On 5th June 2019, the European Commission published its country-specific recommendations within the framework of the European Semester. The concrete recommendations for Austria paint a mixed picture: on the one hand, it is recommended to increase the cooperation with the social partners. On the other hand, increasing the statutory pension age has been recommended once again.
Since 2011, the so-called European Semester is a key component of European Economic policy: to ensure that the EU Member States improve their coordination in order to be better equipped for any crises, the Commission prepares an Annual Growth Report for the EU, country reports on every Member State and finally country-specific recommendations.
With regard to Austria, once again this year the Commission repeats its demand to increase the statutory pension age based on the argument that it was necessary in order to safeguard long-term funding. However, from the point of view of the Chamber of Labour, the Commission bases its argument on the false premise that public spending for the pension system had to be reduced in relation to GDP. On the contrary, calculations have shown that public pension spending will only moderately increase over the coming decades; that is why one cannot refer to endangering funding. In particular for those employees, who are exposed to high levels of pressure at the workplace, getting their pension at a later stage would mean a massive additional burden. Once more the Commission overlooks the fact that the Austrian pension model can be used as best-practice example of a sustainable funded pension scheme, as it primarily relies on the public pillar of the contributory system, which benefits all and not on private and high-risk systems.
Positive is the fact that the Commission emphasises the important role of the social partners in Austria, whose participation was increasingly “challanged” in the past months. Hence, it recommends - in contrast to previous years - that the government cooperates with the social partners to support full-time employment for women. Especially the share of women in part-time employment (47.6 % in Austria, EU average 30.8 %) due to insufficient childcare facilities is particularly high. Apart from that, the opportunities of lower qualified people on the labour market shall be increased, as more than 44 % of the unemployed only have compulsory schooling qualifications.
The Commission also emphasises that the factor labour should be relieved from its tax burden and shifted to other sources, which better promote fair and sustainable growth. It also points out that Austria has a “striking wealth inequality” and refers to the fact that neither inheritance nor gifts are being taxed.
However, due to the economic situation in the EU Member States, the Commission has its sight on other countries: hence, the Commission has recommended initiating a excessive deficit procedure against Italy, as at 132 %, her national debt continues to be significantly higher than the threshold of 60 % and the budget deficit is still rising. Even if in the past other countries have not adhered to the so-called Maastricht criteria, it could be the first time that a fine would be imposed on an EU country. France, Belgium and Cyprus were also scrutinised; however, here the Commission does not think procedures are necessary. This is in contrast to the praise for Spain: here, the Commission recommends to the Council to close the excessive deficit procedure, which have been ongoing since 2009.
Now the ball is in the corner of the Member States. They have to approve the recommendations and proceedings recommended. Whilst the country-specific recommendations are probably once again only a formal step, it is to be expected that excessive deficit procedures against Italy will be the key issue of the next Economic and Financial Affairs Council on 14th June 2019.