Does Austria’s economy need to adapt to changes in the economic environment?
Austria has established a reputation as a well performing economy. Among the European countries, Austria belongs to the group of five with the highest GDP per capita since the end of the 1980s. Unemployment in Austria has been consistently at the lower end within the EU and the OECD. Yet, in recent years the Austrian growth performance has weakened relative to the other high income countries and unemployment, while still being relatively low, has increased to levels hardly known in the past. The weakening of Austria’s growth performance is largely reflected in weaker employment generation whose adverse effects were not offset by higher productivity growth.
Growth developments
1. Denmark, Belgium, the Netherlands, Sweden, Ireland were selected from the EU on the basis of the highest average GDP per capita level in 1995 prices and PPP (excluding Austria, Luxemburg, Germany, France), 1991-2002. The EU5 growth rates are weighted averages of country growth rates, weights as in the OECD Economic Outlook (based on 1995 GDP).
Source: OECD - Economic Outlook Database and Annual National Accounts.
Employment by type 1994 = 100
1. Full-time is 37 to 40 hours inclusive per week. 2. Part-time is 12 to 36 hours inclusive per week.
3. Small jobs, comprising only primary jobs, are less than 12 hours per week.
Source: Statistics Austria, Microcensus; OECD.
Moreover, the country is facing challenges, some of which bring to the surface the need to renovate its hitherto successful institutional framework. While social partnership and a high degree of state intervention was beneficial during a protracted post-war period of structural stability and a high degree of state trade with non-market economies, this institutional set-up subsequently came under stress in the course of the appearance of supply shocks associated with globalisation and accelerating technological change. Within a more or less unchanged institutional framework, characterised by a large government sector and legally binding collective wage bargaining, important policy responses became more defensive during the 1990s: budget consolidation was achieved by an increase in the government revenue share of GDP to record levels; attempts were made to keep unemployment low by taking older workers out of the labour force; and enterprises producing for the domestic market were sheltered by some sophisticated entry barriers, even after EU accession in 1995. While in recent years these problems have begun to be addressed, it is clear that Austria cannot continue along these lines and remain a prospering economy. Indeed, over the next years and decades the old age dependency ratio will substantially increase, with potentially adverse implications for growth and living standards. Also, while Austria has benefited from the opening of the eastern European Markets, reaping the full benefits of further integration requires that institutions and production processes are able to adjust rapidly. The priority targets for structural reform taken up in this Survey are to consolidate the general government budget, increase labour force participation and employment, and encourage higher productivity growth. The government is aware of these issues and has embarked on major reform efforts in order to reverse the slippage of Austrian economic performance.
-------------------------------------------------------
The full edition of the OECD Economic Survey for Austria is available from:
-
SourceOECD for subscribing institutions and many libraries;
-
Government officials with
OLISnet accounts;
-
-
Return to the Economic Survey - Austria 2003 homepage
Follow us
E-mail Alerts Blogs