This chapter looks at ways to enable labour market mobility for mid-career and older workers in Austria. The first half of the chapter focuses on the role of skills development to enable transitions into higher-quality employment, with a focus on enhancing access to training for mid-career and older workers. In this context, the chapter also analyses key features of the Austrian adult education landscape and the role of the Public Employment Service in up- and re‑skilling for employees. The second half of the chapter focuses on structural framework conditions that may inhibit career mobility in Austria. This includes the focus on lifetime occupations and the seniority wage system.
Promoting Better Career Mobility for Longer Working Lives in Austria
Abstract
Key messages
Adult education and training are critical factors in enabling job mobility for workers towards the middle and end of their career. Relative to other countries, participation in adult education and training is high in Austria, but the share of workers seeking training declines with age. Austria could act in several domains to advance opportunities for up- and re‑skilling at later ages.
Longer-term training could play a key role in facilitating labour market transitions into new and better-quality jobs. Austria has a well-developed offer of policy instruments to support further education and training of workers, with programmes targeted at both individuals and companies. Several of these instruments promote training of long duration. This includes educational leave, which (with employer consent) supports a one‑year full-time or two‑year part-time leave from work to participate in training, as well as the skilled worker and nursing scholarships, which can be used to acquire vocational qualifications in occupations facing shortages, with funding provided for up to four years.
Mid-career and older workers are participating in education and training measures to a limited extent, particularly in measures of long duration. Educational leave is among the measures with the highest number of participants in the Austrian qualification subsidy landscape and incurs by far the largest cost. However, the effects on employment are rather modest. Educational leave does not appear to reach the workers most in need of training, including mid-career and older workers, and with limited requirements on the range of training undertaken, training is often not labour market relevant. The scholarships for qualifications in occupations in acute shortage, in contrast, have demonstrably positive effects on participants, but they, too, are unlikely to be used by older workers.
The Austrian adult education and training system is exceedingly complex, with a multitude of actors and levels of governance involved. This can make it difficult for workers to identify appropriate opportunities, complicates funding structures and presents challenges for training professionalisation and quality assurance, despite efforts towards improved co‑ordination across regions and actors in recent years. Generally speaking, continuing education and training is not established as an equal pillar in the Austrian educational system, which is reflected in the structure of total federal education spending of which less than 1% is reserved for adult education.
The Public Employment Service (PES) plays a crucial role in up- and re‑skilling for the labour market. However, given its traditional focus on jobseekers, the role of the PES in education and training policy has widened as it is increasingly tasked with training for employees.
Austria’s traditional emphasis on “lifetime occupations” acts as a barrier to mid-career mobility. The approach is a result of the dual vocational system and the importance traditionally placed on formal qualifications. The latter is reflected in several features of the Austrian labour market system that can act as an impediment to mobility. First, despite some efforts in recent years, recognition of prior learning is relatively underdeveloped and not anchored in a legal framework. Second, own-occupation assessment after illness inhibits transitions to new occupations. However, some recent promising efforts go in the direction of shifting away from a pure emphasis on formal qualifications, such as the introduction and gradual roll-out of competence matching in job intermediation by the PES.
Seniority wages are another structural feature of the Austrian labour market inhibiting mobility for older workers. Austria has historically had very steep age‑wage profiles, which have flattened considerably in the last decades. Nevertheless, many collective bargaining agreements for white collar workers still feature seniority-based wage increases. Such provisions disincentivise job mobility from a worker perspective and can lead firms to encourage early retirement for older employees.
Based on these considerations, Austria should consider taking action to:
1. Reform the system of educational leave to improve targeting and effectiveness. Policymakers should consider some strengthening of the requirements on training (e.g. in terms of duration and content) and mandatory accompanying career/educational counselling, but also measures to strengthen the participation of disadvantaged groups. This could include higher financial support for specific groups of workers, increased promotion of part-time leave and the potential introduction of a conditional right to educational leave.
2. Encourage participation of mid-career workers in longer education and training, through educational leave and the skilled worker or nursing scholarships. This could include specific financial incentives for mid-career workers, but also increased outreach and guidance efforts. Particular focus should be placed on low-skilled (mid-career) workers.
3. Increase funding and improve governance structures for adult education and training more generally. Federal funding for adult education and training should be increased and anchored within a modernised legal framework, including a clear definition of competences. Efforts for co‑ordination among regional actors should be strengthened and accompanied by improved monitoring and data collection.
4. Turn the Public Employment Service into a “continuing education agency” with responsibility for training of employees, alongside and on par with its responsibility for job intermediation services and jobseekers. The PES should be the interface between training providers and employees seeking up- and re‑skilling opportunities. This requires increased funding for the PES, possibly from new funding streams (other than unemployment insurance contributions), and a potential revision of the legal mandate.
5. Move away from the concept of a lifetime occupation. Efforts to co‑ordinate initiatives for recognition of prior learning should be further strengthened, and the introduction of a legal right to skills validation should be considered. Own-occupation assessment as part of the return-to-work process after an illness should be softened and abolished in the long-term.
6. Further flatten seniority wage structures. Seniority wages are largely anchored in collective bargaining agreements, and room for action for policymakers is thus limited. However, policymakers can engage with social partners in discussions on gradually flattening age‑wage curves for white collar workers to align wages more closely with actual labour productivity.
Skills are an important prerequisite for being able to transition to high-quality jobs within or across industries and occupations. The need for up- and re‑skilling is further compounded by structural labour market shifts caused by digitalisation and the green transition, which may require workers to transition to new jobs or to take on new tasks and job functions within their existing occupation. According to the 2022 AARP Global Employee Survey, more than half of workers aged 45 and above who were concerned about losing their job in the next year reported that their skills are becoming obsolete or that they do not have the right skills (OECD, 2024[1]). Against this background, investing in education and training for older workers is of crucial importance.
3.1.1. Designing well-targeted and effective training instruments
Overall, rates of participation in education and training in the adult population are high in Austria. In the 2022 Adult Education Survey, 58% of adults aged 25‑64 indicated that they had participated in formal or non-formal education and training over the past 12 months, the sixth-highest rate in the EU (Eurostat, 2024[2]). Between 2007 and 2020, education and training rates have considerably increased (Figure 3.1).
However, participation rates appear to have peaked in 2016 and there is a clear and persistent age gradient in training participation. While participation rates are highest for individuals aged 25‑34 (68.7% in 2022) and 35‑44 (61.8%), they are significantly lower in the group aged 45‑54 (59.6%) and, particularly, 55‑64 (43.3%). To facilitate job mobility and career transitions, further strengthening the access of mid- and late‑career workers to high-quality training is therefore a key concern.
Share of the adult population participating in education and training by age in the last 12 months, 2007‑22
Note: Chart includes participation in formal and non-formal education and training.
Source: OECD calculations based on Eurostat dataset Participation rate in education and training by age.
Strengthening employee access to education and training within companies
Against the backdrop of historically low access to training for older workers, workers in small companies and those with low levels of education, several policy measures were introduced in Austria to strengthen company investment in training in recent decades (Mahringer, 2008[3]). The two key instruments specifically targeting employees are qualification support for employees and the creation of training networks for companies, which constitute the main PES policy instruments targeted at companies, alongside company counselling (Chapter 2).
