Simone Romano
OECD
Falilou Fall
OECD
OECD Economic Surveys: Austria 2026
Abstract
The ageing of the Austrian population is projected to intensify, reducing the number of prime-age workers while increasing the share of older people and retirees. This risks negatively affecting economic growth and productivity, threatening the sustainability of the pension system and challenging the health system and long-term care (LTC) provision. Enhancing the employment of women and older workers would help address labour shortages. Linking the statutory retirement age to life expectancy and continuing to restrict access to early retirement would contribute to make the most of the silver economy, while helping to secure the sustainability of the pension system for future generations. Further strengthening primary care to reduce excessive reliance on hospitals, advancing the digitalisation of the health system, and promoting healthier lifestyles will benefit both the financial and operational sustainability of the health system, while improving its outcomes. Enhancing the working conditions of LTC workers and attracting more male workers in sector would help bolster the supply of care, while better targeting of the LTC allowance would help to sustain the overall care system.
Following a trend shared by many advanced economies, Austria’s population is ageing rapidly. In 2025, the population aged 25-64 represented 52% of the total, while those aged 75 and above accounted for approximately 9.3% (Figure 4.1, Panel A). The old age dependency ratio, defined as the ratio of the population aged 65 and above to population aged 20-64, stood at 33% (2024), a figure lower than that of the most rapidly ageing countries such as Japan or Italy, but somewhat higher than the OECD average of 31.7% (Figure 4.1, Panel B). In the coming decades the ageing of the population is projected to intensify, fundamentally altering the demographic structure of Austria’s population. By 2050, the 25-64 age cohort is expected to shrink to 50% of the total, while the share of those aged 75 and above will nearly double to reach 16% (Figure 4.1, Panel A). Consequently, the old age dependency ratio is projected to increase to 52% in 2050 (Figure 4.1, Panel B), almost as the same level as Japan today (53.6%).
2024 and 2050
Note: Panel A: Population refers to 1st of January. 2050 data are baseline projections. Panel B: Ratio of population aged 65 and above to population aged 20-64. Projections are based on medium fertility variant. The OECD aggregate corresponds to the unweighted average of the OECD countries. The EU aggregate corresponds to the composition of European Union as of 2020. A selection of countries is shown.
Source: Eurostat Population projection; OECD Demography and Population Statistics (database).
These demographic dynamics are primarily driven by two key factors: low and declining fertility rates and the extension of life expectancy, together with a cohort effect from Austria’s babyboomers born around 1960. In 2023, Austria’s fertility rate stood at 1.32, lower than both the EU (1.38) and OECD (1.49) averages (Figure 4.2, Panel A). Although the fertility rate exceeded the replacement level of approximately 2.1 during the 1960s, it began declining already in the latter half of the 1970s, stabilising at around 1.5 from the mid-1980s onward. While fertility has been declining over the last 50 years, life expectancy at birth has increased substantially. In 1970 life expectancy at birth was 70 years, and it has grown since then to reach 82.2 years by 2023, a level that is lower than in top performing EU countries, such as Italy or Spain, but slightly higher than the OECD average (Figure 4.2, Panel B).
Note: Panel B: Data reference years differ by country: Australia’s 1970 data to 1976; Canada’s 1970 data to 1980; Latvia's 1970 data correspond to 2002; and the 1970 data for Luxembourg, Israel, and Italy correspond to 1971. Panel A & B: The OECD aggregate corresponds to the unweighted average of the OECD countries. A selection of countries is shown.
Source: World Bank: World Development Indicators; OECD.
Net immigration has helped sustain population growth, rejuvenate the age structure, and marginally lift fertility rates, thus helping to counteract rapid population ageing and reducing the old-age dependency ratio (OeNB, 2025). The proportion of the population with a migrant background rose considerably in the past 25 years, increasing from around 12% in 2000, to about 20% in 2014 and reaching 27.8% in 2024 (OIF, 2025) (Kraler and Sohler, 2005). Refugee inflows coming mainly from Syria (since 2015) and Ukraine (since 2022) added to the long-standing economic migration coming from neighbouring countries and Eastern Europe (Holler and Schuster, 2018) (Poledna et al., 2024). This has made international immigration the sole driver of population growth in Austria in recent years (Statistics Austria, 2025a). Austria also ranks among the EU countries with the highest share of children born to foreign-born mothers (around one-third) (Eurostat, 2025), providing a positive albeit marginal (0.1 on average) contribution to lifting the fertility rate.
Population ageing presents multiple risks and challenges, including to economic growth and productivity, fiscal sustainability, and the provision of health and long-term care. First, population ageing increases the risks of labour shortages as the working-age population declines (WIFO, 2025b). Second, the stock of skills risks becoming increasingly outdated and health issues increasingly frequent as the average age of workforce participants rises. Third, an ageing population tends to lower the overall propensity for investment, innovation, and entrepreneurial activity, thereby constraining potential growth (Gardo et al., 2025). Fourth, in pay-as-you-go health and social security systems, fiscal stress will result from increases in the ratios of older people and retirees, who are recipients of social spending, to prime-age workers, who finance the system. Fifth, beyond financial sustainability, health systems will face growing operational pressure as population ageing increases the demand for health care, while increasing longevity escalates the complexity of required care and extends the duration over which such care is needed (Bloom, 2022). Finally, the rise in both longevity and the number of older people will increase the demand for long-term care, while the shrinking number of family members will reduce the supply of informal care and labour shortages will constrain the availability of formal care.
This chapter focusses on three of the main challenges related to demographic challenges that Austria will need to address: first, mitigating the decline in labour force, primarily by increasing the employment of women and older workers; second, ensuring the sustainability and intergenerational fairness of the pension system in the long term; and third, making sure health and long-term care systems are equipped to meet the growing challenges they will face in terms of both financial sustainability and operational capacity.
4.2.1 There is room to raise the employment of female and older workers
Population ageing is anticipated to lead to a decrease in the working age population and a smaller share of working age people in the overall population, which will drag on growth and could lead to labour shortages in the absence of measures to raise labour force participation, employment and productivity. However, labour market participation in Austria, while having increased over past decades and being now around the OECD average, remains lower than in several OECD countries and could be raised by removing obstacles to work (WIFO, 2024b).
Austria’s participation rate of people aged 55 and above remains below both EU and OECD averages and ranks among the lowest in the OECD (Figure 4.3), standing approximately 20 percentage points below that of top performing countries such as Sweden or Japan. However, it has been steadily increasing over time, rising from barely 30% in 2000 to around 42% in 2010, and reaching nearly 60% in 2023. Employment of older workers has been recently increasing as well. However older workers face a higher risk of long-term unemployment. Austria’s prevalence of long-term unemployment in the age group 55-64, meaning the share of all unemployed persons in that age group who have been unemployed for 12 months or more, is lower than the EU average but still reaches nearly 50%, roughly double that of the 25-54 age group (Eurofound, 2025). Rising longevity and improvements in the health of each cohort provide opportunities for people to remain longer in the labour force.
Labour force participation rate, percentage of 55-64 years old population, 2024
Note: The EU aggregate corresponds to the composition of European Union as of 2020. The OECD aggregate corresponds to the unweighted average of the OECD countries.
Source: OECD.
Austria also has one of the highest shares of part-time work in total employment among OECD countries, notably driven by part-time work by women. While part-time work may represent a choice and offer flexibility, it is important to reduce barriers that lead to involuntary part-time employment. Part-time employment in Austria is characterised by a substantial gender imbalance: although the gap between female and male part-time employment has been shrinking over the past 25 years, it still ranks third highest among OECD countries (Figure 4.4). This part-time work of women is often involuntary. Caregiving responsibilities for children, the elderly and adults with disabilities are listed as the main reasons for part-time employment among women, reaching 40.1% (against only 7.2% among men), while less than 25% of women working part-time declare that full-time employment is not desired (Statistic Austria, 2025). This has negative consequences for overall economic performance, long-term fiscal sustainability and women's financial security and pension entitlements (Berghammer and Riederer, 2018).
Percentage of 15-64 years old population, 2024
Note: The OECD aggregate corresponds to the simple average of the OECD countries.
Source: OECD.
4.2.2 Enhancing the employment of older workers
Eliminating the obstacles to older workers’ employability and increase their attractiveness for employers is key to increase their employment. A first obstacle that hinders longer career is a low effective retirement age. In 2022, Austria ranked below the OECD average in terms of the average effective age of labour market exit, while ranking among the OECD countries with the highest differences between the effective and statutory retirement ages for men and the widest difference in the statutory retirement age between men and women (Figure 4.5). Early retirement pathways have played a determining role, as confirmed by the difference between female and male retention rates due to differing statutory retirement ages for men and women. Up until 2023, the statutory retirement age for men was 65 years, while for women working in the private sector and born before 31 December 1963 was 60 years. Starting in 2024 with women born on or after 1 January 1964, the statutory retirement of women is gradually increasing by six months a year to reach 65 years in 2033 (BMSGPK, 2025).
