This chapter discusses the role of transitions into and out of part-time work in facilitating career mobility into higher-quality employment in Austria. The chapter first examines gender differences in part-time work in Austria. It highlights several barriers to increasing women’s hours spent in employment, such as the unequal division of paid and unpaid labour, the lack of infrastructure for care services and limited working time flexibility. The chapter then looks at part-time work as a potential means of prolonging working lives towards the end of the career. Finally, the chapter discusses part-time work in the context of facilitating return to work after sickness absence and the labour market participation of workers with (chronic) illnesses.
Promoting Better Career Mobility for Longer Working Lives in Austria
Abstract
Key messages
Austria has one of the highest rates of part-time work in the OECD. Moreover, gender inequality in part-time work is pronounced, with 50% of women and 12% of men working part-time in 2023. While part-time work can enable labour market participation for individuals with family or health constraints, it is often associated with wage or other disadvantages relative to full-time work. Policy should enable mobility out of low-quality part-time work, particularly where it is driven by structural constraints.
Gender inequalities in the take‑up of part-time work are related to the gendered division of paid and unpaid labour. In Austria, female part-timework is widely established among women with children and often persists across the life course, even as children age. The move into part-time work after childbirth is often associated with occupational downgrading and wage losses. At the same time, women, particularly those with children, spend substantially more time on unpaid household and caring work than men. As a result of their lower labour market participation throughout the life course, women face substantial financial disadvantages. The Austrian gender pension gap is the third largest in the OECD.
Care obligations are an important constraint to improved female labour market outcomes. Enrolment rates in early childhood education and care (ECEC) are low in international comparison, particularly for children under age three. While Austria has acted in recent years to expand ECEC services, public expenditure remains below the OECD average. In addition, care for adult dependents plays a significant role. The share of individuals above age 50 providing informal care to someone at least weekly in Austria is the second highest in the OECD.
The availability of flexible work schedules and high-quality part-time jobs is limited. Cultural norms on the gendered division of labour and a male full-time norm are deeply rooted in Austria, and full-time working hours are among the highest in Europe. In 2023, full-time workers worked 41.7 hours on average (EU27: 40.4 hours). A system where part-time work entails longer hours and higher-skilled work while curtailing excessive full-time work could enable greater participation overall.
Part-time work can enable labour market participation towards the end of the career, for workers who would otherwise exit the labour market entirely. In Austria, the old age part-time scheme, which subsidises part-time work prior to retirement, has existed since 2000. However, the scheme has little effect on employment overall, while incurring significant costs. It tends to be taken up by high-earning, well-integrated labour market participants, who may have continued working even without subsidies.
Workers with (chronic) health conditions can also benefit from part-time work. In 2017, the reintegration part-time scheme was introduced to support part-time return to work after sick leave for a period of up to nine months. This represents a considerable step forward in enabling flexible work options with the aim of achieving a faster return to work. However, this is not a form of partial sick leave but only a tool to facilitate a return to work. An evaluation of the scheme is currently ongoing.
Based on these considerations, Austria should consider taking action to:
1. Invest in the further development of care services. This includes both early childhood education and care and care services for adults. Key considerations include the availability of services, but also their affordability, quality and investment in qualified staff.
2. Normalise more diverse working-time schedules and greater working-time flexibility. Excessively long full-time hours should be curtailed through restrictions on overtime and abolishing tax advantages for overtime. At the same time, the introduction of a right to request flexible hours or to choose one’s working hours within specific corridors should be considered.
3. Move towards the abolition of subsidised old-age part-time. The phasing out of the blocked variant of subsidised old-age part-time (which is nothing else than subsidised early retirement) is a positive development. However, policymakers should consider gradually phasing out subsidies for the continuous version as well, especially as this system is poorly targeted.
4. Enable greater flexibility in working hours for workers close to retirement. This could involve the introduction of a partial pension scheme, which would enable workers to flexibly draw from their pension while continuing to work. In addition, the introduction of a right to part-time work, without subsidisation, should be considered for workers close to retirement.
