Austria has strong material well-being and quality of life. Steady growth in GDP per capita has been combined with low income inequality, high environmental standards and rising life expectancy. Supportive conditions for a dynamic business sector, generous cash benefits allowing families to provide extensive “in-house” services, a wide supply of public services and a well functioning social partnership system have helped achieve this performance. The Austrian population has therefore combined preferences for stability and work-life balance (“wealth in time”) with a thriving economy pursuing an active globalisation strategy.
Post-crisis fiscal pressures persist. Fiscal consolidation is ongoing but public services and transfers are exposed to sizeable long-term spending pressures. The successful expansion of Austria’s financial services in neighbouring transition countries has exposed the sector to considerable contagion risks, raising additional potential liabilities for public finances.
Policies should take into account both synergies and trade-offs between dimensions of well-being. Synergies between economic growth, quality of life and resource generation for public finances should be preserved, while in areas where there are trade-offs between well-being dimensions, public policies should enable citizens to make free choices. Public governance reforms are advancing, but are not yet fully in place to deliver solutions for these difficult and interwoven challenges. The federal government introduced the transition to performance-based budgeting, systematic regulatory impact assessment, and long-term public spending simulations, which are expected to help policy formation.
Average well-being outcomes, 2011
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Particular attention will need to be paid to the following three areas, involving trade-offs among important well-being dimensions:
- Pressures from demographic developments. The ageing of the population may threaten the fiscal sustainability of the large public pension system, although important reforms are already under way; rising female labour force participation strengthens the demand for policies to reconcile work and care responsibilities within families; and the large weight of immigrant groups with low human capital calls for remedial policies to preserve the cohesion of society.
- Environmental pressures arise from urban sprawl and the strong expansion of road transportation. Externalities associated with road transport are not adequately priced and regional development policies are not sufficiently coordinated across different layers of government and integrated with housing and transport policies.
- Changes in the global economy challenge Austria’s strong position in international production chains while domestic service sectors are not fully exposed to competition. About one third of the many family firms will need to change owners in the coming ten years as a result of generational transmissions. The education system is excessively fragmented and makes outcomes overly dependent on the socio-economic background of parents. As a result, the long-term innovation and growth potential of the economy cannot be taken for granted.
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- Risks to financial market stability remain
- Well-being outcomes are remarkable
- Inequalities exist in several well-being areas
- Productivity growth based on stable and vocational intensive employment
- Living patterns remain very stable
- Public expenditures are large and have a complex structure
- There are strong demographic pressures on the pension system
- Migrants’ human capital gaps remain significant
- Land-use changes due to new built-up area are above target
- Air pollution
- The technological intensity of industry may be falling behind
For further information please contact the Austria Desk at the OECD Economics Department.
The Secretariat’s draft report was prepared for the Committee by Rauf Gönenç, Oliver Röhn and Christian Beer under the supervision of Andreas Wörgötter. The draft report benefited of the substantial contribution by Romina Boarini. Research assistance was provided by Béatrice Guérard, with contributions from Seung‑Hee Koh.