Average effective age of labour-market exit and statutory retirement age, 2024
Note: The OECD aggregate corresponds to the unweighted average of the OECD countries. Normal retirement age is shown for individuals retiring in 2024 after a full career from labour market entry at age 22. a selection of OECD countries is shown.
Source: OECD (2025) Pensions at a Glance.
Gradually increasing the statutory retirement age of women contributes to expanding the workforce. However, measures to raise the statutory retirement age should be accompanied by efforts to ensure that older workers remain active in the labour market and do not exit prematurely. In Austria, voluntary job separations, motivated mainly by retirement and disability, are particularly high, suggesting scope for further activation of older workers (OECD, 2024).
In line with recommendations from past Economic Surveys, Austria has made progress in narrowing early retirement pathways, including the abolition of deduction-free early retirement pensions in 2022. However, beyond specific schemes that allow early retirement for long or heavy careers (Table 4.1), a part-time scheme (Altersteilzeit) and an early retirement scheme (Korridorpension) are still in place. The Altersteilzeit is apart-time scheme for older workers that allows for a reduction of normal working hours in the last years preceding retirement. This reduction, which needs to be agreed between the worker and their employer, is subsidised and workers receive wage compensation for part of the lost income, and they continue paying social security contributions. The corridor pension scheme (Korridorpension) provides the possibility to claim early old-age pension benefits, with corresponding deductions, before reaching the statutory retirement age.
Note: 1: This gets relevant only by 2028. 2: Born as of 1966. 3: Born as of 1954. 4: This gets relevant only by 2024. 5: At least 10 years of "hard labour" within 20 years before retirement.
Source: Federal Ministry of Finance and European Commission, 2024 Ageing Report – Austria Country Fiche.
In June 2025, the parliament approved a reform that strengthened the requirements to claim the corridor pension scheme, gradually bringing from 2026 the number of insurance years from 40 to 42 and the minimum entry age from 62 to 63 (increasing both by 2 months each quarter) for persons born on or after January 1, 1964. This is expected to push 0.3% of the workforce to retire later, with a positive cumulated effect on GDP of around 0.15 percentage points and estimated direct fiscal savings amounting to 0.19 % of GDP in the long term (BFM, 2025). Another reform has introduced the semi-retirement scheme Teilpension, a new early retirement pathway for older workers who can continue to work part-time and draw part of the pension before the final date of retirement (Box 4.1). At the same time, the reform restricted the length (from 5 to 3 years) and the eligibility criteria of the existing part-time scheme for older worker (Altersteilzeit) (Austrian Parliament, 2025).
The new partial pension schemes starting in 2026 is designed to allow insured persons who are already entitled to an early old age pension (according to one of the schemes described in Table 4.1) to reduce their working hours, continue working and claim part of their pension benefit on the basis of the reduction.
The amount of previous working hours can be reduced by at least 25% and at most 75%, whereby there must still be an activity that justifies compulsory pension insurance, so participants continue to pay into their pension account. An agreement with the employer on the reduction in working hours is also necessary.
As a compensation for the reduced income, the insured person can take up a partial pension (“Teilpension”) from the individual pension account at 3 levels of the total pension account credit (25%, 50% or 75%), depending on the reduction of working hours. The savings achieved in the corridor early retirement scheme through the uptake of this new semi-retirement option, together with the additional social insurance revenue generated from extended employment durations, are expected to offset the associated public expenditure.
Source: (BMSGPK, 2025).
Bridging programmes that allow participants to receive partial wage replacement or to combine salary and pension have the potential to extend individuals’ participation in the labour market, as evidenced by Germany’s Altersteilzeit (Berg et al., 2015). However, careful design is essential to prevent unintended consequences that might instead facilitate early labour market exit. Empirical findings indicate that partial retirement does not necessarily delay withdrawal from employment (Baumann and Madero-Cabib, 2019). It can, nevertheless, be effective when targeted at those who would otherwise retire early or leave the labour market through unemployment (Haan and Tolan, 2019). This highlights the importance of restricting even more costly subsidised old age part-time programmes, such as the Altersteilzeit, and strongly focusing them on groups at risk of early exit to achieve the intended objective of prolonging, albeit partially, active employment, while minimising the risk of prompting full-time workers to reduce working hours prematurely (OECD, 2025a).
As of January 2024, Austria increased its deferral bonus, which is meant to encourage insured persons to work beyond the statutory retirement age if they meet the eligibility criteria, extending their working career. The new higher bonus increases workers’ pension benefits by 5.1% per year (previously it was 4.2%), with a maximum bonus of 15.3% for 3 years of deferral (BMSGPK, 2025). The recent reform also introduced the exception, active in 2024 and 2025, from paying social pension contributions for working pensioneers above the statutory retirement age on the first EUR 1037 of monthly earnings, while employers still need to pay contributions in full. Such a scheme has the benefit to provide an effective incentive to work beyond the statutory retirement age and extend the active labour participation of older workers. However, its implications for the long-term fiscal sustainability of the pension system need to be carefully addressed, as increased pension entitlements accrued under such schemes could place upward pressure on future pension expenditures.
Age discrimination represents a further obstacle to increase older workers’ employment rates (Austrian Ombud for Equal Treatment (OET), 2021). Employers often assume that older workers have outdated skills, are less adaptable to new technologies and are more likely to have health issues, therefore threatening their productivity. At the same time, seniority-based salaries are widespread, contributing to a wage‑productivity mismatch that often discourages employers from retaining or hiring older workers (OECD, 2025a). Aligning wages more closely with productivity, performances or tasks rather than age or seniority in collective bargaining agreements could increase demand for older workers, as it would better reflect the actual contributions of workers rather than their length of service (OECD, 2025a). Evidence from countries, such as Germany, where firms increasingly adopt performance‑related or task-based salary scales and collective bargaining agreements no longer feature binding clauses on seniority-based wage progression, shows that moving away from automatic seniority pay has contributed to improve employment outcomes for older workers. However, to be effective, performance‑related pay must be carefully designed. Evidence suggests that both financial incentives and non-financial recognition need to be perceived as fair and linked to clear standards and supportive management to be effective in improving motivation and performance (OECD, 2025a).
Lifelong learning, upskilling and reskilling are key instruments to promote longer working lives and increase the employability of senior workers, endowing them with the skills that are searched by businesses (Vickerstaff and van der Horst, 2022). Participation of older workers in formal and non-formal education and training in Austria is among the highest in Europe, but it still does not reach 50%, and it is around 20 percentage points lower than for younger workers, indicating room for improvement (Figure 4.6). The drop in participation in training activities with age is due to both employer- and employee-specific factors. Employers may be less willing to invest in training older staff, focusing resources on younger employees, while older workers may perceive less return on investment in training as they approach retirement. Structural and cultural barriers, such as insufficient adaptation of training content to older learners’ needs, may play a role as well.
Percentage of formal and non-formal education and training, 2022
Note: The EU aggregate corresponds to the composition of European Union as of 2020.
Source: Eurostat: Participation rate in education and training by age.
After abolishing the "educational leave" (Bildungskarenz) programme as part of budget consolidation measure in April 2025, the Austrian government introduced a new programme titled “training period” (Weiterbildungszeit), which will be effective from June 2026. In comparison with the former education leave, the new programme features stricter eligibility criteria and limits on types of training, excluding for example recreational courses. This addresses the criticism made by the Austrian Court of Audit (Austrian Court of Audit, 2023), and should better align adult formation with market needs, preventing wasting resources (OECD, 2024a).
However, a better and more targeted design is needed to enhance enrolment of older workers, as they were insufficiently covered by the previous programme (WIFO, 2023). Germany’s WeGebAU programme provides an example (OECD, 2019a). WeGebAU supports training of low-skilled and older workers in SMEs, which receive a 75% subsidy to the training costs of workers aged 45 and older, while micro-enterprises receive a 100% subsidy. Evaluations of the programme have found that it has helped participants to increase their time spend in employment, with no effect on wages (OECD, 2019a).