Qualification support for employees (Qualifizierungsförderung für Beschäftigte) is a subsidy available to companies for education and training targeted at disadvantaged labour market groups. First introduced as an ESF+ programme and nationally funded since 2015, the subsidies are available for training of three specific groups: employees with at most the compulsory level of education, women holding an apprenticeship or other vocational qualification, and workers over 50 (until November 2024, workers over 45 with a higher than compulsory level of education). The subsidy covers 50% of the costs of the training measure, as well as 50% of personnel cost for employees with at most compulsory education, up to a maximum of EUR 10 000 per person.
From the inception of the nationally funded programme to May 2023, 74 184 individuals benefitted from a subsidy (Table 3.1). More than half of participants (58.5%) were aged 45 or older, which can be linked to the specific targeting of this group by the measure. The length of the subsidised training is rather short for most participants (40 hours or less in 51.2% of cases), but there is a significant minority (19.5%) that undertake training of more than 100 hours.
In 2023, an evaluation of the qualification support measure found positive effects of participation on employment and observed yearly income for participants, though this effect was smallest for older workers (Putz et al., 2023[4]). The most cited reason for training for older workers, according to employers, is familiarisation with the current state of the art. Hence, training likely has a stabilising function, with less impact on monetary improvements in workers’ situation. 66.4% to 78.1% of workers stated that they would not have participated in training without the subsidy.
Complementing qualification support for employees, the PES programmes targeted at companies also include the formation of impulse training networks (Impuls-Qualifizierungsverbünde). These networks can be formed by a minimum of three companies, at least half of which must be SMEs, with the aim of jointly developing qualification measures for their employees. The PES supports the development of the network through external consulting (up to 10 days) and subsidising the cost of qualification measures through qualification support for employees.
Participant and training characteristics associated with qualification support by employees, up to May 2023
Source: Putz et al. (2023[4]), “Qualifizierungsförderung für Beschäftigte: Laufendes Monitoring und Wirkungsanalyse”, Jahresbericht 2023 des Projekts »Wirkungsmonitoring Impulsprogramm«, Synthesis Forschung, Wien.
Training networks are organised regionally through regional PES offices. Currently, networks exist in five of the Austrian provinces (Burgenland, Kärnten, Niederösterreich, Oberösterreich, Steiermark). The number and size of these networks varies. For instance, in Oberösterreich, there is one rather large network with almost 250 member companies, which focuses on training measures for the digital and green transitions. The networks in other provinces tend to be significantly smaller, ranging from less than 10 to ca. 80 member companies (Box 3.1).
The impulse training network Wald4tel 2024 is the largest training network in Niederösterreich (Lower Austria), with 60 member companies. The network aims to provide education and training opportunities for companies within the network, with a particular focus on specific groups such as low-educated workers and older employees.
Within the company network, training activities are planned based on the identification of training needs across the member companies. For the current programming period (April 2024‑March 2025), specific areas of focus were identified, including training for production activities, management and leadership, IT, personal development, and occupational health management. Member companies within the network can subscribe to a programme of training activities. In addition, the network also hosts other activities to enable exchange between companies, such as expert talks and occasions for sharing of best practices. The PES Lower Austria supports the project activities jointly with external consultants who assist in the setup of the network, identification of training needs and organisation of training activities.
Educational leave as a lever for up- and re‑skilling and job mobility
Participating in longer, in-depth training and qualification measures can be an effective way to enable (mid-career) workers to transition to new jobs or occupations. One type of policy measure to enable this are educational leave programmes, where workers take a leave of absence from employment to undertake training while receiving (partial) compensation for their lost earnings (Kauhanen, 2021[5]). The aim of such policies is to address structural barriers workers face in undertaking training, such as lack of time and cost, and ultimately enable mobility against the background of structural labour market change (Ehlert et al., 2024[6]). Evidence from Finland suggests that educational leave programmes have large effects on occupational mobility (Kauhanen, 2021[5]).
In Austria, the option to take educational leave (Bildungskarenz) has existed for more than two decades, with an option for part-time educational leave (Bildungsteilzeit) introduced in 2013. Under the educational leave scheme, subject to employer approval, individuals can take leave from work to participate in work-related training. During the period of leave, which can last for up to one year, participants are paid unemployment benefits. Educational leave can also be taken directly after parental leave. Educational part-time leave involves an agreed reduction in working time and receipt of educational part-time payments.
In recent years, take‑up of educational leave has increased markedly, reaching a high of more than 22 000 recipients in 2023 (Figure 3.2). Fewer people participate in part-time educational leave compared to educational leave, but numbers have also increased over time. Though the majority of participants transition to educational leave from active employment, the increase in the number of participants in educational leave can primarily be attributed to a significant increase in use of educational leave after parental leave (Bittschi et al., 2023[7]). This increase can be linked to the increased presence of training institute offers targeted specifically at young mothers and marketed as a way to prolong parental leave, potentially strengthened by increased awareness of the possibility to take educational leave through word of mouth among mothers (Ibid.).
Recipients of educational leave benefit and part-time leave benefit, Austria, 2015‑23
Source: OECD calculations based on BMAW (2023[8]), Aktive Arbeitsmarktpolitik in Österreich 2014 bis 2023.
Data on the socio-demographic characteristics of educational leave participants reflects this trend (Table 3.2). Individuals who take up educational leave tend to be young, female, and rather high earners, particularly when they enter into educational leave after parental leave. The share of older workers making use of the instrument is low, for both educational leave and part-time educational leave (15.3% and 14.8% of participants are aged 40 or older, respectively, compared to a ca. 52% share of this group in the employee population aged 15‑64).1
Socio-demographic characteristics of educational leave and part-time educational leave participants, 2021 entries
Note: Data on educational attainment is missing for a portion of the sample.
Source: Bittschi et al. (2023[7]), “Evaluierung der Bildungskarenz und der Bildungsteilzeit”, Österreichisches Institut für Wirtschaftsforschung.
Bittschi et al. (2023[7]) recently evaluated the labour market effects of (part-time) educational leave, looking at a 12‑year horizon after undertaking a training measure. Overall, the effects of educational leave are rather modest. Educational leave after active employment has a slight negative effect on employment, while educational leave after parental leave has a slight positive effect. For both groups, positive monthly income effects are observed, though only in the long term if educational leave is taken up after active employment. Part-time leave has hardly any effects on employment but is also associated with increases in monthly income. According to the authors, there are several potential explanations for the moderate and partially negative effects. For instance, individuals who participate in educational leave are already well-integrated into the labour market, which makes significant employment effects less likely. Moreover, a substantial portion of participants had already pre‑planned an end to their employment relationship before the period of educational leave, a selection effect that cannot be accounted for in the analysis.
In addition to the quantitative evaluation, a survey with participants was conducted. The measure was evaluated very positively, with participants indicating that it constituted an opportunity for personal development and was relevant for career progress. A significant portion of respondents also stated that educational leave enabled a job change (36% educational leave, 37% part-time leave) or employer change (37% educational leave, 38% part-time leave), which highlights the potential role of the instrument in enabling career mobility. However, participants transitioning to educational leave from parental leave invested significantly fewer hours in training than those transitioning from active employment. They typically undertook training requiring only a certificate of participation (52%), while other participants usually acquired a formal qualification (58% educational leave after active employment, 74% part-time leave).
