutions
Strong Participatory and Representative Democracy
Strong, Independent, Representative Organizations
Self-Governed (Elections)
Chambers based on law
Multi-level cooperation and interaction
informal
voluntary
historically grown
between the organizations and with the government

28
How does it work Basic Principles

Common long-term economic and social policy aims
E.g. growth of real incomes and wealth, social
security, full employment, equal distribution of
wealth, price stability ...
Dialogue, co-operation and co-ordinated action
more beneficial for everybody than open conflict
No denying or ignoring of conflicts ...
... but seeking solutions and balance of interest
that benefit all participants

29
How does it work - Critical Success Factors

Culture and Political Will
"... a special kind of discussion and negotiation
culture ...
Trust, common goals, balance of interests
Macro-economic perspective
Compromise as a contribution to success
... the willingness to enforce compromises
internally as well as externally, and
to represent different interests with due regard
to medium-term joint objectives and the overall
interests of society ...

30
Institutional Set up the Chambers

Established by law, compulsary membership
Representing professional, social and cultural
interests
Chamber of Labour also represents the interests
of consumers, unemployed, retired workers,
apprentices
Politically/financially autonomous/independent
Self-governed (elections) and largely
decentralised

31
Institutional Setup The Chambers
Responsibilities

Go far beyond mere industrial relations, lobbying
and services for members
Are engaged in legislation, administration,
social security system
Have the right to evaluate legislative drafts and
to submit amendments
Fulfill public tasks/providing public goods
(education, working conditions, labour market
policy ...)
Send members in many advisory bodies / committees
Informal negotiating and problem solving
competency
Formal co-operation in social partnership
institutions

32
Institutional Setup Commissions, Councils and
Committees

Parity Commission and its successors
(top representatives of government and of 4
major social partnership organizations)
With 4 Sub-Committees
Advisory Council for Economic and Social Affairs
Subcommittee on International Issues
Subcommittee on Wages
Subcommittee on Competition and Prices

33
Advisory Council for Economic and Social Affairs
- Basics

Created 1963 - based on informal agreement of
4 large social partnership organizations
No legal basis, no legal personality
No own budget, no building, no staff
Publishes studies and reports on economic and
social policy issues
... containing joint (unanimous) recommendations
to policy makers

34
Advisory Council for Economic and Social Affairs
- Organisation

Think tank" of 21 top experts of social
partners' bodies
President chairs meetings and represents outside
Presidency rotating on 6-month basis
2 Secretaries General "organizational backbone"
No written rules of procedure
All activities are unpaid (costs shared by 4
organizations)
Mandate unlimited
Meetings once a month

35
Advisory Council for Economic and Social Affairs
- Procedures

4 Social Partners' presidents ask for opinion
Council establishes working group including
external experts from all areas
Working group submits draft to Council
Council negotiates to formulate unanimous wording
and recommendations
4 Social Partners' Presidents sign and release
Report is published - forwarded to government and
media

36
Advisory Council for Economic and Social Affairs
- Outcome

Profound expert knowledge of policy oriented
scientists close to real life
Aims at consensual views among all social
partners about basic facts, figures and contexts
Concentrates on facts, common concern and
interests
Keeping political differences out of discussion
Giving unanimous recommendations

37
The Social Partners - Recent Agreements (1)

Action plan for older employees (2008)
Elements of a long term climate policy (2008)
Safeguarding the future of the public health
insurance (2008)
A modern legal basis for European statistics
(2008)
The future of the labour market 2010 (2007)
Agreement on combat against social dumping and
social fraud (2007)
Basic concept for a policy for Lifelong Learning
(2007)
Agreement on minimum wages (2007)

38
The Social Partners - Recent Agreements (2)

Agreement on better compatibility of job and
family (2007)
New law on regulation of working time flexibility
(2007)
Declaration Fifty years of the Treaties of Rome
(2007)
Proposals for economic growth and full employment
(2006)
Austria 2016 Declaration of the Social Partners
(2006)
Conference proceedings The challenges facing
participatory democracy in an enlarged Europe
(2006)
The macro-economic policy and the Lisbon strategy
of the EU (2005)

39
The Chambers of Labour A special institution

Created in 1920 (first request in 1872) on
pressure by unions and social-democrats to
protect and extend social achievments
Public body based on Law on Chambers of Labour
Broad Mandate To represent and promote the
social, economic, professional and cultural
interests of workers and employees( 1)