Introducing tailored career services may provide a contribution as well. While Austria has a broad range of career guidance and placement provisions, structured systems for career guidance targeted at mid-career and older workers do not yet exist (OECD, 2025b). In 2019, the Netherlands launched the Ontwikkeladvies programme providing workers aged 45 and above with subsidised career development guidance. The programme, which was widely used during the Covid-19 crisis before being ended, helped many mid-career and older workers to develop a personal plan that encompassed actions to be taken to secure employment until retirement age based on insights on the future prospects of their current jobs (OECD, 2019a). Another successful example is Australia’s Career Transition Assistance programme, which combines tailored career assistance and functional digital literacy training for job-seekers aged 45 and above. The programme helps workers identify how their skills can transfer to a new job, improve their understanding of job opportunities and how to tailor job applications (OECD, 2025a).
4.2.3 Tackling unvoluntary part-time work among women
Increasing full-time employment among women would raise overall employment. It could be achieved by tackling the obstacles that lead women to opt for part-time work against their preferences and despite the negative consequences for their career and wealth in the long term. In Austria, use of part-time work by women is linked to children and elderly care duties. In 2023, Austria had the highest share in the EU of mothers with children working part-time (69.2%) and the largest difference between mothers and fathers being employed part-time (Figure 4.7). This suggests that root causes of female unvoluntary part-time working are linked to family stereotypes and an uneven sharing of care responsibilities between men and women.
Percentage of part-time employed 25-54 years old by household composition, 2024
Note: Categories refer to private households composed by adults with or without resident children. Data for the United Kingdom are not available. Definitions may differ for France and Spain.
Source: Eurostat.
The lack of available and affordable early childhood education and care (ECEC) facilities discourages full-time work by those with family responsibilities (OECD, 2018b). In the kindergarten year 2024/25, around 94% of three- to five-year-olds attended an education facility, but the share drops to around 35% for under-threes. Moreover, only around 60% of all these children were cared for in a facility that allows parents to work full-time (Statistics Austria, 2025d). The governance and the financing of childcare facilities are highly decentralised in Austria, with the main responsibility falling on state-governments and municipalities. This creates substantial regional and municipal differences in the availability, opening hours, admission criteria, and cost structures of facilities (Federal Chancellery, 2025) (European Commission / EACEA / Eurydice, 2025).
In 2024, the federal government gave an impulse to expand childcare and make it more widely available through an earmarked investment of EUR 4.5 billion by 2030, with a specific focus on children aged 1-3. Furthermore, this investment was linked to more detailed monitoring of local situations, with the aim of reducing local disparities (Federal Chancellery, 2024). While this initiative is welcome, other issues remain to be tackled. Although the number of childcare personnel increased and the teacher-child ratio improved in recent years thanks to this enhanced public investment, general staff shortages continue to be a problem. Official estimates point to between 6200 and 20000 new ECEC staff needed in the period 2023-2030, posing a challenge to the availability and quality of provision of early childcare services (UNICEF, 2023).
These shortages are the result of several underlying causes. First, salaries are often not appealing enough to attract adequate numbers of professionals. Second, working conditions are often challenging, which holds particularly true for those who work with vulnerable children (Federal Ministry of Social Affairs, Health, Care and Consumer Protection, 2023). Third, the sector’s career attractiveness remains limited, partly reflecting that, unlike in most EU countries, ECEC teaching does not require a university degree. Introducing a system with alternative pathways according to different levels of qualification, and where professionalisation is continuously encouraged through further incentives, would respond to these issues. Such a system may feature additional salary top ups for personnel with higher qualifications or link them to career progression pathways and enhancing perception of careers in the sector (UNICEF, 2023).
Promoting workplace flexibility and remote working would help as well. Encouraging results-oriented work models over presenteeism would allow to successfully combine work, family commitments and personal life without having to resort to part time working. The government can help to address the issue by encouraging supportive and flexible working practices, making it easier for parents to strike a better balance between work and home life (OECD, 2024b). However, it is important to avoid that flexible work ends up fostering existing stereotypes further, with women that are more likely, or even expected, to carry out more domestic responsibilities whilst working flexibly, while men are not doing the same (Chung, 2024).
Cultural norms and stereotypes about family roles play a crucial role. The male breadwinner model and a rather negative attitude towards full-time working mothers with a child below the age of three have been quite widespread in Austria (Berghammer and Riederer, 2018). This is confirmed by a substantial motherhood penalty, with Austrian mothers suffering a 50% earnings drop relative to fathers ten years after the birth of the first child (Kleven et al., 2024). The tax system should not create tax-induced disincentives that discourage the full employment of mothers and may therefore end up nurturing these stereotypes and cultural norms.
Austria’s Alleinverdienerabsetzbetrag (single-earner tax credit) is a tax credit available to parents who are married or live in a cohabitation, and where only one has an annual income above the threshold of around EUR 7000 (Oesterreich.gv.at, 2025). Such provisions may contribute to influence labour supply decisions and incentivize single-earner family structures, where the male is very often the main breadwinner, providing a disincentive for female workers to take up full-time jobs. Measures such Alleinverdienerabsetzbetrag should therefore be gradually phased out, foreseeing adjustment to mitigate the impact on low earning couples.
Recent reforms that introduced the “Dad Month” and linked the extension from 22 to 24 months of parental leave to the prerequisite that both parents take at least two months each go in the right direction. However, the mechanism put in place with the “Dad Month” should be strengthened further to tackle entrenched stereotypes and reduce motherhood penalty (Fontenay et Gonzalez, 2024), also considering that maternal leave extending beyond one-year risks having negative effects on mothers’ health, in addition to causing human capital depreciation (Chuard, 2023). The standard parental leave could be gradually reduced to 12 months with the required period to be taken by fathers increased, aiming at a more equal sharing of parental leave between the two parents. If the prerequisite is period met, parental leave could be extended to 20 months.
Holistic and well-structured media and educational campaigns might provide an effective tool against discrimination and biased norms, albeit they require time. Sweden’s whole-school approach to challenge gender stereotypes that engage curriculum, language use, play, textbooks and technology provide a useful example (Box 4.2). At a later stage in the education path, initiatives such as Italy’s “Girls Code It Better” would be useful to challenge gender stereotypes about careers. This project was carried out in lower and upper secondary schools in Italy to promote educational and career pathways for girls in STEM, a field that has long been male dominated (OECD, 2022a).
Sweden has implemented different policy actions to achieve the eradication of gender stereotypes and biases in schools. It starts with gender-neutral pre-schools, where children are encouraged to freely choose from toys that are traditionally designated as girls’ or boys’ toys, and children are not criticised for exhibiting behaviours that are typically attributed to the other gender. Some initial studies indicated that children who attend these pre-schools are less likely to take up gender-stereotype as compared to children in typical pre-schools. Moving along the educational path, teachers and educators are provided with training on gender-awareness, and female gender is more frequently represented in books, particularly in terms of representation of women in non-traditional and non-domestic roles, such as politicians and activists.
Source: OECD (2022a), Gender stereotypes in education.
4.2.4 Increasing the labour force and skills pool through tailored migration
Migration inflows have helped mitigate population ageing and labour and skills shortages, as immigration in Austria tends to be concentrated in the younger segment of the working-age population (OeNB, 2025). Allowing migration inflows to limit the negative effects of population ageing means anyway continuing to attract migrants possessing skills that are scarce and then successfully integrating them into the labour market. Economic migrants coming from neighbouring countries of Eastern Europe have historically integrated well in the economy, contributing to enhance Austria’s economic performance. However, attracting them has become more difficult, as the salary differential between Austria and their countries of origin has shrunk, skills in shortage often coincide, and the population of these countries, albeit at a slower pace, is ageing as well.
Since 2011, Austria has replaced its work permit framework with the Red-White-Red (RWR) Card system to manage immigration of qualified third-country workers who wish to settle permanently in Austria. There are different kinds of RWR cards, each targeting a specific category, from graduates to start-up founders. The RWR card for skilled workers in shortage occupations aim at attracting third-country nationals who have a job offer and training in one of the professions listed in the labour shortage ordinance issued annually by the Federal Ministry of Labour, Social Affairs, Health, Care and Consumer Protection. The RWR system also provides the possibility for highly qualified workers without a job offer to receive a six‑month job‑search visa. Immigrants who are recipients of RWR cards, thanks also to the various minimum salary and qualification requirements, tend to have positive labour market outcomes.
Over time governments have amended the RWR card system to ease access, as, for example, by making some requirements (such as language requirements and duration of work experience) less stringent (European Parliament, 2025). The programme also features the possibility to bring accompanying family members by applying for a RWR card plus at the same time as the main applicant. This allows family members to have free access the Austrian labour market, aligning with the OECD best practices.