Educational leave is, in principle, a promising policy instrument that could be used to help individuals adapt to structural changes in the labour market and enable transitions to new jobs and occupations, including in the mid-career. Currently, the labour market effects of the measure are however rather modest. This can likely be linked to the fact that educational leave does not reach the groups most in need of training, among them older workers, and that training is not always labour market relevant. A very broad range of training can be undertaken through educational leave, with low requirements in terms of hours of schooling, in-person attendance, certification of educational offers and labour market relevance of the training (Österreichischer Rechnungshof, 2023[9]). No mandatory educational or career counselling is linked to the choice of training.
The use of educational leave after parental leave could have positive effects if it leads to substantive up- and re‑skilling and improved labour market prospects of young mothers. However, currently, it appears to frequently be used as a way to extend parental leave, care responsibilities being a primary motivation for take‑up of educational leave (Bittschi et al., 2023[7]). More stringent requirements on the type of training that can be undertaken and mandatory educational counselling could help to address these concerns. Moreover, for low-qualified workers, cost is more likely to be a barrier preventing them from engaging in training (Ehlert et al., 2024[6]). Specific financial incentives could make educational leave more attractive for groups for whom cost constitutes a particularly significant barrier to training participation, including low-skilled and older workers (OECD, 2023[10]). These financial incentives could include an increase in the level of educational leave benefit beyond the unemployment benefit, but also additional financial support to cover training and other costs. The use of educational part-time work should also be promoted further, particularly among low-skilled workers, for whom total labour market exit is often not possible (Bittschi et al., 2023[7]).
Moreover, educational leave can only be taken up on the condition of employer agreement, which is more likely to pose a problem for particular groups of workers. Individuals who work in non-professional occupations and in small companies are less likely be offered time away to engage in training activities (Ehlert et al., 2024[6]). Ehlert et al. (2024[6]) propose introducing a conditional right to educational leave as a means of balancing companies’ ability to plan long-term with individual access to training. Such a conditional right would entail a planning period in advance of educational leave, limits to several employees taking up educational leave at the same time and a maximum of 50% part-time leave in small companies. Establishing a conditional right to educational leave warrants consideration in view of the need to better involve marginalised labour market groups in training. However, such a policy would require careful calibration and implementation to ensure its effectiveness while limiting the burden of personnel loss for companies, particularly small companies.
Acquiring new vocational qualifications through longer training in the mid-career
In addition to educational leave, several other Austrian qualification measures focus on financial support for longer periods of training. These measures aim specifically at the acquisition of new qualifications, with a focus on occupations that are facing shortages. The most prominent measure focusing on acquiring new or higher vocational qualifications in shortage occupations is the skilled worker scholarship (Fachkräftestipendium). Established in 2013, the skilled worker scholarship subsidises training programmes that lead to a (higher) vocational qualification in sectors that are facing shortages, focusing on employees or unemployed individuals with low or medium levels of qualification. The subsidy covers full-time training measures of at least 20 hours per week that last at minimum three months and at most three years. Participants receive unemployment benefits or a minimum rate of EUR 38.6 per day (in 2024).
Complementing the skilled worker scholarship, the nursing scholarship (Pflegestipendium) was established in 2023. It enables unemployed or employed individuals to acquire a formal qualification in the care sector, providing a comparatively high minimum stipend of ca. EUR 51.2 per day (EUR 1 536 per month, in 2024), for the duration of the training measure (maximum four years). Prior to the introduction of the nursing scholarship, these qualifications were included in the skilled worker scholarship. A further measure promotes education and training in social services, Upskilling for employees in social services of public interest (Höherqualifizierung von Beschäftigten im Bereich soziale Dienstleistungen von allgemeinem Interesse). Companies can apply for the subsidy and are reimbursed 75% of schooling and personnel cost associated with the qualification measure, up to EUR 30 000 per person.
An evaluation of the skilled worker scholarship showed that career reorientation was the most common reason (73.3%) for participating in the program, with the majority of individuals quitting their previous job to participate in training (Danzer, Lechner and Riesenfelder, 2020[11]). Relative to a control group, participants had significantly more days in employment per year, as well as higher monthly income. Notably, the employment effects of the skilled worker stipend were particularly high for older participants, at 181.9 additional days in employment for men (relative to 43.3 across the population) and 130.9 days for women (relative to 58.3). A new evaluation of the programme will be undertaken in 2025.
Despite the positive effects of the skilled worker scholarship on older workers, however, data shows that younger workers are considerably more likely to take part in it (Figure 3.3). Only a minority of individuals making use of a skilled worker scholarship (FKS) are aged 45 or older (e.g. 8.9% in 2023). The share of older individuals using the subsidy for upskilling in social services of public interest (GSK) is somewhat higher (19.8% in 2023) but this measure is substantially smaller in overall scale. With the introduction of the nursing scholarship (PFS), take‑up of the skilled worker scholarship decreased substantially. In 2023, 17.5% of the workers making use of the nursing scholarship were aged 45 or older.
Stock of individuals participating in measures to acquire qualifications in shortage occupations, by age, 2019‑23
Note: FKS refers to the skilled worker stipend (Fachkräftestipendium); GSK to upskilling for employees in services of public interest and PFS to the care stipend (Pflegestipendium).
Source: OECD calculations based on Austrian Public Employment Service data.
Labour foundations as a means to address large‑scale labour market shifts
Beyond individual-level measures such as educational leave and the various scholarships, the Austrian labour market policy landscape also includes instruments to manage structural change and address personnel losses or shortages within companies or regions. Labour foundations (Arbeitsstiftungen) have existed for several decades. They support the unemployed or employees about to become unemployed through targeted qualification measures and career guidance. As such, they are a key early intervention measure when individuals are threatened by unemployment. The key distinguishing feature of foundations relative to other policy instruments is that they enable a collectively organised and targeted response to specific labour market shifts or challenges, which can be used to enable career reorientation and mobility for individuals (Eichhorst and Marx, 2022[12]).
Several types of foundations exist (Box 3.2). Outplacement foundations can be constructed at company, regional or sectoral level in periods of large‑scale personnel cuts to support newly unemployed individuals. These are very common in Austria as a means to respond very quickly to mass dismissals. Implacement foundations are targeted qualification measures within companies to address labour shortages. All types of foundations work through co-financing by public actors, including the PES and the provinces, and the companies affected. They enable long training measures up to three years, or four years for individuals aged 50 years and above.
Different types of labour foundations exist in Austria to support companies in managing structural labour market change.
Outplacement foundations (Outplacementstiftungen) support companies and employees who are facing substantial personnel cuts. Foundations can be created in different circumstances by one or more companies who are facing cuts or in the case of insolvency of a company. In addition, there are examples of regional foundations (created by several companies within one region) or sectoral foundations (created by social partners in a sector). Outplacement foundations include career guidance and orientation, up- and re‑skilling activities, job search support, and potentially internships.
Implacement foundations (Implacementstiftungen) are created in the case of specific labour shortages within companies which the existing pool of unemployed workers cannot cover. These are created by one or more companies in a region or sector and offer targeted job search and training measures for integrating unemployed individuals within the companies affected.