40
The Chambers of Labour Tasks Outcome

Participation in legislation and administration
Research studies (think tank)
Training of works councils and union
Representatives
Services for members free of charge
information, legal advice including
representation in court in labour disputes
2 mio consultations per year
Education and culture subsidies, BFI - BBRZ
Outcome 1 Euro paid 3 Euros back (total of
services, OÖ)

41
The Chambers of Labour -Membership and Resources

Membership compulsory - 3,3 mio members
Workers, apprentices, unemployed, parental leave
(ex civil servants, agriculture) interests of
retirees are represented
Financed by contributions
(0,5 of Gross Salary - max. 19, 20)
More than 80 spent on direct services for
members
advice on labour and social law 72,
tax law 6,7,
consumer issues 19,8,
education 1,5,
Staff 2.400 (incl. Brussels Office)

42
The Chambers of Labour Organisation Governance

1 Federal Chamber (umbrella)
9 Regional Chambers
Brussels Office
Self-governed public corporations
Members elect a Parliament of Workers for five
years (equal, secret, direct vote), political
groups
Bodies
President, Vice-Presidents (elected by plenary),
Governing Body, Committees,
Plenary
Staff 2.400

43
The Chambers of LabourCooperation with Trade
Unions (1)

The task of the Chambers of Labour is to advise
the voluntary professional bodies empowered to
make collective agreements and the bodies
dedicated to the representation of company
interests, to support them in the promotion of
the social, economic, professional and cultural
interests of workers and employees, and to work
jointly with them. ( 6)

44
The Chambers of Labour Cooperation with Trade
Unions (2)
ÖGB

Agreements on wages and salaries,
collective bargaining

Support and backup for works councils

Division of labour and co-operation

Focus of the representation of interests
vis-a-vis industry and sector

Voluntary membership

Struggle organisation

Right to go on strike

45
The Chambers of Labour History and Public Opinion

Created in 1920 at the request of unions (first
requ.1872)
Liquidated in 1938 re-established in 1945
Political attacks in the 1990s led to strategic
overhaul reorientation professionalisation
more direct services
Referendum 1996 91 of members want Chamber
as a legal public organisation to defend their
interests (71 participated)
Polls Chamber ranks first in citizens
confidence 80 (followed by President and other
institutions)
87 AK is important 67 very important
85 (very) satisfied with services

46
The Chambers of LabourSkills Development and
Vocational training

BBRZ Group,
A company built by the labour movement in 1960
To help people getting back to work
By skills development, vocational
rehabilitation, education, training and placement
For different target groups and markets
A common task enhance education, employment and
vocational integration
Oriented upon requirements of economy and
labour-market
International Activities EU Twinning
Staff 4.300 (OÖ)

47
The Chambers of Labour Skills Development and
Vocational training

BBRZ group (contd)
Vocational Education for individuals and
companies
Vocational Rehabilitation Prevent work-related
problems, rehabilitate and reintegrate after
accident or illness,
Prepare for and help with reintegration by
special employment and training projects
Clients Individuals, Companies, Regions
(Länder), Communities, Social Security
Institutions (PV, UV, KV), Bundessozialämter,
Employment Agencies

48
Challenges for Social Partners- in Austria and
Beyond

The International Dimension
Globalisation and New Capitalism change the logic
and shift power
This requires new approaches to corporate,
national and global governance
Cross-border, European and international
cooperation need to be strengthened
Social Partners and other stakeholders need to be
involved on all levels and in all organsations
including the international level
Building on existing cooperation, institutions
and procedures Cross-Border, EU-Social Dialogue,
EESC, AICESIS,
The impacts of the crisis

49
How does Austria cope with the crisis

50
Unemployment increases but is second-lowest in
Europe (EU-method)Source Chart 6 EU employment
situation and social outlook, Monthly Monitor,
January 2010

51
and is lower than OECD total

Unemployment (OECD Nov. 2009)

52
Austrias fiscal balance deteriorates but less
than OECD

Austria Fiscal Balance (OECD Nov. 2009)

53
.. And inflation is lower but positive in 2009

Austria Inflation (OECD Nov. 2009)