5. Carefully evaluate the reintegration part-time scheme and reform it as needed. In the ongoing evaluation, particular attention should be paid to the effects of reintegration part-time on individuals with chronic diseases and mental disorders. These workers will often not be entitled to support from this system, as their work ability remains affected. Moving forward, the introduction of obligations for both employers and employees should be considered to further increase the take‑up of reintegration part-time. A move towards a partial sick leave system covering chronic conditions as well would be a significant step forward. To prevent high costs of such a system, its use could be limited to people on sick leave for a few weeks.
Over the last decades, the prevalence of part-time work has increased significantly in many OECD countries, notably driven by an increasing number of women entering the labour force on part-time contracts. Austria has one of the highest rates of part-time work across OECD countries (Figure 4.1). In line with international trends, the rate of part-time work is much higher for women (50.1%), while only a small share of men works part-time (12.2%). The high prevalence of part-time work should be seen in the context of the design and progressivity of the tax system, which can serve as a deterrent to increasing one’s working hours, particularly for women (Schratzenstaller and Dellinger, 2017[1]).
Share of employed individuals aged 15‑64 working part-time, 2023
Source: OECD calculations based on data from OECD Data Explorer • Full-time and part-time employment based on national definition.
While part-time work can be a way to facilitate labour market participation for workers – chiefly women – with care responsibilities, it is also associated with lower incomes and moves into lower-quality employment. Once women have moved into part-time employment, it often persists throughout their working life, so that material disadvantages accumulate and lead to persistent labour and pension income disadvantages at older ages. Against this background, taking policy action to facilitate mobility of mid-career women into higher-hours and higher-quality employment is of crucial importance.
Changes in the retirement age for women in Austria, which will gradually increase from 60 to 65 between 2024 and 2033, further underline the urgency of addressing gender inequalities in the labour market and facilitating longer labour market participation for women. Older women are already a vulnerable labour market group, and unemployment tends to be high among women close to (the former) retirement age (Mayrhuber and Mairhuber, 2020[2]). The increase in the retirement age further highlights the necessity of developing policy interventions to enable female labour market participation at older ages by enabling mobility into better-quality employment in the mid-career.
4.1.1. Female part-time work is associated with disadvantages which persist across the life course
The rate of female part-time employment in Austria is one of the highest across the OECD, as is the difference between female and male part-time employment (Figure 4.1). Patterns of part-time work in Austria are rooted in its welfare state structures, which are built on a conservative‑corporatist system. Caring duties are traditionally allocated to the family, based on a male breadwinner model where the division of labour relies on women providing unpaid care work in the home (Fritsch, Liedl and Paulinger, 2020[3]; Riederer and Berghammer, 2019[4]). Data on time use in Austria paints a picture of a strongly gendered division of time spent on paid und unpaid work (Figure 4.2). Among adult people without children, men spend approximately one hour more per day on employment-related activities, and more than one hour less on unpaid work (including housework, care for adult household members and volunteering). Among individuals with children, these discrepancies further increase, with men with children spending approximately 2.5 hours more per day on employment-related activities and 2.5 hours less on unpaid labour (Figure 4.2, Panel A). Overall, time spent on childcare decreases with children’s age, but significant gender differences remain (Figure 4.2, Panel B).
Over the last few decades, a move away from a strict male breadwinner model can be observed in Austria, as more couples adopt a model where one partner, usually the male partner, works full-time and the other part-time. The prevalence of this model is confirmed by data on employment patterns (Figure 4.3). Forty percent of couples in Austria are in a one partner full-time, one partner part-time arrangement, the third highest share in the OECD after the Netherlands and Switzerland (Panel A). Strikingly, a recent study comparing different cohorts of women in Austria born between 1940 and 1979 finds that employment rates of mothers have increased in younger cohorts, with return to the workplace concentrated when children are aged 3‑5, but overall working hours have decreased among mothers with children below age 3 and remained stable for those with children aged 3‑5 (Riederer and Berghammer, 2019[4]). In addition, part-time work plays a significant role for single parents, only 45.8% of whom work full-time (OECD average 57.1%), while 28.4% work part-time (Panel B).
Average hours spent on various activities per day by gender, Austria, 2021/22
Note: Unpaid labour includes time spent on housework, childcare, care for adult household members and volunteering. Employment-associated activities include time spent on the primary and second job, time spent preparing for employment (e.g. changing, lunch break), commuting.
