Economy

Austrian economy recovering, but trade-offs on the horizon, OECD says

 

02/07/2013-Austria has achieved high levels of economic growth and well-being, but must address serious demographic, environmental and globalisation challenges if future generations are to share the same prosperity, according to the OECD’s latest Economic Survey of Austria.

SG with Austrian federal chancellor in Vienna

The new Survey, presented in Vienna by OECD Secretary-General Angel Gurría to Austria’s Federal Chancellor Werner Faymann, looks “beyond GDP” and into the main dimensions of well-being; those aspects of life that really matter for people. This follows the OECD How’s Life framework, which measures well-being along 11 dimensions, like living conditions, quality of life, social connections and civic engagements. 

"Austria has enjoyed a remarkable performance, even during the crisis, keeping unemployment low and GDP growing, but more than that Austrians have achieved strong material well-being, low levels of inequality, high environmental standards and a high quality of life,” Mr Gurría said. “The challenge going forward is to manage the synergies and trade-offs between economic growth, well-being and the need to maintain healthy public finances, to ensure that future generations benefit from the same conditions afforded to Austrians today,” Mr. Gurria said (read the speech in full.)

Particular attention will need to be paid to three areas that could undermine the strength of Austria’s stable economy and thriving society:

Demographic developments, and notably the ageing of the population, may undermine the financial sustainability of the pension system. Rising female participation in the labour force reinforces the need for making high-quality institutional child care available and affordable for the parents of children at all ages, to reconcile work and care responsibilities within families. The Survey also finds that people from migrant backgrounds have not shared in well-being gains to the same extent as the average Austrian. The lack of skills amongst immigrant groups calls for policies to improve the educational and labour market prospects of future generations.

Environmental pressures will arise from urban sprawl and expansion of road transportation, requiring new efforts to make polluters pay the cost of externalities. Increasing diesel taxes, extending the road pricing system, abolishing the favourable taxation of company cars and phasing out the commuting subsidy should all be considered. Better coordination across different layers of government and stronger integration of housing and transport policies will also be necessary.

Changes in the global economy will challenge Austria’s strong place in international supply chains and notably its comparative advantages in medium technology activities. For Austria to remain competitive, corporate governance in family firms should be modernised, to facilitate ownership changes between generations and the arrival of venture capital, and the service sector should be further open to competitive pressures. Further education reforms will be necessary to meet the growing demand for workers with solid, generic skills, which are cultivated through life-long learning.

Austria can rely on its ability to build social consensus to successfully confront these challenges but it should also ensure that its unique social partnership system continue to evolve with the society and notably broadens to include vulnerable groups.

Further information on the Economic Survey of Austria is available at: www.oecd.org/eco/surveys/austria-2013.htm. You are invited to include this Internet link in reports on the Survey.

Journalists seeking further information should contact the OECD’s Media Division: news.contact@oecd.org, +33 1 45 24 97 00.

 

 

 

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