Target group foundations (Zielgruppenstiftungen) can be established in the case of extraordinary difficulties experienced by specific labour market target groups, such as young people or women. Both implacement and outplacement foundations are possible.
Source: Adapted from BMAW (2023[8]), Aktive Arbeitsmarktpolitik in Österreich 2014 bis 2023.
In recent years, implacement foundations have been the most prominent type of labour foundation in Austria (Figure 3.4). In 2023, 84.3% of the individuals registered with a labour foundation were part of an implacement foundation. Different types of implacement foundations exist in Austria to target specific labour shortages. In seven Austrian provinces, foundations address shortages in the care sector by offering qualification measures in care and social services to unemployed individuals. In addition, in 2022, an environment foundation was established, focusing on qualification measures in jobs relevant for the green transition.
Relatively few recent evaluations of foundations exist. However, evidence suggests that foundations are an effective preventative and individualised employment support measure, and that participation has significant positive effects on employment (Lutz, Mahringer and Pöschl, 2005[13]). A recent case study examines the insolvency of a large Austrian company, which led to an insolvency foundation co-founded by the regional PES offices and the province Oberösterreich (Egger-Subotitsch, Liebeswar and Stark, 2016[14]). Seventy-five percent of foundation participants found less than marginal employment again within three months, and 83% participated in some form of continuing education or training measure. Modest positive employment effects are observed relative to a control group of other jobseekers in the sector, these effects being particularly pronounced for participants with disadvantageous labour market characteristics.
Stock of individuals in labour foundations by type of foundation, Austria, 2019‑23
Note: Target group foundations can be either implacement or outplacement foundations and are included in the respective columns.
Source: OECD calculations based on Austrian Public Employment Service data.
Up- and re‑skilling to enable mid-career transitions: Taking stock of the Austrian landscape
Overall, many policy instruments to enable up- and re‑skilling and thereby facilitate career mobility exist in Austria, several of which are targeted at employees. In particular, a number of instruments enable workers to undertake rather long training of one or even several years. Educational leave, which enables participation in qualification measures lasting up to one year (or two years part-time), is a measure with a very high number of participants and an extremely large budget compared to other measures (Table 3.3). However, a recent evaluation shows that the effects of educational are rather limited, and certain labour market groups, including mid-career and older workers, only participate to a very limited extent (Bittschi et al., 2023[7]). While educational leave is a promising policy instrument that could enable individual job mobility, refinement of the measure through more stringent requirements for training, better targeting, including through financial incentives, and improved counselling linked to the choice of qualification measure should be considered.
Remarkably, several other instruments – such as the skilled worker scholarship and the nursing scholarship – enable workers to acquire vocational qualifications through training programmes lasting several years. This could enable workers to transition to better-quality employment within or across firms. To date, the share of workers above the age of 45 participating in these measures is rather limited (Table 3.3), despite evidence that the benefits of such training measures for older workers can be substantial (Danzer, Lechner and Riesenfelder, 2020[11]). Further strengthening these measures and making mid-career and older workers a priority target group should therefore be a key policy priority.
In addition, longer-term training and labour market integration measures are enabled through participation in labour foundations, which are organised at firm, sectoral or regional level. Implacement foundations, in particular, are promising instruments for addressing labour shortages in key sectors. However, as with the individual-level stipends, older workers are significantly less likely to participate in implacement foundations. In contrast, the share of workers aged 45 or older is substantially higher (58.9) for the qualification subsidy for employees, a subsidy for within-company training that is specifically targeted at at-risk labour market groups. However, while a large number of workers benefit from training through this subsidy, training tends to be rather low-cost and short (Table 3.1). This is reflected in the limited budget allocated towards this measure relative to other PES measures focused on up- and re‑skilling (Table 3.3).
Stock of participants, share of older workers and PES budget by qualification support measure, Austria
PES: Public Employment Service.
Note: Data for (part-time) educational leave participants and share of older workers refers to 2021, all other data refers to 2023. Share of older workers refers to workers aged 40 or older for (part’-time) educational leave and to workers aged 45 or older for all other cases. PES budget data is for 2023.
Source: OECD calculations based on Austrian Public Employment Service data and Bitschi et al. (2023[7]), “Evaluierung der Bildungskarenz und der Bildungsteilzeit”, Österreichisches Institut für Wirtschaftsforschung, Wien.
3.1.2. Improving structural conditions in adult education and training for labour market mobility
Existing policy measures for education and training for (mid-career) workers have to be considered as part of a broader landscape for adult education. While participation in adult education and training is high in Austria and many subsidy measures exist, the policy landscape is complex and can be difficult to navigate. Creating better framework conditions for mid-career mobility through adult education and training requires increasing co‑ordination and transparency, clarifying the role of the PES in training for employees, and increasing federal funding for adult education within a modernised legal framework.
The Austrian adult education and training landscape is complex and regionally differentiated
The Austrian adult education and training landscape, including that for vocational education and training, is highly diverse and complex. Constitutionally, competence for adult learning policy is not explicitly defined. This means that the Austrian provinces (Bundesländer) retain substantial competence in adult education and training policy (Gruber and Lenz, 2023[15]). At national level, the main legal reference is the 1973 Act on the Promotion of Adult Education and the National Library System (Gesetz zur Förderung der Erwachsenenbildung und des Volksbüchereiwesens), which enables the use of federal funds for the financing of adult education and training (Schneeberger, Petanovitsch and Schlögl, 2008[16]). The Austrian Government funds education and training on a project basis according to thematic focus areas defined every year.2 However, as a result of the legal framework, a flurry of regulations and policy instruments govern adult education and training policy at both federal and provincial level (Gruber and Lenz, 2023[15]).
Education and training for the labour market exists at the intersection between adult education and labour market policy. Contrary to adult education, labour market policy is a national competence, spearheaded by the Ministry of Labour and the Economy and implemented by the PES (Bock-Schappelwein et al., 2014[17]). Nevertheless, the Austrian provinces can supplement national labour market policy with their own measures and funding, which notably occurs with respect to support for qualification measures. While several national labour market policy instruments to enable continuing education and training for workers exist at national level each province also has specific measures and regulations. For instance, in Vienna, the WAFF (Box 3.3) implements the city’s labour market policy and, in addition to the PES Vienna, provides guidance and funding for both employees and jobseekers. However, comparable institutions do not necessarily exist in other provinces.
The Vienna Employee Promotion Fund (Wiener Arbeitnehmer*innen Förderungsfonds) is responsible for the implementation of the City of Vienna’s labour market policy and is largely financed by funding from the municipality Vienna.
The core task of the WAFF is the provision of information and funding for career development for employees in Vienna. The WAFF offers free counselling and career guidance services, as well as funding for education and training to supplement the policy instruments available at national level. While the core focus of the WAFF is on employees, it also offers services for jobseekers (in co‑ordination with the PES Vienna) and for companies, including specific subsidies for education and training in companies. In 2023, the WAFF work programme included services for 25 880 employed individuals, 10 780 jobseekers and 1 224 companies, with a total budget of EUR 128.8 million.