The number of cards issued, initially limited, has increased as eligibility was expanded and with increased demand. The number grew almost fivefold in the 10 years between 2012 and 2022, passing from around 1500 cards issued in 2012 to more than 7500 issued in 2022 and reaching almost 10000 in 2024 (Court of Audit Austria, 2024). However, there is room to improve further and strengthen its effectiveness. Its structure and application rules could be made more flexible. Applicants may find it challenging to discern between the five types of RWR cards because there are many overlaps regarding the requirements for qualification and skills, as well as the target groups. This makes it difficult to decide which card to apply for and the lack of flexibility in the system makes this a key decision, as applications can only be made for one particular type of RWR card. Moreover, these overlaps may result in incomplete applications, which have to be rectified by means of a request for improvement, delaying the process. A positive step to address these issues was taken with the 2022 RWR card reform, which introduced the Austrian Business Agency (ABA) Unit ‘Work in Austria’, an advisory centre that provides free assistance throughout the entire RWR card application process.
The RWR card application and approval procedures could be enhanced in terms of efficiency. Applications are processed by both immigration offices and the Public Employment Service (AMS), but in separate IT systems with no common interface. Creating a joint IT processing and controlling system for all state agencies concerned would improve the efficiency of the system and make the revision process swifter, as the legally prescribed duration of eight weeks is exceeded in more than 40% of all cases (Court of Audit Austria, 2024).
The inflow of refugees in Austria has been strong in recent years. Since 2015, over 125 000 asylum applications have been lodged from Syrians, with more than 24 000 applications in 2015 alone. More recently, in the first year following the illegal war of aggression on Ukraine, 464 000 Ukrainian nationals entered Austria, but 384900 have since left, leaving approximately 78,000 Ukrainian nationals under temporary protection status in Austria as of January 2025 (ECRE, 2025) (AIDA, 2024). Labour market integration of refugees and asylum seekers in general tend to be challenging, in Austria as in many other OECD countries. While recognized refugees, holders of subsidiary protection and displaced Ukrainian nationals have free access to Austrian labour market, the same does not apply to asylum seekers during the phase of clarification of legal under which their access to labour market is limited. Moreover, often asylum seekers cannot provide proper documentation of education or skills, hampering skills recognition and job placement. Language barriers, often related to a new and different writing system, add to the challenge (AIDA, 2025). As a result, many refugees risk remaining idle and many work in occupations that are below their qualification level or in unrelated fields.
Austria has responded positively to these challenges. The public budget for free-of-charge language courses has been increased and, in most federal provinces, language courses are already offered free of charge during the asylum procedures, with more than 65000 German course places available throughout Austria in 2023. The recognition of qualifications has been improved through the 2016 Act on Recognition and Evaluation, which allows, for example, asylum applicants to apply for recognition even if they cannot provide documentary proof. However, additional reforms could enhance the integration of refugees into the labour market and Austrian society.
Accelerating the integration of asylum seekers while application is pending facilitates social integration. Evidence points to the advantages of allowing refugees to enter the labour market quickly (Jestl and Tverdostup, 2023). Germany’s job turbo initiative may provide an example of a multipronged strategy aimed at speeding up labour market integration (Box 4.3). Moreover, new evidence stresses the importance of social ties with Austrians in improving employment prospects for refugees (Landesmann and Leitner, 2025). Austria has recognised the importance of fostering social bonding to better integrate refugees through instruments such as the 2017 Federal Sports Promotion Act. However, it is important that such programmes do not offer parallel participation but involve Austrian citizens, effectively building social ties that enhance the social and labour integration of refugees (ISCA, 2018).
Both migrants and refugees tend to settle in Vienna, creating geographical and skills mismatches and posing a further challenge to their successful and rapid integration into the labour market. The widespread tendency to settle in the capital is due to existing social networks and family ties, greater availability of support structures, and accessible public services. However, job opportunities, especially in sectors such as manufacturing, tourism, agriculture, and care work, tend to be more concentrated in industrial and peripheral regions (AIDA, 2025) (Jestl et al., 2022).
A more effective whole-of-government approach that avoids coordination gaps between federal, regional, and local governments is key to reducing geographical mismatch. The dispersal formula applied to asylum applicants is one example. This formula is used to distribute refugees throughout the country and requires federal provinces to provide reception places according to their population share (ICMPD, 2023). Asylum seekers cannot choose where to be located and cannot move until their asylum status has been granted, making it essential to take into account the education and professional background they claim to have in order to place them in a region where employment prospects are higher, whilst creating the necessary enabling conditions for their integration (OECD, 2018). This necessitates efficient interinstitutional collaboration and coordination, and the same applies when promoting relocation incentives for migrants to move from cities to areas where their skills are needed. Conditioning federal and EU funding destined to develop reception and basic integration services to their effective implementation may contribute to foster effective collaboration between different areas and levels of government towards the achievement of national objectives (Konle-Seidl, 2018).
In late 2023, Germany launched the "Job-Turbo" initiative to accelerate Ukrainian refugees' integration into the labour market. The programme adopts a multi-phase approach that prioritises immediate employment over waiting for full language proficiency.
The first phase focuses on arrival, orientation, and basic language acquisition through integration courses. Refugees can begin working immediately in positions that don't require strong German language skills.
The second phase emphasises the need of quickly and more stable entering training and/or employment, recognising that prolonged unemployment creates barriers to re-entering work. Job centres connect course graduates with suitable employers while documenting refugees' skills and establishing integration agreements with mandatory compliance to maintain benefits.
The third phase concentrates on skill development and career consolidation for sustainable employment, encouraging companies to hire refugees with limited German proficiency (below B2 level) and providing state-supported upskilling opportunities.
This framework transforms refugee integration into a more flexible pathway that allows immediate economic participation while striving to promote long-term career prospects.
Source: (OECD, 2024c).
Public pension expenditure in Austria is high, amounting to 14.8% of GDP - one of the highest levels in the OECD (Figure 4.8). According to European Commission projections and considering the impact of past reforms, public pension spending will rise further to about 15.4% of GDP by 2035, before gradually declining to stabilise at 14% by 2070 (European Commission, 2024). However, projections of the increase of pension spending from the Austrian Fiscal Council, the Austrian Pensions Commission and the OECD are higher than the EU’s projections (see chapter 1). Austria has undertaken several reforms to strengthen the financial sustainability and transparency of its pension system. The 2005 reform, which harmonized pension schemes and reduced the accrual rate, was a major milestone. A 2023 federal law implemented the framework established by the 1992 constitutional reform and is gradually increasing the statutory retirement age for women, bringing it from 60 to 65 between 2024 and 2033, thus aligning it with that of men. Nonetheless, pension spending is set to continue growing before receding from 2035. Moreover, the deficit in public pension schemes already amounted to 2.18% of GDP in 2022 (European Commission, 2024) and is projected to continue increasing until 2030 (Austrian Pensions Commission, 2025).
Percentage of GDP
Note: Panel A: The OECD aggregate corresponds to the unweighted average of the OECD countries of which a selection is shown. Panel B: A 5- year moving average is applied to interpolated data for smoothing purposes.
Source: OECD; Institute for Economic Research EcoAustria and OECD calculations.
Further adjustments are needed to ensure the long-term financial sustainability of Austria’s public pension system. The scheme is a defined-benefit, pay-as-you-go system financed mainly through compulsory contributions (up to a maximum contribution base). The current uniform contribution rate of 22.8% for employees’ forms part of Austria’s labour tax wedge, which is among the highest in the OECD. Self-employed and farmers pay lower contribution rates, but this is compensated by the federal government. Given the already high tax burden, there is limited scope to further increase contribution rates. Reducing pension spending is key for the overall sustainability of public finances and capacity to cope with new challenges as climate costs (see Chapter 1).
Raising retirement ages would help to safeguard sustainability of the pension system, as well as help to maintain people in work. For instance, an increase in life expectancy at birth of two years by 2070 would, in the absence of reform, raise pension spending by an additional 0.7% of GDP (European Commission, 2024). Reducing early retirement pathways, as discussed in section 4.2, would help to raise the effective retirement age, while raising the statutory retirement age would strengthen financial sustainability, both by lowering spending and increasing contributions. Adjusting the retirement age with life expectancy gains would help contain fiscal costs while also supporting labour supply and economic growth. Nine OECD countries already link retirement ages to life expectancy gains - either partially, by increasing the retirement age by two-thirds of the gains (Finland, Netherlands, Portugal, Sweden), or fully, by matching the increases one-to-one (Denmark, Estonia, Greece, Italy, Slovak Republic) (OECD, 2023a).
