Following the economic and financial crisis 2008, the European Semester had been introduced in 2011. Its key objective is to improve the coordination of economic and social developments of the Member States by the European Commission. Apart from the EU’s Annual Growth Report, the annually published country reports and the country-specific recommendations based upon them, are the core elements of the European Semester.

The newly published Country Report for Austria contains a number of recommendations, which had already been part of the Country Report 2019. With regard to country-specific recommendations, the Commission attests Austria occasionally progress.

Wealth and environmental tax necessary

The Commission commented positively on the progress made - although small – in reducing the tax burden on labour. Austria is still being advised to reduce taxation on labour and to shift the tax mix more towards wealth and environmental taxation. As reported by the A&W Blog, the introduction of tax on wealth and fossil energy consumption is not only supported by the Commission, but also by the OECD.

Climate policy needs to catch up

Regarding the Sustainable Development Goals (SDGs), which have been analysed in the country reports for the first time, Austria is ranking above average – especially with regard to good healthcare and wellbeing. However, when it comes to climate policy measures, Austria is below EU average. Austria is far removed from national and European climate targets. Measures, such as an eco-social tax reform and other measures are considered necessary to make carbon neutrality a realistic target by 2040.

Unequal chances in the labour market and within society

According to the report, action is also need to improve the labour market for less educated people, due to the fact that no improvements were made last year. Only slight improvements were observed concerning Austria’s equality policy, such as a slight increase in women’s full-time employment. At 47.6 %, the share of women in part-time work in Austria lies significantly above the EU average of 30.8 %. A lack of child care facilities and women still doing great part of care work have contributed to this. The high part-time work rate for women is also reflected in the gender gap with regard to retirement benefits. At 38.8 %, pensions are above EU average, therefore also requiring measures. 

Austria still does not do enough to tackle the strong link between socioeconomic background and education. People with migration background have fewer opportunities in the labour market. Apart from that, members of this group are also disproportionately affected by poverty, in spite of being in work (16.9 % in relation to 5.5 %). In respect of good working conditions and social security, Austria is still performing better than other countries; this is in part due to the high collective agreement coverage.

Progress on the effective retirement age

The EU Commission acknowledges the progress which is made in efforts to increase the effective retirement age and also highlights positive approaches of increasing the adequacy of pension benefits. The fact that the pension level naturally depends on the employment biographies suggests that the existing imbalances in the labour market need to be eliminated - especially when it comes to the distribution of paid and unpaid work or other patterns of employment that are disadvantageous for women.

Further information:

European Commission: Country Report Austria 2020

AK EUROPE: Country Report Austria 2019: Commission attests Austria’s need to take action

AK EUROPE: The future of pensions in Europe

A&W Blog: New Federal Republic: Setting the course for a welfare-oriented budget policy