As a result of the complex governance framework, the funding structure for adult education and training is highly heterogeneous. The Act on the Promotion of Adult Education establishes a commitment by the state to provide funding for adult education and training, but does not specify the amount of funding dedicated to this policy area (Gruber and Lenz, 2023[15]). Funding for adult education and training is a combination of many sources, including federal, province and local funding, sponsorship by public bodies, trade unions, chambers, and the European Union (Gruber and Lenz, 2023[15]). Vogtenhuber et al. (2021[18]) estimate that within state‑based funding for continuing education and training, approximately one‑third are provided by provinces, and a further 22% by municipalities. In addition, in the realm of vocational education and training, the PES is a key actor providing funding for training, which is outsourced to education and training institutes (Schneeberger, Petanovitsch and Schlögl, 2008[16]).
The large level of differentiation in the adult education and training landscape is also reflected in the diversity of education and training providers, which include public, non-profit and private actors. Due to the complexity of the landscape and lack of sufficient data, the exact number of training providers in Austria is unknown. Experts estimate that it ranges between 1 800 to 3 800 (Gruber and Lenz, 2023[15]).
Over the past decades, there have been sustained efforts to increase professionalisation and standardisation in the Austrian adult education landscape. This included the introduction of a nation-wide quality label for education and training providers (Ö-Cert) and new funding agreements between the national level and training institutes, measures developed against the background of the Austrian Lifelong Learning Strategy, introduced in 2011 (Gruber and Lenz, 2023[15]). Efforts were also made to co‑ordinate educational counselling offers across the various providers and levels of governance involved through the introduction of the national initiative on educational counselling (Bildungsberatung, see Chapter 2), with the aim of addressing the challenges associated with the multi-level governance system for counselling services (BMBWF, 2024[19]).
The strong regional differentiation observed in the Austrian education and training landscape constitutes an advantage in so far as it enables localised implementation and design of policies according to the specific needs of regions and stakeholders. Looking at training targeted at the labour market, several positive examples of such measures exist. For instance, training networks (Box 3.1) are a way to enable participation in education and training within localised networks. This is facilitated when there is strong buy-in from regional stakeholders.
However, regional heterogeneity makes the offer of training programmes difficult to parse for consumers and could also be associated with inequalities in access to (high-quality) training and educational counselling offers. Relatively little data and evaluation on such regional disparities exists to date. However, some nationally co‑ordinated programmes, such as educational counselling, exhibit strong variation in take‑up across provinces (Gugitscher and Lachmayr, 2023[20]). Research also suggests that for some national programmes administered by the PES, such as the skilled worker scholarship, interpretation of the regulations differs across provinces, and that administration could benefit from greater standardisation (Danzer, Lechner and Riesenfelder, 2020[11]). The evaluation of the qualification support for employees shows that there is substantial variation in the effects on workers across provinces (Putz et al., 2023[4]).
The PES is a key actor in education and training for the labour market
The PES is the key actor in the Austrian policy landscape in the financing and administration of education and training for the acquisition of labour market competences and, ultimately, facilitating job mobility. As set out in the Act on the Labour Market Service (Arbeitsmarktservicegesetz), the PES can finance qualification measures to enable sustainable and long-term employment. The Federal Ministry of Labour and Economy (BMAW) sets out the labour market policy goals to be implemented by the PES. While placement of jobseekers – and associated qualification measures – are defined as the primary responsibility of the PES, the financing of qualification measures for the employed also falls within the realm of PES work, with the aim of supporting employment in the long-term (BMAW, 2023[21]). In recent years, the PES has increasingly taken up the role of financing training for employed individuals, through some of the measures described in section 3.1. However, the primary focus of the PES remains on jobseekers (and employers). Where training for employees is supported, this is largely framed under the aim of preventing unemployment, rather than enabling transitions into better-quality jobs. In 2022, 377 039 new support measures (including training but also employment support) were registered for jobseekers, adding up to an expense of EUR 2.257 billion, compared to 54 203 employed individuals (EUR 646 million) (AMS, 2023[22]).
Data on the distribution of funding for non-formal adult education and training in Austria over time underlines the key role of the PES (Vogtenhuber, Juen and Lassnigg, 2021[18]). The PES funds a substantial share of education and training measures for adults, which is larger than state funding (including both the federal and provincial level). However, the share of the cost of education and training funded by the PES is decreasing over time, constituting 26.9% of overall funding in 2009 and 21.4% in 2018 when including direct and indirect cost. The amount of funding for adult education and training increased between 2009 and 2018, but these increases are largely carried by greater spending of private households on education and training, rather than greater public (state or PES) investment.
Annual amount and share of funding for adult education and training, 2009 and 2018
PES: Public Employment Service.
Note: Data shown in millions of euros at 2018 prices. Indirect cost includes unemployment benefits and other payments for people in qualification (PES), cost of training during working hours (companies) and lost opportunity cost of education and training during free time (private households).
Source: OECD calculations based on Vogtenhuber et al. (2021[18]), Finanzierung von Erwachsenen-und Weiterbildung in Österreich und in ausgewählten Vergleichsländern.
The significance of the PES for funding adult education and training also stands out in international comparison.3 In comparison to four other OECD countries, the share of funding for adult education and training accounted for by active labour market policy spending – of which the PES is the key provider – is by far the largest in Austria (28%, Figure 3.6). This is reflected in data on education and training, which shows significantly higher training intensity (as measured by hours in training) for unemployed individuals participating in training, consistent with PES measures predominantly focusing on this group (Lassnigg, Juen and Vogtenhuber, 2024[23]). Austria exhibits strong educational and age gradients in training intensity. The large share of active labour market policy in adult education and training can be seen as a counterbalance to these disparities, by privileging disadvantaged labour market groups such as the unemployed (Ibid.). At the same time, there is a lower share of groups relying on stronger financial support – such as the low-skilled and older workers – within education and training measures for the employed. This in turn can be linked to the fact that employed individuals are more likely to bear a higher share of training cost themselves.
Share of funding for adult education and training, 2018
Note: ALMP: Active labour market policies.
Source: Vogtenhuber et al. (2021[18]), Finanzierung von Erwachsenen-und Weiterbildung in Österreich und in ausgewählten Vergleichsländern.
The role of adult education and training within the broader education system
A comprehensive strategy for adult education and training also needs to consider how continuing education and training interacts with and is situated in the broader national education system. Two elements are of importance here. The first concerns the interlinkages between different sectors of the education system, which remains strongly segmented into individual segments – school, university, and adult education – which are in competition with each other (Gruber and Lenz, 2023[15]). The increasing prominence of lifelong learning at EU level as well as the Bologna process prompted a reflection on the relationship between initial (tertiary) education and continuing education within universities, opening up the possibility of a weakening of the traditional distinction between the two (Holzer and Jütte, 2007[24]). Universities, particularly applied science universities, have increasingly opened themselves up to becoming more involved in continuing education and offer targeted programmes for “non-standard” students e.g. individuals with work experience and those wanting to return to university (Gruber and Lenz, 2023[15]). One notable example is the University for Continuing Education in Krems, which focuses exclusively on continuing education (Box 3.4).