An important issue in raising effective retirement ages is to ensure fairness for those with unhealthy occupations who may have lower life expectancy or those who started work at a younger age, who have contributed for a long period. However, arduous or hazardous jobs are primarily a labour-market issue and should be treated during the career and with labour market policy instruments (OECD, 2023c). In particular, measures which can provide the most efficient response should primarily combine: health and safety regulations to limit the risks, informing about the remaining risks, lifelong learning and reskilling to allow job mobility into healthier jobs and, disability insurance. However, as delayed health impacts of some job characteristics (e.g. physical strain, noise or uncommon working-time patterns) are typically not covered by disability insurance, some special pension provisions can complement disability insurance. The objective is to compensate workers in these jobs for the potential long-term consequences, which occurrence should be backed by solid evidence, through well-targeted early retirement options (OECD, 2023). Aligning the minimum retirement age for employees in heavy work with that of long-term contributors at 62 years would harmonize rules across groups. This reform would establish a universal minimum retirement age of 62, reduce the maximum early retirement period to three years for all workers, lower total pension penalties, and decrease the risk of old-age poverty (Table 4.2).
Source: Federal Ministry of Finance and European Commission, 2024 Ageing Report – Austria Country Fiche.
The pension replacement rate is generous (Figure 4.9). Slightly reducing the accrual rate - the parameter that converts one year of work into a fraction of earnings used to calculate pension benefits - could help ease future pension spending pressures. Austria’s accrual rate is currently the third highest in the OECD. Austria combines high replacement rates and relatively high average pensioner incomes with a comparatively high incidence of poverty among the older people. The gross replacement rate averages 74%, while the income of older people stands at 91% of that of the total population (Figure 4.9). Yet, the poverty rate among the older people exceeds that of the overall population, and the depth of poverty is among the highest in the OECD (OECD, 2021). Early retirement schemes with penalties and relatively short contribution requirements for a full pension help explain the prevalence of low pensions, particularly for women (Mayrhuber, 2025). Increasing female labour force participation and the alignment of women’s retirement age with men’s should contribute to higher women’s pensions.
In addition, the pension indexation mechanism could be reconsidered. In 2026, the government will apply the new pension indexation of the first year in pension by increasing it by 50 % of the pension increase for those already in retirement (Aliquotierungsreform). Austria has often differentiated pension indexations depending on their level on a discretionary basis with the thresholds changing (OECD, 2023c). Establishing a rule to differentiate indexation between low and high pensions, particularly during periods of high inflation and weak growth, as experienced recently, could further contribute to enhance sustainability of the system. For instance, pensions up to a certain reference level (median income) could be indexed to inflation and the part of pensions above that level would be increased at a lower level than inflation.
Note: The OECD aggregate corresponds to the unweighted average of the OECD countries. Panel A: The gross replacement rate at 100% of average wage is defined as gross pension entitlement divided by gross pre-retirement earnings. Panel B: Relative income of older people is defined as the average income of people above age 65 relative to the average income of the total population and it follows the income definition since 2012. Income of older people encompasses income from public transfers, employment, self-employment capital and public transfers. In Luxembourg, public transfers account for the overwhelming part of income of older people (83.1%).
Source: 2025 OECD Pensions at a Glance (database); OECD Income Distribution Database.
4.4.1 Population ageing intensifies pressures on the health and long-term care systems
Austria ranks high among OECD countries for public health expenditure as a share of GDP (Figure 4.10). This makes Austria’s health care system one of the most expensive in the EU (OECD, 2023a). Long-term care expenditure also plays a role, as it is largely financed by public money and total expenditure reached almost 1.2% of GDP in 2023 (Statistics Austria, 2025b).
Percentage of GDP, 2024
Note: The OECD aggregate corresponds to the simple average of the OECD countries.
Source: OECD Health Expenditure Statistics (database).
Healthcare expenditure has been on an upward trend in recent years, with a yearly average increase between 2017 and 2023 that amounted to 6.1%, and with the increasing costs of better and more complex treatments that are expected to continue to fuel this trend (Statistic Austria, 2025c). Population ageing is projected to intensify this growth further, with the increase in the old-age dependency ratio putting the financial sustainability of the healthcare system at risk. Increased longevity, without an improvement in health status, leads to increased demand for health treatments over a longer period. As a result, long-term projections forecast health expenditure to continue to rise both as a share of GDP and in per capita terms, with long-term care contributing substantially to this increase, as it is projected to more than double and reach 3.1% of GDP by 2070 (European Commission, 2024).
Older populations use hospitals and outpatient care much more intensively, increasing occupancy rates and leading to potential bottlenecks, longer waiting lists, and challenges in maintaining service quality and access. While these dynamics increase demand for healthcare staff, retiring health professionals will outpace new entrants, risking staff gaps. Long-term care follows a similar path, with the growing demand for care being confronted by a declining supply of informal care due to the decrease in the number of family members (WIFO, 2025a).
Enhancing the efficiency of the health and long-term care system is key to assuring its sustainability in the long run, both operationally and financially. Life expectancy in Austria is lower than in France or Sweden for similar or higher spending, loosely indicating lower performance of the health system (Figure 4.11, Panel A). Moreover, increasing longevity needs to be coupled with physical and mental robustness to translate into a longer healthy life, and limiting the negative impact of ageing on the economy and public finances. However, the projected share of additional years in bad heath is higher than the OECD average and that of countries, such as Ireland and Finland, which have a lower health expenditure per capita (Figure 4.11, Panel B), indicating scope for improving the efficiency and outcomes of the health system.
2023
Note: Panel A: The shaded area highlights countries with levels of health spending per capita that are relatively close to Austria’s spending levels. Panel B&C: The EU aggregate corresponds to the composition of European Union as of 2020. United Kingdom data are missing from source. Figures at the end of the bars correspond to life expectancy.
Source: OECD Health Statistics (database), WDI: World Bank; Eurostat.
Fostering efficiency and safeguarding the sustainability of the healthcare system requires a multipronged approach, which would allow to better face the challenges embodied by population ageing. This section discusses, first, how to promote healthier lifestyles in order to reduce the pressure on the system and allow people to age in better health conditions, then how to reduce the high reliance on hospital services and release pressure on inpatient care. The section will therefore look into enhancing governance effectiveness, reducing fragmentation of the system and promoting its digitalisation, and finally discuss policies to strengthen the long-term care system.
4.4.2 Promoting healthier lifestyles
Prevention is key to allow healthier ageing and so to boost employment among older workers. Austria ranks high among OECD and EU countries for financial resources allocated to prevention (Figure 4.12, Panel A). This is welcome, as evidence points out that across the OECD returns to prevention policies have been estimated to be over five times higher than their cost (OECD, 2019). This investment has helped Austria to reach preventable mortality rates that are below the OECD average (Figure 4.12, Panel B). However, they remain higher than many best-performing countries such as Italy, Switzerland or France, indicating room for further improvement (OECD, 2023b).
Note: The OECD aggregate corresponds to the simple average of the available OECD countries. Panel A: Data for New Zealand and Türkiye are missing from source. Panel B: The indicator refers to premature mortality (under age 75). Preventable mortality is defined as causes of death that can be mainly avoided through effective public health and primary prevention interventions (i.e. before the onset of diseases/injuries, to reduce incidence). Treatable (or amenable) mortality is defined as causes of death that can be mainly avoided through timely and effective healthcare interventions, including secondary prevention such as screening, and treatment (i.e. after the onset of diseases, to reduce case-fatality). Avoidable mortality covers both treatable and preventable mortality. Data for Belgium, Colombia, Germany, Japan, New Zealand, Norway and United Kingdom are missing from source.
Source: OECD Health Statistics (database).
Behavioural risks significantly influence both healthy life expectancy and the risk of disability or chronic diseases in older people (Zaninotto et al., 2020), both through behaviours at older ages and for the young whose behaviour can affect their longer-term health prospects. Some of these risks remain high in Austria, with around 36% of all deaths recorded in 2019 attributable to them (OECD, 2023a). Alcohol consumption is among the highest in the OECD, both among adults (Figure 4.13, Panel A) and adolescents, with one third of 15-year-olds reporting having been drunk at least twice in their lives, one of the highest proportions among EU countries (OECD, 2023a). Obesity rates are on the rise: among adolescents they have increased considerably in the last 10 years, reaching 23% (Figure 4.13, Panel B), but also among adults the rate has reached 17%, slightly exceeding the EU average of 16% (OECD, 2023a). Alcohol consumption together with dietary risks are estimated to be responsible for 21% of all deaths and for poor health conditions in the population segment aged 55+, reducing the possibility of working and increasing the potential health costs related to long-term conditions (OECD, 2023a). Tobacco consumption continues to be elevated as well, with the percentage of daily smokers among adults (20.6%) being considerably higher than the OECD average (14.8%), and the same happening with teenagers (15 years old) OECD (2025c).
