Last week, the European Commission presented its country-specific recommendations within the scope of the “European Semester”. Whilst in particular the United Kingdom and Finland were criticised for their budget deficits, Austria - in spite of some isolated problems - compared favourably. The horror interpretations in the media by some business representatives were greatly exaggerated. Even though Austria cannot be ranked “top of the class” in all areas, the country nevertheless has to be graded as a “model pupil”.

European Semester as reaction to lack of economic policy coordination

In order to prescribe a kind of unified direction in the area of economic policy, the European Commission has been issuing annual recommendations to the Member States since 2011. Whilst one might argue about the actual influence of the recommendations from Brussels, one cannot deny a certain symbolic meaning.

From the 26 country-specific recommendations, the Commission this year concentrated on four guidelines:

1. Encouraging investments and speedy implementation of the “Juncker Fund” EFSI

2. Structural reforms, e.g. on labour markets, but also in the financial sector

3. Responsible fiscal policy, combined with public investments of those states, which currently have financial room for manoeuvre

4. Employment policy and social protection for the purpose of cohesion and in the sense of economic growth

The competent Vice President of the Commission, Valdis Dombrovskis, also pointed out that this time the social partners had been even more integrated during the preparations.

Austria not “on a slippery slope”

In contrast for example to Germany, Austria - according to the analysis of the Commission - continues to belong to the seven Member States, where economic imbalances do not exist and were no offences against the Stability and Growth Pact were committed. For most, the concrete points of criticism aimed at the Alpine Republic, should not be something new. Measures are demanded among other in respect of the complex Austrian Federalism, the low pension age of 59.7 years (2014) (in the whole of the EU: 63.1 years) and the discrimination against women and migrants in the labour market. With regard to the budget path, the EU authority in general agrees to the Austrian plans, expects, however, more concrete proposals as to how the targets agreed for 2015 and 2016 should be met.

Tax reform, pensions, banks and independent professions

Whilst the tax reform has been welcomed as “comprehensive” and positive economic effects are also expected, the Commission is hoping for its “budget neutral” implementation. With regard to pensions, the EU authority unfortunately - but not unexpectedly - champions a very one-sided approach, when it demands the earlier adjustment of the pension age of men and women as well as an automatic coupling of pension age to life expectancy.

In line with the deregulation doctrine of the European Commission, the demand is for liberalising the sector of independent professions (e.g. medical practitioners or notaries); part of the “foreign risk positions” of Austrian banks are classified as dangerous.

Educational system in need of reform

Whilst vocational training (apprenticeship) is praised and compared to other EU states, Austria shows a low rate of early school leavers, the Commission criticises the lack of permeability of the system. These would in particular affect migrants, who because of this were denied chances of advancement. Improvements with regard to the New Secondary School were also required.