54
How does Austria fight the crisis?

Economic Stimulus Packages, Tax Reform and Wage
increases (negotiations 2008, effective 2009)
maintain 41.500 jobs and dampen increase in
unemployment by 0,7-points
Labour Market Packages I-II¹ maintain 45.000 jobs
Active Labour Market Policy² 10.000 jobs
Actions for young 3.000 jobs
Total 100.000 jobs³
Expenditure for PES 2009 38,5 2010
1 Short-Time work, Part-Time for older workers,
Solidarity bonus, Training leave New,
EPU-Förderung
2 Action 4.000, Sozialökonomische Betriebe,
Employment Projects
3 Calculations WIFO

55
Unemployment and Short-Time Work in Austria

Growth of Unemployment in selected Sectors
compared to last month
Short-Time Work Persons per Month

56
And what is the role of Labour Relations?

Social Partners involved on all stages
Continuous and ongoing cooperation among social
partners and with government
To identify common ground and win-win-situations
Ongoing meetings on different levels (Presidents,
SGs, experts) continuously develop common
positions which allow for quick action when
necessary
E.g. Ischler Dialog - yearly conference of
Social Partners where they issue a paper on a
previously chosen issue, which is then negotiated
with government. October
2010 employment and migration

57
And what is the role of Labour Relations?

Key the culture of permanent and ongoing contact
and cooperation which allows for continuous
adjustment of positions and views
Results in common proposals such as
Social Partner Proposal LM 2010 in 2007
(before the crisis)
Negotiations with Government resulted in
Extension of Training via PES (Public employment
Service)
Youth Package (Education Guarantee for Young
helps a lot in the crisis)

58
And what is the role of Labour Relations?

The Crisis Packages
were negotiated in detail between the ministries
concerned and AK, ÖGB and WKÖ
Bills were drafted after these negotiations
In parallel Social Partners negotiated Short-time
Work
Government waited for results and included them
in the bill taking into account budgetary
restraints
In addition Social Partners are part of the
Governing Bodies of PES (Public Employment
Service)
Plus negotiations on company level trade unions
and works councils e.g. Short-time work needs
an agreement on company level plus agreement by
the sector union
The result is a compromise agreed upon and
accepted by all participants

59
And what is the role of Labour Relations?

Short-time Work in Austria
The instrument is very selective
Wage compensation 90 - subsidized by PES
Approval upon key elements (conditions), among
others
Employer contributes substantially to costs
Agreement by social partners on company level
plus sector union
Employers get flexibilisation of short-working
time, PES pays employers contribution to social
security
Consequences only sound companies can afford,
they only keep key people
Effect no adverse structural effect (cf OECD)
Result 30.188 persons (10 of unemployed) in
254 companies by 16.1.2010 (BMASK - paper)

60
Labour Relations in Austria and the fight
against Unemployment

Thank you!

61
Fighting unemploymentThe most important measures
(p.1 of 16)

Supra-Company apprenticeship-Training
For young people without appr.places
Including older young, disadvantaged and slow
learners
Training capacities created 12.300 places
2009/10
Participation Dec. 2009 10.000

62
Fighting unemployment The most important
measures (p.2 of 16)

Future for Youth Action Programme (1.4.2009)
Facilitiate integration into LM and opening
career-perspectives for 19 24 year-olds
Includes job offer, tailored training measure or
subsidised employment
Funding 120 mio in 2009 and 2010
Result 83.108 young included 138.191 were
employed

63
Fighting unemployment The most important
measures (p.3 of 16)

Youth Foundation (Labour Foundation for young,
1.4.2009)
Offer tailor made measures up to 3 years
Assistance and training
Previous employer contributes 1.000
Participants receive unemployment benefits

64
Fighting unemployment The most important
measures (p.4 of 16)

Short-time working Scheme (1)
Most important measure in terms of budget and
participants
Includes a fixed-term reduction in normal working
time
Based on an agreement between social partners
(works council and sector union)
To maintain employment in times of temporary,
non-seasonal economic difficulties

65
Fighting unemployment The most important
measures (p.5 of 16)

Short-time working Scheme - new rules by March
2009 (LM Package 1)
Greater flexibility in fixing hours of employment
(between 10 and 90 of working time)
Benefits granted für 6 months, up to 18 months
under certain conditions, up to 24 months (since
1.7.2009)
Skills enhancement benefits for training measures
agreed by social partners

66
Fighting unemployment The most important
measures (p.6 of 16)

Short-time working Scheme - new rules by July
2009 (LM Package 2)
Social security contributions of employers fully
refunded by Public Employment Service from 7th
month of short-time work.
Maximum period for short-time work 24 months (if
it begins before 31.12.2010)
Result 30.188 persons (10 of unemployed) in
254 companies by 16.1.2010 (forecast)