Note: Panel A: The OECD aggregate corresponds to the unweighted average of the available OECD countries. Data for Chile are missing from source. Panel B: Data refer to schooled 15-years old who are overweight or obese (based on WHO growth reference). Young people were asked to give their height (without shoes) and weight (without clothes). Body mass index (BMI) was calculated from this information and cut-offs for overweight and obesity allocated based on the WHO growth reference for age. Findings presented here show the proportions who were overweight or obese. Data for Belgium correspond to the average of the Flemish and the French part.
Source: OECD, Health Behaviour in Schooled-aged Children Study (HBSC).
Higher taxation on alcoholic beverages can help reduce their consumption and promote a healthier diet. While Austria rightly levies a mixed excise on cigarettes in line with EU tobacco tax directives, with total taxes accounting for around three‑quarters of the retail price of a standard pack in recent years, it is among the 13 OECD countries that do not impose any excise tax on wine (OECD, 2024d), and imposes one of the lowest excise duties on beer (Figure 4.14). The same applies to alcoholic beverages other than beer and wine (OECD, 2024d). Moreover, in line with best practices these excise duties are fixed per unit of alcohol, but they are not linked to price nor adjusted for inflation, weakening their impact over time. While continuing to increase the existing duties on tobacco and nicotine products, excise duties should be applied to all alcoholic beverages as well, and they should be regularly adjusted for inflation or wage growth to remain effective in curbing consumption. As shown by the case of Lithuania, increasing excise duties on alcohol across the board can effectively reduce consumption and improve public health outcomes (Box 4.4).
Excise Duty per 330 ml beer bottle at 5% alcohol by volume (ABV), 2025, Euros
Note: Excise duties can be levied per alcohol content (ABV), per degree Plato (°P), or as a fixed amount for defined ABV/°P brackets. To make these excise duties comparable, degrees Plato were converted into alcohol content (1°P generates approximately 0.4 ABV).
Source: European Commission Taxation and Customs Union; UK HM Revenue & Customs.
Sugar-sweetened beverage (SSB) taxes can be an effective tool to reduce sugar consumption and improve health outcomes, including lowering obesity prevalence. Empirical evidence shows that introducing a 20% taxation on SSBs could lead to a reduction in consumption of around 20% and a decrease in the prevalence of overweight and obesity by around 10% (Itria et al., 2021) (WHO, 2017). Austria does not have any SSB taxes and should consider their introduction, following the successful examples of the UK, Mexico and other countries (Box 4.4).
Mexico introduced a 1 peso per litre excise tax on any non-alcoholic beverage with added sugar (powder, concentrates or ready-to-drink) in January 2014, and since then it has increased over time. The tax is paid by producers, but its pass-through effect swiftly resulted in a 10% increase in the final consumers’ price. In the first two years following implementation, purchases of taxed sugary beverages declined by 7.6%. The reduction was even greater among low-income households, where average purchases fell by 11.7%, while purchases of untaxed beverages, particularly bottled water, increased by 2.1%.
The United Kingdom introduced the Soft Drinks Industry Levy (SDIL) in April 2018. This measure employs a two-tiered structure that taxes producers according to the sugar concentration of their products: drinks containing between 5 and 8 grams of sugar per 100 millilitres are taxed at GBP 0.18 per litre, whereas those containing more than 8 grams per 100 millilitres are subject to a tax of GBP 0.24 per litre. This has led manufacturers to reduce the sugar levels in their products, resulting in the removal of approximately 45 million kilograms of sugar from soft drinks each year and contributing to measurable declines in daily free sugar intake among both adults and adolescents, thereby generating significant public health benefits.
In 2017, Lithuania enacted sharp excise tax increases on alcoholic beverages: 112% for beer, 111% for wine, and 23% for spirits, leading to average price rises of 26%, 7%, and 6% respectively. After one year, tax revenue increased by 20%, productivity losses decreased by approximately 7% and healthcare costs decreased by approximately 5%. These positive results have continued and extended beyond the first year, and alcohol consumption reached a 10-year low in 2023. Complementary measures, such as a comprehensive ban on alcohol advertising and stricter limits on the sale of alcohol, have contributed to achieving these positive results.
In Austria, as in many OECD countries, behavioural risk factors are more prevalent among people with lower educational attainment and socio‑economic status (OECD, 2023a). Measures designed to help consumer embrace healthier habits and consumption choices are useful to address the problem and reduce inequalities. While Austria complies with the EU Regulation that requires prepacked foods to display key nutrition information, it lags other EU and OECD countries in adopting a nationally standardised, front‑of‑pack interpretive labelling scheme such as France’s Nutri‑Score which offers clear, easily comprehensible information across diverse population groups, and has demonstrated effectiveness in improving dietary decisions and health outcomes (OECD, 2022).
Advertising exerts a powerful influence on consumer choices, particularly among children and adolescents. Austria currently maintains only limited restrictions on the marketing of unhealthy foods to children and lacks a comprehensive statutory ban on the advertising of high‑fat, sugar, or salt (HFSS) products across major channels such as television, online platforms, and outdoor media. The Austrian National Nutrition Commission developed in 2021 the “Austrian Nutritional Profile”, which establish thresholds or fat, saturated fat, total sugars, added sugars, salt, and energy that determine whether marketing should be allowed in audiovisual media. However, these thresholds and the recommendations issued in the nutritional profile are not mandatory. Empirical evidence shows instead that comprehensive and well-designed mandatory market regulation, such as the one introduced by Chile in 2016, may have the potential to substantially decrease the obesity prevalence among adolescents (Dillman Carpentier et al., 2019).
4.4.3 Continuing to enhance the efficiency of the health system
The efficiency of Austria’s health system continues to be hindered by structural and financial fragmentation (Box 4.5). Over the past decade, Austria has undertaken a series of reforms to address this fragmentation, but progress remains slow. The introduction of two Federal Target‑Based Governance Agreements, in 2013 and 2017, sought to respond to the challenge by establishing the Target‑Based Governance Commission: a multi‑stakeholder decision-making body empowered to define financial targets for health care structures, processes, and outcomes, and to negotiate formal agreements among institutional actors. The 2020 social health insurance (SHI) reform represented another significant intervention, consolidating the eighteen existing SHI funds into five, of which three are exclusively health insurance funding, with the aim of improving efficiency and reducing service inequalities nationwide.
The governance of Austria’s health system is characterised by a complex division of responsibilities among the federal government, the Länders, and the social health insurance (SHI) funds.
The federal government holds primary responsibility for overarching legislation and national health policy, legislating on social health insurance, health professions, pharmaceuticals, and the framework for hospital law. The Länder are responsible for implementing these laws, managing hospital operations, and overseeing long‑term care services.
The SHI funds are responsible, on the basis of federal legislation, for the implementation of the health insurance system, which includes the provision of contract services in the extra-mural sector, the provision of medicines and medical goods, as well as inpatient and outpatient rehabilitation.
This division often leads to resource misallocation, regional disparities, discontinuities in patient care, challenges in health workforce planning, and insufficient coordination, particularly at the interface between health and long‑term care (OECD, 2023a).
Funding for the Austrian health system comes from a mix of compulsory SHI contributions, general taxation, and out‑of‑pocket payments. SHI funds cover the largest share of health expenditure (approximately 45%), primarily financed by contributions from employees and employers. Out‑of‑pocket payments account for around 16–18%, mainly covering pharmaceuticals, outpatient care, long-term care, and dental services.
Hospital funding is based on standardised case flat rates that group inpatient stays by diagnosis, procedures, age, and treatment complexity. Each case is assigned points reflecting resource use; hospitals are reimbursed according to the points accrued per case rather than bed numbers or length of stay, although length of stay influences case grouping and additional payments. General practitioners (GPs) in Austria are mostly private practitioners contracted by SHI funds to provide ambulatory primary care. They are reimbursed mainly on a fee‑for‑service basis, receiving fixed payments for each consultation or treatment rendered, regulated by negotiated fee schedules with the SHI funds.
Source: The Austrian Federal Ministry of Social Affairs, Health, Care and Consumer Protection (2019): The Austrian Health Care System: Key Facts.
The recent reforms are substantive steps forward. Efforts to enhance and harmonise the functioning of the health system across different states should continue in order to increase its efficiency. However, the positive impact of reforms depends heavily on their complete and timely implementation, as partial execution may hinder the attainment of agreed objectives. The recent SHI funds reform provides a concrete example. While the reform successfully consolidated SHI funds into three, the foreseen harmonisation of the national legal framework for contracts and negotiations between SHI funds and healthcare provider representatives at the Länder level has not been fully implemented, resulting in missing the savings targets originally envisioned by the reform (Bachner et al., 2024).
