Labour markets, human capital and inequality

Economic Survey of Austria 2009: Re-inventing the education system


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The following OECD assessment and recommendations summarise chapter 4 of the Economic Survey of Austria published on 2 July 2009.




Upgrading human capital through stronger education is crucial

Austria’s growth performance hinges inter alia on the quality of its education system. While it has long successfully equipped the labour force with very good vocational skills, it now faces the major challenge of providing youth with the new, higher and more generic skills called for by technological change, international competition and aspirations for a more equitable distribution of human capital. As in many other countries, the education system faces difficulties in responding to these challenges. It has been organised to date as a massive public service, where fiscal costs are high, the existing human and physical resources are difficult to reallocate, and management is more input than output-oriented. It also suffers from a particularly complex federal structure, with central, Länder and local governments fulfilling politically independent roles but having overlapping responsibilities. Reform efforts in different education layers met with problems in the past, due to limited agreement across society, political parties, teaching professionals and federal and Länder authorities on the key challenges and the most urgently needed changes. The new government has an ambitious education reform agenda. Achieving a degree of consensus amongst the various stakeholders will be important for its success.

Pre school education needs to be considerably strengthened

Austria’s pre-school infrastructure has some weaknesses in international comparison. In pre school facilities, class sizes are large and socio-economically disadvantaged, including immigrant, children are under-represented. The government has recently agreed with the Länder, which are constitutionally in charge of pre-schools, to have one year of free compulsory kindergarten education for all five year old pupils, on a half-day basis. This will start to apply from September 2009, and be generalised in September 2010. Moreover, significant additional resources will be devoted to the provision of new child care facilities, the improvement of German language skills in pre-schools and the training of private childminders. Furthermore, there is an agreement to set up an education plan (Bildungsplan) in order to guarantee a high standard quality all over Austria. Although those are major steps forward, room for further progress is considerable. The basic policy objective should be for all children from age three onwards to benefit from high-quality pre school education.


The ongoing reforms of compulsory education require deeper resource re-allocations

A major reform was launched in compulsory education in 2007, to overcome the excessively early streaming of students into "academic" and "general" tracks by promoting a new breed of "comprehensive schools" (Neue Mittelschule). For this to succeed, adequate teaching resources and school infrastructure are needed. At the same time, there is ample scope for the rationalisation of school and class infrastructure, and of the distribution of teaching personnel across the country. Resources should be freed from where they are less needed, and re-allocated to the most important and innovative policy initiatives. This agenda, however, faces a wealth of administrative and political hurdles. The federal government should continue with efforts to renew the structures of compulsory education by providing more autonomy to schools, in exchange for improved accountability in meeting national education standards.


The intended development of high-quality tertiary education is not on track

University enrolment is relatively low in Austria, especially in science and engineering. The government intends to offer high-quality tertiary education to a larger proportion of the young. However, universities' existing organisational and funding arrangements are not well-suited to this ambition. In principle, universities are required to register all qualified applicants to the programmes and courses of their choice, without any selection and at no financial cost to the student. The resulting imbalance between ambitious service objectives and limits on available resources has started to undermine the quality of education. Alternative tertiary institutions, which select students and charge fees, have begun to provide arguably better and more labour-market-relevant education. Whilst waiting for more comprehensive reforms, growing registration demand needs to be met without compromising teaching quality. Universities should have greater leeway to select their students and charge tuition fees, with a comprehensive student grant and income-contingent loan system ensuring equality of opportunity.


Average results are held back by a large group of underperformers

Percentage share of students achieving high and low results on the reading scale

Note: Numbers in brackets indicate the rank of the country within OECD countries of the mean PISA score on the reading scale.
Source: OECD (2007), PISA 2006: Science for Tomorrow’s World, Vol. 2, OECD, Paris.


University graduation rates are low
%, by age group, 2006

Note: Countries are ranked in descending order of the percentage of the 25-to-34-year-olds who have attained tertiary education.
Source: OECD, Education at a Glance 2008, Table A1.3a.


How to obtain this publication


The complete edition of the Economic Survey of Austria is available from:

The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations.


Additional information

For further information please contact the Austria Desk at the OECD Economics Department at

The OECD Secretariat’s report was prepared by Rauf Gönenç, Lukasz Rawdanowicz and Christian Hederer under the supervision of Vincent Koen. Research assistance was provided by Béatrice Guérard.




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