67
Fighting unemployment The most important
measures (p.7 of 16)

Amended solidarity Bonus Scheme (1.8.2009)
PSE supports empoyers who offer inhouse-Training
for employees (whose working hours are reduced)
or unemployed or apprentices
Employers are thus given a cost-effective option
to train their future skilled workers in-house

68
Fighting unemployment The most important
measures (p.8 of 16)

Subsidies to single-person businesses
PSE pays 25 of gross wage for one year when
single-person businesses hire an employee for
first time
Targets young unemployed and job seekers 19 - 30

69
Fighting unemployment The most important
measures (p.9 of 16)

Action 4.000 (1.9.2009)
Promotes employment opportunities for
LT-unemployed in municipalities or charitable
organisations
PES gives wage subsidy of 2/3 of labour costs
Target 4.800 persons by end 2010

70
Fighting unemployment The most important
measures (p.10 of 16)

Action 6.000 (LMP III 1.1.2010)
young gt 25 who cannot find a job after graduation
(due to lack of qualification and/or work
experience)
PSE pays 50 of wage and non-wage labour costs
for 6 months for
Starting 01 2010
Targets 6.000 young

71
Fighting unemployment The most important
measures (p.11 of 16)

Amended further training leave programme
(1.8.2010)
Facilitates access to training leave by
reducing previous minimum employment from 12 to 6
months
And minimum training period from 3 to 2 months

72
Fighting unemployment The most important
measures (p.12 of 16)

Reform of part-time allowance scheme for older
workers (1.9.2009) facilitates access by
Postponing increase of minimum eligibility age
until 2010
Abolishing prereuisite of recruiting a
replacement worker
The scheme
gives older employees the opportunity to reduce
their working time with partial wage compensation
prior to retirement
Preserving the entitlements for retirement,
unemployment and health insurance
Favours working time reduction over block time
reduction

73
Fighting unemployment The most important
measures (p.13 of 16)

Revalorisation of the assessment base of
unemployment benefits (1.9.2010)
To compensate for inflation
Health insurance for persons not receiving
unemployment assistance due to partners income
(1.9.2009)
Duplication of places in regional skilled
personnel training to 10.000 (LMP III, 2010)
Offers training for low skilled to upgrade skills
(e.g. complete apprecnticeship training)
of women will amount to 54

74
Fighting unemployment The most important
measures (p.14 of 16)

Integration Initiative (LMP III, 2010)
Will be expanded
PES offer German language courses to 21.500
people
Targets persons with little command of german,
registered as job-seekers for at least 2 months
or seasonally employed
Future-oriented jobs in health care and welfare
(LMP III, 2010)
Employment in these sectors rises
PES offers training and skills development for
6.000 persons

75
Fighting unemployment The most important
measures (p.15 of 16)

More and better job orientation and educational
counselling (LMP III, 09-2010)
All pupils of 7th or 8th grade shall spend one
day in Vocational Information Centre
30 additional Employees in the centers
To offer new training and job perspectives, esp.
girls
Focus on women (LMP III, 2010)
Women 40,8 of unemployed, but 49,5 of
beneficiaries of LMP measures
Participation of women will be intensified

76
Fighting unemployment The most important
measures (p.16 of 16)

Electronic applications for handling unemployed
benefits at the PES (LMP III, 1.7.2010)
Possibility to apply electronically for
unemployment benefit
To avoid queues at PES
To free capacities at PES for counselling and
placement instead of administration
Increase PES staff for crisis management (LMP
III, 1.9.2010)
200 additional advisors in 2009
More staff in sept 2009 (to cope with
means.tested minimum income)

77
Labour Relations in Austria and the fight
against Unemployment

Labour Market EU-accession and Enlargement
Enlargement transitional arrangements 2004 -
2011
Aims prevent sudden increase of labour supply
and pressure on wages, gradual transition to full
freedom of movement for workers, ease
restrictions step by step, make Austria fit for
expiry of transition arrangements
Results successful, some evidence blue collar
workers from new MS wages 20 lower.
Share of foreigners in dependent employment
8,8(1973), 5,4(1988), 12,7 (2007)
Special regulatons/easier access for some groups
seasonal workers, posting of workers,
self-employed, special skills, nurses, newspaper
deliverers.
(Chaloupek/Peyrl).