Pharmaceutical spending has potential for efficiency gains. Expenditure on outpatient pharmaceutical products alone accounts for more than 15% of total health spending, and per capita expenditure on retail pharmaceuticals is higher than the OECD average and that of many EU countries (OECD, 2023b). Austria has very few regulations in place to incentivise the use of generic medicines, and the practice of generic substitution by pharmacists is generally not allowed, marking a difference with many other EU states. As a result, in 2021 generic medicines accounted for only about 36% of the total volume of medicines in Austria, compared with 79% in the Netherlands and 83% in Germany (Figure 4.15) (Bachner et al., 2024).
Introducing well-designed incentives to increase the uptake of generic medicines could substantially reduce pharmaceutical expenditure. Austria should enable pharmacists to substitute branded drugs with generics without requiring prior physician approval, following the example of the Netherlands where the substitution is pharmacist-driven with the consent of the patient, while the prescriber can only explicitly forbid substitution (OECD, 2025c). Financial incentives for both prescribers and patients to choose lower-cost generics could also be adopted by setting the maximum reimbursement level at the price of the least expensive generic or, as in the Netherland’s case, setting for pharmacists a fixed reimbursement fee per prescription rather than being paid as a percentage of the drug’s price, removing the bias toward dispensing higher-priced branded drugs, and adopting for doctors pay-for-performance schemes that offer GPs additional income (about 5 to 10%) as incentives for prescribing cost-effective options like generics (OECD, 2025d) In addition, public information campaigns highlighting the safety and efficacy of generics could further improve value for money in the outpatient pharmaceutical expenditure.
Percentage, 2024 or latest available year
Note: The OECD aggregate corresponds to the unweighted average of the OECD countries. Data for Chile, France, Slovenia, United Kingdom are community pharmacy market. Data for Austria, Denmark, Germany, Greece, Ireland, Luxembourg, Netherlands, New Zealand and Spain are reimbursed pharmaceutical markets, referring to the sub-market in which a third-party payer reimburses medicines.
Source: OECD Health Statistics 2025.
4.4.4 Further strengthening primary care to reduce high reliance on hospitals
Austria’s high reliance on inpatient care remains a key driver of elevated health expenditure. Although the proportion of spending allocated to inpatient services has shown a gradual decline, it was still 29.5% of total health expenditure in 2021, significantly above the EU average of 24.7% (The European Observatory on Health Systems and Policies, 2024). Austria ranks high among OECD members for hospital beds density (Figure 4.16) and hospitalisation rates. The high number of hospital beds can be partly explained by longer-than-OECD-average lengths of stay in hospitals and by the high number of avoidable hospitalisations resulting from chronic conditions (OECD, 2024).
Hospital beds per 1000 inhabitants
Note: The OECD aggregate corresponds to the simple average of the available OECD countries. The indicator corresponds to the number of total hospitals beds in the healthcare sector covering both somatic and psychiatric type of care). Total hospital beds are all hospital beds which are regularly maintained and staffed and immediately available for the care of admitted patients. 2023 data for Costa Rica and United States refer to 2022.
Source: OECD Health Statistics (database).
A well‑functioning and easily accessible primary care sector reduces the demand for costly and resource‑intensive facilities such as hospital wards and emergency department (OECD, 2020). Unnecessary referrals to specialists and avoidable hospital admissions substantially increase system costs, as specialist and inpatient care are far more expensive than primary care services. Furthermore, the management of minor or non‑urgent health issues in hospitals can lead to congestion, longer waiting times, and the inefficient use of specialist capacity, ultimately undermining the overall effectiveness of the system.
Austria is undertaking reforms to strengthen primary care and take-over activity from hospital care. The Primary Health Care Act, which entered into force in 2017 and was then amended in 2023, has strengthened primary and ambulatory care provision by enabling the establishment of multiprofessional and interdisciplinary primary health care units, whose development has been financed also through EU Recovery and Resilience Fund grants. These units are multidisciplinary primary health care centres run by at least two GPs who employ other health professionals (such as nurses or psychotherapists). Moreover, the 2024 - 2028 health care reform allocated around EUR 300 million per year to strengthen the public outpatient sector outside hospitals and reinforced ambulatory settings through the hiring of more doctors; and increasing the number of primary health care units; while also simplifying and streamlining authorization of group practices and outpatient clinics (Bachner et al., 2024). While these reforms are welcome, their implementation has been slow and needs to be coupled with a progressive reduction in hospital supply, effectively shifting care from inpatient to outpatient facilities In 2023, the number of primary healthcare units had increased to 40, far from the target of 75 initially set for 2021 and subsequently extended to the end of 2023 (OECD, 2023a). In 2025, the total number reached 107. However, only 10% of the population could currently receive primary care from such units.
Effective planning of the healthcare workforce, especially of GPs, is needed to ensure a better operability of primary care but also a more equal access to healthcare across the country. While urban centres such as Vienna have a relative high density of GPs, many rural districts present the opposite situation, marking regional inequalities that risk worsening with the ageing of the physician workforce (Bachner et al., 2024). Austria has a high overall density of doctors, however the proportion GPs over the total number of doctors has steadily declined from 16% in 2010 to below 14% today, making it one of the lowest shares among EU member states (Figure 4.17, Panel A). This decline has reduced Austria’s number of GPs per 1,000 inhabitants to below the OECD average (OECD, 2023a). In addition, a significant proportion of practising GPs are approaching retirement age (Figure 4.17, Panel B), and many work in solo practice settings (Bachner et al., 2024). These factors limit the capacity of primary care to perform an effective gatekeeping role through assessing patient needs, managing common conditions, and preventing unnecessary access to hospital and specialist services (OECD, 2024).
The average remuneration of GPs in Austria has risen more rapidly than that of specialists since 2011, and the current GP salary level aligns broadly with the OECD average (OECD, 2023b). Nevertheless, further efforts are needed to enhance the attractiveness of general practice as a career choice, particularly in rural and underserved areas. The two recent initiatives introduced by Austria’s largest social health insurance (SHI) fund, the ÖGK, represent useful solutions that may be worth scaling up if evaluations show positive results. First, since the summer of 2023, 50 scholarships have been awarded to medical students who commit to working as SHI-contracted physicians in underserved regions for at least five years after completing their training. Second, a pilot project has been introduced to provide a professional support package that allows physicians to outsource organisational and managerial tasks, allowing them to focus on medical tasks (Bachner et al., 2024).
Percentage of workers in the same health profession, 2024 or latest available
Note: The OECD aggregate corresponds to the unweighted average of the OECD countries.
Source: OECD Health Statistics (database).
4.4.5 Enhancing digitalisation and effective data collection and usage
The digitalisation of the health system has an important role to play in improving effectiveness, in terms of cost-efficiency, governance and health outputs. Improved data collection is essential not only for monitoring performance and identifying inefficiencies, but also for improving diagnostic accuracy and enabling personalised treatments, thereby better supporting patients and improving health outcomes. Although some progress has been achieved in reinforcing governance and performance monitoring, data flows remain fragmented, particularly between health and long‑term care. The fragmentation hinders the ability to assess performance and outcomes at the system‑wide level, indicating scope for improvement in integrating and standardising data flows (OECD, 2023a).
The creation of meaningful health analytics and their effective application depend on timely access to high‑quality data and the capacity to link information across multiple datasets. A composite OECD indicator incorporating measures such as timely access to population-wide data and the use of interoperable clinical data standards places Austria well below the OECD’s top‑performing countries (Figure 4.18, Panel A). A similar pattern is observed in the dataset governance score composite indicator, which incorporates criteria including data‑sharing arrangements, data catalogues, and the implementation of training and operational controls to ensure privacy and security (Figure 4.18, Panel B).
Score, 2019-2020
Note: Panel A: The score is the sum of the proportion of health datasets meeting 8 key elements of dataset availability, maturity and use in this survey. The maximum score is 8. Lithuania and Spain have reported this capability, but no data were available in the survey when it was conducted. Panel B: The score is the sum of the proportion of national health care datasets meeting 15 governance elements. The maximum score is 15.
Source: OECD Health Working Papers No. 127, Survey results: national health data infrastructure and governance, https://dx.doi.org/10.1787/55d24b5d-en.
Austria is actively pursuing the digital transformation of its health system. The comprehensive healthcare reform package 2024-2028 seek to alleviate pressure on hospitals under the guiding principle of “digital before outpatient before inpatient”. This approach emphasises the prioritisation of digital health solutions as the first point of contact for patients, particularly through the expansion of teleconsultation services and the broader use of electronic health records, with tele-medicine being now formally included as a reimbursable service. The action is welcome, as the uptake of telemedicine started from a low level before the pandemic and also the increase during the pandemic (+6.4%) was slower than the EU average (+9.9%), widening the gap with best performing countries such as Slovenia and Poland (OECD, 2023a). Around EUR 51 million per year have been allocated to enhance the digitalisation along these lines (Bachner et al., 2024).
