As part of the European Semester, the EU Commission each year publishes Country Reports and country-specific recommendations with the objective to improve the coordination of Member States’ economic policy. From the AK’s point of view, the Country Report for Austria, which was submitted on 23 May 2022, comprises positive approaches in some areas.
With its European Semester Spring Package 2022, the EU Commission is laying the foundation for the future economic development: in the current situation (Covid and energy crisis), a higher level of public debt has been more readily accepted than during the neoliberal austerity programmes after the financial and economic crisis. For several years now, the Country Reports and the country-specific recommendations have no longer only been referring to economic indicators, but in accordance with the European Pillar of Social Rights also to socio-political aspects: in the case of Austria, the EU Commission this year made specifically recommendations with regard to women’s participation in the labour market, the education system and the tax system.
It is particular welcome that the AK’s often voiced criticism regarding the lack of childcare facilities in Austria has been addressed by the EU Commission. The lack of these facilities makes it especially difficult for mothers to participate actively in the labour market. Instead of the required 1.6 billion Euro for a comprehensive expansion of childcare, Austria was only planning to spend 28 million Euro. Hence, the EU’s criticism of very low investments in institutional childcare should be another incentive for the Austrian government to implement the joint proposals of social partners and the Federation of Austrian Industries to improve the reconciliation of work and family life and to significantly increase public investments in this sector. The Country Report also emphasises that at the same time, a comprehensive expansion of childcare would also make a significant contribution to reduce the Gender Pay Gap.
Another point of criticism voiced by the EU Commission is the Austrian tax system, which in its opinion should be made fairer and more ‘growth-friendly’. The EU Commission is therefore recommending a structural reform of the tax system, which would significantly reduce income taxes. This might explicitly be achieved by introducing a inheritance or gift tax, which has been one of the AK’s long-term demands. In contrast, the AK is clearly rejecting a reduction of non-wage labour costs, as recommended by the EU Commission, as this would be equal with a reduction of welfare state contributions by employers. However, particularly in economically challenging times, welfare state services proved to be urgently needed.
Another point of criticism is that the EU Commission does not see any need for action with regard to fighting poverty. After several waves of the pandemic, the current price rises affecting housing, energy and food exacerbate the poverty risk especially for single parents, the unemployed and pensioners.
Fiscal rules still suspended
The EU Commission has also confirmed that the escape clause of the Stability and Growth Pact will be kept activated in 2023 and that guidelines for a possible economic governance reform shall be presented in autumn 2022. According to the EU Commission, the considerable downward risks, which exist in relation to the economic outlook in connection with the war in Ukraine, resulting in unprecedented energy price rises and the ongoing interruptions in supply chains, justify the extension.
Positive assessment by AK und trade unions
The Austrian Chamber of Labour and the European Trade Union Confederation welcome the renewed suspension of the neoliberal austerity rules. This was the right step forward for millions of employees, who find it hard to make end meets and would need further help. The Austrian Chamber of Labour and Finance Watch are also pointing out that the current fiscal rules of the EU are out of date and in need of being reformed. What is needed is a Golden Investment Rule to enable public investments for the socio-ecological transformation.
AK EUROPA Position Paper: Economic Governance Review
AK EUROPA: Crucial phase for the social realignment of European economic policy
European Trade Union Confederation: Semester – Suspended austerity rules should be scrapped
European Commission: European Semester – Spring Package