The University for Continuing Education in Krems (Universität für Weiterbildung Krems) is an Austrian higher education institution specialised in continuing education. The university was founded in 1995 and remains the only continuing education university in the German-speaking world. It offers tertiary degrees at graduate and postgraduate level, which can be undertaken alongside work, as well as shorter continuing education courses, The latter can be combined into a tertiary degree over time.
In 2023/24, about 8 000 students were registered at this university for continuing education, with an average age of 39. The majority of students have substantial work experience before commencing their studies, with only 20% having less than five years of work experience, and 36% more than 15.
In 2018/19, 6% of all students at Austrian universities (ca. 30 000) were undertaking a continuing education course (Kulhanek et al., 2019[25]). These participants were 37 years old on average, with 13% of participants aged 50 or older (Ibid.). This underscores the potential relevance of continuing education and training at universities for mid-career workers. However, there remains considerable room for further institutionalisation of continuing education as a third pillar next to research and teaching within Austrian universities, and ultimately overcoming the strict segregation between continuing education and other parts of the educational system (Gruber and Lenz, 2023[15]).
A second element of importance is funding for continuing education and training. In contrast to other parts of the educational system, federal funding for adult education is limited and based on support for specific projects, with no specific legal commitment to or responsibility for funding adult education at federal level (Gruber and Lenz, 2023[15]). If adult education is to be established more strongly within the educational system, this requires more substantial and long-term (i.e. non-project-based) funding, including at federal level, anchored in the national legal framework. Data on funding for adult education is difficult to procure given the complexity of the funding landscape. Vogtenhuber et al. (2021[18]) find that overall state funding (federal and provincial) for adult education amounted to EUR 276 million in 2018, which compares to overall educational spending of ca. EUR 22.5 billion (Statistik Austria, 2024[26]). At federal level, adult education (under the category lifelong learning) accounts for 0.4% of the overall education budget for 2024 (BMF, 2024[27]).
Moving towards greater transparency, co‑ordination and effectiveness in adult education and training
The Austrian adult education landscape consists of a large and diverse set of offers for education and training. These offers provide many opportunities for individuals to engage in up- and re‑skilling opportunities that could ultimately lead to mobility into high-quality, sustainable employment. This is reflected in the high overall rate of participation in education and training in Austria. At the same time, the institutional landscape is hampered by a large degree of heterogeneity. From a consumer perspective, this can make the landscape of education and training offers difficult to parse. This can be a problem especially for older workers who are already less likely to participate in continuing education and training, and for whom a lack of information about training opportunities constitutes a significant barrier to participation (OECD, 2023[10]). As such, efforts to make information about education and training more accessible should be intensified. For instance, Germany, a country characterised by a similarly differentiated and federalised education and training landscape, recently introduced a national online portal as a one‑stop shop with access to information about continuing education and training for individuals, companies and continuing education providers (Box 3.5).
In January 2024, the German Federal Employment Agency (Bundesagentur für Arbeit) launched the Mein-Now (“My Now”) portal, an online platform collecting information on continuing education and training opportunities. The portal is a joint effort by the German Ministry of Labour and Social Affairs (BMAS) and the German Länder and includes information on national and province‑specific services.
My Now is targeted at both individuals and companies. For individuals, it offers five services: (i) information on the development of jobs and sectors (ii) tests for career orientation (iii) a search function for continuing education and training opportunities (iv) information on funding support (v) information on counselling services. Companies can access information about their sector and tools for (self-assessment), search for education and training or company counselling offers, and access information about financial support. At the time of writing, the portal relies on data collected in the education and training portal of the Federal Employment Agency, but the product is still in development, with the aim to add further functions and integrate data from other partners in the future.
In addition to improved access to information for individuals, policymakers should explore further avenues for standardisation, co‑operation between the national level and the provinces and simplification of the offer of training programmes, building on the laudable efforts for improved co‑ordination and professionalisation of recent years. While some efforts for co‑ordination across provinces exist, these should be further intensified to facilitate knowledge exchange and improve programme delivery across provinces. To identify areas for action, data collection and monitoring within the adult education space should be improved. This includes better monitoring of training participants, education providers, and funding structures across the country, but also evaluations into potential regional disparities in programme take‑up and effects and their driving factors. Examples from other countries demonstrate measures that could be implemented to improve co‑ordination and monitoring across provinces (Box 3.6).
Reforming the education and training landscape also requires consideration of the role of the PES. While the PES has become increasingly involved in qualification measures for the employed population, its primary clientele, for the moment, remain the unemployed. Its role with respect to the employed population is not clearly defined. In view of the scale of labour market shifts and the need for substantial up- and re‑skilling across the (working) population, continuing education and training should be institutionalised as one of the core areas of responsibility for the PES, alongside job placement. The PES has considerable advantages in taking on this role compared to other institutional actors, given its substantial expertise in labour market policy implementation but also its regionalised structure, which enables co‑ordination at various levels of governance and increases the reach of the agency. The PES could function as a first point of contact for all employees seeking opportunities for up- and re‑skilling, as the interface with further education providers. Turning the PES into a “continuing education agency” with responsibility for training of workers in this way would require a potential revision of its legal mandate. Moreover, it necessitates increased funding for the PES and a potential reflection on additional funding streams.4
Various practices can improve the governance of policy across stakeholders and levels of governance. Central co‑ordination bodies which involve all stakeholders are one means of improving the governance of adult education policy. They can establish policy priorities, define financial incentives and increase policy effectiveness through collaboration among partners (OECD, 2023[28]). A successful example is the Estonian Adult Education Council (Ibid.) The council has an advisory function, its legal mandate being to offer strategic advice, monitor policy implementation and evaluate adult learning policy. It consists of representatives of a broad range of stakeholders, including representatives of relevant ministries, education institutions, training providers, trade unions and employer organisations, among others.
In addition, systematic monitoring and benchmarking plays a key role. For instance, in Denmark, the National Labour Market Authority has implemented systems for monitoring of municipal job centres, which are responsible for the implementation of labour market policy (OECD, 2013[29]). Monitoring consists of various elements. A benchmarking tool is used to monitor the use of programmes for different clients. Data is available on a public website (Jobindsats) and can be used to compare the performance of local job centres or regions against each other. The Regional Labour Market Authority (RLMA) has annual meetings with each job centre to assess successes and failures and spread good practices. It uses both formal tools, including a dialogue based on the national targets set by the ministry, a strategy plan and a revision of results, and informal tools such as frequent dialogue on specific projects. Transparency and dialogue about outcomes are seen as effective ways to achieve progress across different local areas. In addition to its role in benchmarking, the RLMA also facilitates the dissemination and sharing of good practices. There is increasing focus on evidence‑based evaluation using methods such as randomised control trials.
Finally, structural framework conditions should be improved to strengthen the adult education system. First, in order to establish adult education as an equal pillar of the education system, co‑ordination with schools and universities should be increased. In particular, universities should further open themselves up as providers of continuing education and training. Second, federal funding for adult education should be increased and anchored within an updated legal framework for adult education, to enable more strategic and long-term planning, professionalisation, and expansion of the sector.