Despite promising developments and Austria’s robust e‑health infrastructure developed over the past decade, further progress is necessary to fully realise the potential of digitalisation, with underutilisation of health data remaining a major challenge. Although the universal electronic health record system (Elektronische Gesundheitsakte – ELGA) is now used in the vast majority of hospitals, pharmacies and physicians’ offices, the secondary use of these data, which is central to improve governance, medical research and prevention, is heavily restricted by legislation and a lack of interoperability standards between different dataset (OECD, 2023a).
4.4.6 Strengthening formal long-term care
The demand for long-term care (LTC) is high and will continue to grow due to population ageing. However, the supply of formal LTC is struggling to keep up. The ratio between LTC formal workers and people aged 65+ in Austria is lower than the OECD average and less than half the share in best performing countries such as Sweden or Switzerland (Figure 4.19, Panel A). Moreover, half of LTC formal workers work part-time, a share that is above the OECD average (Figure 4.19, Panel B). As a result, the share of informal LTC workers in Austria is among the highest in the OECD (Figure 4.19, Panel C). More than 10% of the Austrian population, i.e. around 950,000 people, dedicate themselves to the care and support of a family member. Many of these caregiving relatives are over 60 years old and predominantly female (BMSGPK, 2024).
Note: The OECD aggregate corresponds to the unweighted average of the OECD countries. Panel A: 2014 data for Finland are missing from source. Panel C: The definition of informal carers differs between surveys. United Kingdom data refer to England only.
Source: OECD Health Statistics (database); SHARE, wave 8 (2019-20); SDAC (2018) for Australia; ELSA, wave 9 (2018-19) for the United Kingdom; HRS, wave 14 (2018-19) for the United States.
Attracting more formal workers to the sector remains key to meet rising demand, and Austria has implemented many policies going in the right direction. The Act on the Special-Purpose Subsidy for Salary Increases aimed at ensuring better pay for nursing and care staff, with the federal government providing the federal states responsible for nursing and care staff with EUR 570 million. Moreover, the amendment to the Long-Term Care Fund Act seeks to secure long-term salary increases for nursing and care staff, while professionals in long-term care are now entitled to an additional week of leave starting at age 43. This has led salaries of LTC workers in Austria to be on average higher than in many other OECD countries, albeit they remain lower than the Austrian average salary (Figure 4.20).
Average hourly wages of personal care workers as a share of economy-wide average wage, 2018
Note: The OECD aggregate corresponds to the simple average of the OECD countries. Personal care workers are those included in ISCO-08 53 ISCO category 53, which groups together personal care workers and childcare workers.
Source: OECD calculations based on 2018 EU-SES data, and 2021 OEWS Survey data for the United States.
Beyond remuneration, working conditions are a crucial factor influencing the attractiveness of long-term care professions. Care workers throughout OECD countries are highly exposed to both physical and mental health risks and are around 2.5. times as likely to work at night as the average employee (OECD, 2023). Additionally, there is a widespread negative perception of the skills required in LTC roles, as the emotional and psychological competences required to care for vulnerable people are often overlooked (OECD, 2023).
Austria has actively sought to improve the public image of LTC professions through targeted information campaigns, including television advertisements depicting the daily realities of care workers. These initiatives have aimed both to enhance societal recognition of LTC work and to encourage young people to pursue careers in the sector (OECD, 2023). However, whilst initiatives of this kind are welcome, their impact could be enhanced by portraying care workers as skilled professionals, showcasing both their training and their role in safeguarding the dignity and autonomy of care recipients. Such an approach is key to improving the perception of their role in society. Coupling these campaigns with the issuance of official quality certification for care agencies and live-in care workers may further help to signal their professionalism.
Institutional LTC in hospitals or nursing homes is generally more expensive than home care for people with low to mild needs, and most individuals prefer having LTC provided within their own home settings. Expanding the provision of formal home LTC services is therefore the most effective way to respond to the increasing demand. This would also help to respond to the reduction in family members number, which will reduce the supply of informal care, and to limit the risk of exacerbating gender inequalities and allocating inefficiencies that informal care usually entails. However, even though Austria has been successful in formalising live-in care workers, most of them are registered as self-employed, allowing to circumvent labour regulations (OECD, 2023). This might result in an increase of labour, physical and psychological burden for them, diminishing the appeal of a role already marked by shortages. Switzerland addressed the problem by requiring that live-in care workers must be employed either by the household or an intermediary (Sagmeister, 2023) and by providing incentives to families to formally hire live-in workers, such as simplified procedures, the option to pay a flat contribution covering both withholding taxes and social contributions, and the deductibility of social insurance contributions from taxable income.
Recruitment of LTC professionals from abroad, both EU and third country nationals, remains a key strategy to address workforce shortages. Even though the sector already employs a comparatively high share of foreign-born workers, 33% compared with 22% across the general Austrian labour market (Famira-Mühlberger and Österle, 2024), Austria continues to rightly favour the immigration of workers in this sector. Nursing assistants, specialist nursing assistants and qualified nurses have been on the annual shortage occupation list of the Skilled Labour Ordinance since 2019, and they can more easily obtain a working visa and the recognition of their diplomas thanks to the aforementioned reform of the Red-White-Red (RWR) card in 2022. However, beyond increasing overall workforce numbers in the LTC sector, a specific effort is needed to attract male students and workers, as Austria faces a pronounced gender imbalance in LTC occupations Women constitute 87% of formal carers and 73% of informal carers, reflecting deep-seated gender stereotypes within the sector (Famira-Mühlberger and Österle, 2024). Targeted initiatives to challenge prevailing stereotypes and attract more men into care roles, as was done in the UK or Norway, would help (Box 4.6).
The "Menn i Helse" programme was launched in Norway in 2011 as a targeted initiative to address labour shortages and gender imbalances within the health and long-term care sectors. The programme specifically targets male jobseekers registered with the Norwegian Labour and Welfare Administration (NAV), the majority of whom come from diverse backgrounds.
Participants follow a condensed educational pathway leading to a nationally recognised vocational qualification as healthcare workers, combining theoretical instruction with practical internships. During the programme, participants alternate between receiving unemployment or social welfare benefits from NAV and earning a salary paid by the municipality for their work placements.
The initiative has proven successful in increasing male participation in care professions, as more than 1400 men have graduated since its inception, and about 90% of them have secured relevant jobs in health and care services.
Assuring the effective functioning of long-term care (LTC) systems also requires enabling people to access the care they need. Since 1993, Austria has offered a universal LTC allowance (Pflegegeld) designed to provide financial support to individuals who require long-term care due to physical, mental, psychological, or sensory impairments lasting at least six months, with a minimum monthly care need of 65 hours, including older people but also those with special needs. This allowance is not means-tested and has no age limits, but eligibility requires a medical assessment conducted by qualified personnel. The benefit is paid according to seven graded levels proportional to the assessed care hours needed, ranging approximately from EUR 200 to over EUR 2000 per month, with annual adjustments linked to inflation since 2020. In 2024, around 490 000 people received the LTC allowance, with a total cost amounting to 0,7% of GDP (Statistic Austria, 2025e). The system is tax-financed, with the federal government responsible for cash benefits and regional governments delivering care services (Federal Ministry of Labour, Social Affairs, Health, Care and Consumer Protection, 2025).
The LTC allowance represents a key pillar of Austria's care system, enabling equitable access to care; however, major issues remain. Despite its universal nature, uptake is marked by substantial regional and social inequalities beyond differences in health status and age structure. Improving information dissemination and simplifying application procedures would help reduce uptake disparities and non-take-up among vulnerable groups (Pennerstorfer and Österle, 2025).
Preserving the financial sustainability of the LTC allowance in the face of growing demand driven by population ageing is another key challenge. The number of people receiving the LTC allowance is estimated to increase by 57% between 2021 and 2050, and the public costs associated with the LTC allowance are projected to increase from EUR 2.74 billion to EUR 9.17 billion in real terms, taking into account the annual indexation of the LTC allowance (WIFO, 2024). Although introducing means-testing for the LTC allowance would add administrative complexity and undermine the system's universal ethos, it is essential to manage expenditure growth and improve spending efficiency, targeting support to those who need it most. Means testing should consider both income (pension) and wealth of the receiver as in some other OECD countries. New and alternative source of fundings may be explored as well. In Germany, for example, starting in 2015, 0.1 percentage points of the contribution rate paid by Germans for statutory long-term care insurance has flowed into a fund intended to finance the expected growing burden of long-term care from 2035 onwards (Hougaard Jensen et al., 2025). Private insurance is another option, which is available in some OECD countries, such as the United States and Japan, and is used to cover a fraction of the costs.
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