Structural labour market conditions can be an important facilitating factor or barrier for (mid-career) mobility. Within the Austrian context, two factors play an important role. First, the Austrian system has a strong focus on formal qualifications and “lifetime occupations”, which can lead to pre‑determined career paths and inhibit mobility. Second, while seniority pay has been weakened in recent years, it continues to play a role in collective agreements. This can inhibit employers from recruiting or retaining older workers.
3.2.1. Moving towards emphasising competences, not only formal qualifications
The Austrian educational and labour market system is characterised by the strong dominance of formal qualifications acquired during initial education (Mayerl and Schlögl, 2015[30]). This is a result of the dual vocational education system, which combines learning in school and at the workplace (Vogtenhuber, 2014[31]). Due to the importance of initial formal training, the role of continuing education is mainly regarded as updating and extending existing competences (Mayerl and Schlögl, 2015[30]).
The dual system has several significant benefits, such as the facilitation of the transition from education to work, which is a result of employers being strongly involved in training and valuing apprenticeships as generally valid credentials (Vogtenhuber, 2014[31]; König and Müller, 1986[32]). However, the highly standardised educational system also implies that individuals choose their occupations early and job sequences are pre‑defined according to occupational career ladders. As a result, mobility, particularly across occupations, is relatively limited and labour markets are stratified by educational achievement (König and Müller, 1986[32]; Fritsch, Liedl and Paulinger, 2020[33]). To improve the prospects of all workers over the course of their labour market career, particularly of workers with lower levels of qualifications, it is important to recognise acquired skills of workers beyond their (initial) level of qualification and move away from the concept of a single “lifetime occupation”.
Establishing systems for recognising the skills of workers across all ages
Systems for recognition of prior learning (RPL) can be used to validate the knowledge and skills adults have acquired beyond formal education – on or off the job. They can also enable them to take part in shorter VET programmes or even obtain full qualifications without undertaking additional training (OECD, 2023[34]). By making skills more visible, RPL can contribute to enhancing the employability of individuals and improve matches between jobs and skills (OECD, 2023[35]). For older workers with substantial job experience, skills validation could play a particularly important role in signalling their knowledge to employers and improving prospects for career mobility.
Validation has traditionally played a minor role in Austria, a result of the significance of formal qualifications in the educational and labour market system and the importance of the dual vocational training system for acquiring qualifications (OECD, 2021[36]; Schmid, 2023[37]). While a number of skills validation programmes are run by a variety of actors, such as trade unions and the PES (Schmid, 2023[37]), central governance structures or legal frameworks for validation do not exist (Luomi-Messerer, 2019[38]). However, steps towards adopting a more co‑ordinated approach towards validation have been taken in recent years. In 2017, the Austrian Strategy on Validation of Non-formal and Informal Learning was launched, as part of the broader Austrian Lifelong Learning Strategy. The strategy seeks to improve co‑ordination, governance and quality assurance of the various skills validation initiatives and approaches present at various institutional and regional levels in Austria.
The Austrian validation strategy represents a step forward in the governance of validation systems in Austria, as it provides a space for strategic co‑ordination of all key stakeholders on validation policy and has strengthened awareness of issues surrounding the topic (Luomi-Messerer, 2019[38]). However, substantial challenges remain, particularly the fact that a legal framework for validation, including an individual right to validation, still does not exist (Ibid.). In comparison, a number of OECD countries have more developed legal frameworks on validation (Box 3.7).
A number of OECD countries have developed comprehensive approaches to validation, which are regulated in law (OECD, 2021[36]). For instance, France, building on the legal framework for vocational training and labour market policy, created a validation system (Validation de l’acquis de l’experience) in 2002, which identifies validation as an individual right. The validation process can lead to either full or partial qualifications based on the competences individuals have acquired in different contexts. Similarly, Denmark established a legal right to validation in the context of adult education and CET programmes in 2007 (Act on Change of Different Laws within the Area of the Ministry of Education). Education providers who offer training programmes are responsible for validation. In the Netherlands, a system for validation of non-formal and informal learning has existed since 1998.
Countries with strong dual vocational systems like Austria tend to have less developed legal frameworks in the area of skills validation. However, Germany, a country with a similarly strong dual vocational training tradition, introduced an individual right to validation, focusing on apprenticeships within the dual vocational system, very recently. The Act on Validation and Digitalisation of Vocational Education (Berufsbildungsvalidierungs- und Digitalisierungsgesetz), adopted in July 2024, introduces a right to validation for individuals without a vocational qualification. Eligibility requirements include a minimum age of 25 and having job experience corresponding to at least 1.5 times the duration of an apprenticeship in the corresponding vocation.
Making job matches based on competences
Placing greater emphasis on skills can also facilitate career mobility through positive effects on job matching. Job matching based on skills can connect workers with jobs that better suit their abilities and previous experience and enable firms to recruit individuals with the competences needed to fulfil certain roles. In recent years, public employment services across countries have placed increasing emphasis on incorporating information on skills and competences into job intermediation services, frequently with the help of digital tools (International Labour Organization, 2023[39]). Skills-based matching enables the PES to match jobseekers to vacancies more flexibly and accurately, and to find affinities between different professions which may require similar competences (Ibid.). This could be beneficial for older workers in particular, as they are likely to have accumulated considerable skills and competences throughout their (working) life, which may not be easily recognisable if matching is only based on formal qualifications.
In line with these international trends, the PES has invested in skills-based intermediation services in Austria. In 2023, a new program, skills matching (Kompetenzmatching) was introduced. While jobseekers were traditionally matched to vacancies solely based on job titles, competences are used under the new system. Jobseekers can be matched to vacancies whose job title they do not formally match, as matching is done 80% on the basis of skills and 20% on the basis of job titles. PES staff identifies jobseekers’ competences during a conversation at the start of the matching process. Matching is done with the assistance of the job information system (Berufsinformationssystem), a tool developed by the PES describing ca. 25 000 skills associated with ca. 17 500 jobs. While the previous matching system only indicated jobs that exactly matched jobseekers’ attributes, under the new system, the degree of matching and potentially missing skills are indicated. Skills matching is also incorporated into PES services for companies, who are now asked to indicate the competences that future staff should have, rather than only the job title.
By introducing skills matching, the PES seeks to provide more and better matches for jobseekers and companies, to provide more opportunities for workers without formal qualifications and to help jobseekers identify areas of interest and potential for development. Implementation is still in the early stages; as of June 2024, ca. 35% of profiles of job seekers across Austria had been changed to incorporate competences. However, initial feedback has been positive and there are examples of job matches that would not have been possible under the previous, more rigid job intermediation system.
Moving away from own-occupation assessment to enable mobility and rehabilitation
The focus of the Austrian system on formal qualifications and lifetime occupations is also evident when looking at the question of rehabilitation after illness. In assessing eligibility for a disability pension (cf. Chapter 2), Austria establishes strict own-occupation assessment (Berufsschutz) based on individuals’ occupational status for some groups of workers. According to Austrian labour law, skilled workers (those who were predominantly working in a job for which they had acquired a vocational qualification or work in specific occupations),5 are entitled to own-occupation assessment when they apply for a disability pension. This means that when assessing whether an individual qualifies for retraining, only jobs in the same occupational group (or an equivalent one) as their previous job can be considered. Invalidity is then defined as work ability being reduced to less than half that of a healthy person within this occupation. In contrast, individuals who have not worked in one of these protected occupations – who, generally speaking, tend to be low-skilled workers – are not entitled to the same protections and can be referred to any job. The only restriction is that they cannot be referred to new employment where they would earn less than half of their previous income. From age 60, these distinctions no longer apply, as both groups of workers are assessed against their previous employment, provided workers in unprotected occupations have undertaken a similar activity for at least 120 of the past 180 calendar months.
Own-occupation assessment creates disincentives for job mobility and reinforces the “lifetime occupation mindset” by reasserting that (certain) workers are entitled to staying in their chosen occupation throughout their working life. The regulation reduces flexibility and adaptability to individual circumstances in facilitating rehabilitation after illness. It also reinforces labour market divides, as it fundamentally disadvantages manual and lower-skilled workers, whose work ability has to de facto be much lower than that of skilled workers to be entitled to a disability pension (Arnold et al., 2022[40]; OECD, 2015[41]).
Across OECD countries, the practice of own-occupation assessment for disability benefits has largely been abolished or significantly curtailed (OECD, 2010[42]). For instance, in Germany, the practice was already abolished in 2001 (for individuals born after 1960) as part of a major disability policy reform (OECD, 2003[43]). Austria should follow the example of other OECD countries and aim at abolishing own-occupation assessment in the long-term. As an intermediate step, establishing systems granting partial disability benefit if workers are able to work in occupations other than their own, following the example of Spain, could be considered (Box 3.8).
In Spain, there is a distinction between permanent incapacity to carry out one’s current profession (incapacidad permanente total para la prófesion habitual) and absolute permanent incapacity to work (incapacidad permanente absoluta). While the latter attests total incapacity for any type of employment, the former recognises the incapacity to carry out work in one’s previous occupation, but the capacity to work in another profession.
In the case of incapacity to carry out one’s current profession, individuals are entitled to 55% of the full pension benefit (which can be increased to 75% at age 55 if individuals are not active in the labour market). At the same time, they can still work in another profession which is compatible with their (physical or mental) illness, in either a full-time or part-time job.
3.2.2. Adjusting age‑wage structures to strengthen incentives for recruiting and retaining older workers
Seniority-based entitlements – wages and other benefits associated with an employee’s length of tenure in a company or sector – remain prominent in many OECD countries, including in Austria (OECD, 2024[1]). Seniority-based wages structures typically involve firms paying younger employees comparatively low wages at the point of entry into the firm, which are compensated by higher wages as their career progresses, so-called deferred compensation (Zwick, 2012[44]). These systems are anchored in collective bargaining agreements in a number of countries, including Austria.
Against the background of demographic change and increasing labour mobility, seniority-based wage arrangements make decreasing economic sense and can hamper the labour market prospects of older workers, particularly with respect to job mobility (D’Addio, Keese and Whitehouse, 2010[45]). If hiring older workers is comparatively more costly for firms due to seniority-based wages, which may not always be in line with actual productivity, this disincentivises the recruitment of older workers (Eurofound, 2019[46]). Empirically, stronger seniority wages correlate negatively with employment and hiring rates of older workers across OECD countries (D’Addio, Keese and Whitehouse, 2010[45]).
Conversely, while disincentivising recruitment of older workers, seniority wages tend to benefit those who are already employed, as they are associated with higher average within-firm tenure (Zwick, 2012[44]). In this sense, the system can also enhance labour market segmentation by strengthening divides between labour market insiders and outsiders (OECD, 2005[47]). However, seniority wages can nevertheless lead to earlier labour market exit of older workers. Frimmel et al. (2018[48]) find that in Austria, steeper seniority wage profiles cause earlier job exit of elderly workers and an increase in voluntary “golden handshakes”, which leads them to conclude that firms act to facilitate early exit of older workers within a context of steep seniority wages. In addition, from a job mobility perspective, negative effects are associated with seniority wages for employed workers, since mobility is disincentivised by the within-firm wage structure (Eurofound, 2019[46]).
Within the Austrian context, collective bargaining agreements frequently establish wage increases for workers based on the number of years they have worked in either a specific company or a sector. While a complete overview of the extent of seniority-based wages is difficult to obtain, a relatively recent study shows that there are strong differences in provisions on seniority pay across sectors and groups of workers (Müllbacher et al., 2015[49]). Looking at 30 private sector collective bargaining agreements, they establish that seniority wages, generally speaking, are common in higher-skilled, white‑collar occupations such as banking. In contrast, they play a very limited role, if any, in manual or blue‑collar occupations, such as in construction, sales or production. Seniority-based wages also tend to go alongside other additional entitlements.
In recent years, collective bargaining negotiations have increasingly moved away from seniority-based wage increases, and in some sectors, age‑wage profiles have flattened significantly (Müllbacher et al., 2015[49]). However, in international comparison, the extent of seniority-based wages and other entitlements is still relatively pronounced in Austria. A recent study finds that Austria ranks among the upper mid-field amongst EU countries with regard to the prevalence of a broad range of seniority-based entitlements (Eurofound, 2019[50]). Looking at the actual wage structure, OECD analysis also establishes that seniority wages in Austria are relatively high (Figure 3.7). Moving from 10 to 20 years of job tenure is associated with a wage growth of 6.9% for individuals aged 50‑60, which is slightly higher than the weighted average of 28 OECD countries (5.9%).
Predicted wage growth moving from 10 to 20 years of job tenure for individuals aged 50‑60, 2011/12 or 2014/15
Note: Estimates were obtained from a cross-section regression of wages on tenure, squared tenure and controls for gender, experience, years of education, literacy and numeracy skills, occupation, skills use at work and educational status of the parent. The purple bar is a weighted average of the 28 countries shown. Data for the United Kingdom refer to England and Northern Ireland and Belgium to Flanders.
Source: OECD (2018[51]), Working Better with Age: Japan, https://doi.org/10.1787/9789264201996-en, Figure 2.2.
Overall, seniority wages may present an advantage for the workers who are entitled to them, but disincentivise job mobility and recruitment of older workers and promote early retirement. Establishing age‑neutral wage‑setting practices that are more closely linked to actual productivity, including through adjustments of collective bargaining agreements, is advisable from this perspective. Public authorities can support this process by leading by example in public-sector wage‑setting (OECD, 2019[52]).
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← 1. Calculation based on Eurostat indicator “employment by sex, age and professional status (1 000) [lfsa_egaps.]
← 2. For 2025, these are up- and re‑skilling, digitalisation and digital competences, development of democracy and science, participation and inclusion, and sustainability.
← 3. Figure 3.5 and Figure 3.6 are not directly comparable as they rely on partially different data sources.
← 4. Currently, the primary source of PES funding are unemployment insurance contributions. This is supplemented by various other sources such as an employer contribution when ending an employment relationship, and ad hoc budgetary support (Bock-Schappelwein et al., 2014[17]).
← 5. Austrian labour law distinguishes between two statuses that can be part of an employment relationship, Angestellte (white collar workers) and Arbeiter (blue collar workers). The former are defined as individuals working in trades, other higher services, or in office jobs, while other occupations, which can be largely categorised as manual jobs, are part of the Arbeiter category. Angestellte are entitled to more extensive legal protections than Arbeiter.