Source: OECD calculations based on Statistik Austria (2023[5]), Ergebnisse der Zeitarbeitsverwendungserhebung.
Significantly, transitions into part-time employment are frequently associated with occupational downgrading and a deterioration in status and pay, as mothers take up jobs that are below their qualifications and skills (Fiori and Di Gessa, 2022[6]; Tomlinson, Olsen and Purdam, 2008[7]). International evidence demonstrates that there is a significant occupational status penalty on motherhood, which persists over the long term and appears to be related to mothers’ lower working hours, as well as lower human capital due to career interruptions and fewer accumulated years of work experience (Abendroth, Huffman and Treas, 2014[8]).
Distribution of employment for couples and single parents with at least one child aged 0‑14, 2021 or latest available
FT: full-time; PT: part-time.
Note: Part-time employment is defined as: those who usually work less than 35 hours a week (in all jobs) and either did so during the reference week, or were not at work in the reference week (Australia); based on actual hours worked in the main job during the survey reference week, rather than usual weekly working hours (Chile); usual weekly working hours of less than 35 hours in the main job (Mexico; and actual weekly working hours of less than 35 during the reference week (Israel).
For Australia, Costa Rica, Israel, Mexico, New Zealand and Switzerland data refer to the employment status of the two parents in ‘two parent households’ or ‘couple families’ with at least one child aged 0‑14, rather than to couples themselves. For Costa Rica and Mexico, data cover households where at least one child (aged 0‑14) shares a relationship with the reported ‘head of household’ only. For the United States children aged 0‑17. Data refer to 2020 (New Zealand, Sweden), 2019 (Australia, the United Kingdom), 2017 (Chile) and 2013 (Türkiye).
Source: OECD Family Database indicators LMF2.2 and LMF2.3.
In Austria, part-time work often constitutes a long-term arrangement, which mothers remain in even as their children age (Riederer and Berghammer, 2019[4]). As a result of persistent part-time work throughout their career, women face long-term financial and labour market disadvantages. Women’s reduced labour market participation and working time, as well as lower labour income driven (among other factors) by occupational segregation, ultimately result in substantially lower social security and pension contributions and, thus, benefits over the life course (Mayrhuber, 2017[9]; Mayrhuber and Mairhuber, 2020[2]). Austria has the third-largest gender pension gap in OECD countries, at 40.6% (Figure 4.4). As such early intervention in the mid-career is crucial to facilitate mobility into high-quality jobs and enable longer labour market participation.
Relative difference between men and women aged 65+ (among pension beneficiaries), latest year available
Note: The gender gap in pensions is calculated as the difference between the mean retirement income of men and women (aged 65+) over the mean retirement income of men (aged 65+), among pension beneficiaries. Calculations are based on the Luxembourg Income Study (LIS), except for France, Latvia and Portugal where the HFCS (Wave 3) was used and Iceland, Sweden and Türkiye where results come from the EU-SILC (published on Eurostat’s website). Data come from the latest available survey conducted in: 2013 (Japan, Luxembourg, the Netherlands, Norway, the Slovak Republic); 2014 (Australia); 2015 (Hungary, Slovenia); and after 2015 for all other countries. Data refer to 2017 (Iceland) and 2018 (Türkiye). In Belgium when partner A’s pension rights are less than 25% of those of partner B, the pension of A is not paid out and B receives a family pension (calculated at 75% of wages instead of 60%). OECD is the unweighted average of the 34 countries shown.
Source: OECD (2021[10]), Towards Improved Retirement Savings Outcomes for Women, https://doi.org/10.1787/f7b48808-en, Figure 1.1.
4.1.2. Facilitating career mobility for women in part-time work
Policies to further career mobility of women in Austria need to take a multi-pronged approach, as many intersecting factors influence the extent of female labour market participation and quality of their employment over the life course. These include the development of an improved infrastructure for care services, but also actions to encourage the creation of more high-quality part-time jobs, a move away from a strict full-time norm and a more gender-equal division of paid and unpaid labour.
Care services need to be expanded significantly
One essential piece of the puzzle is improving the care infrastructure, for both children and adults in need of care services. Public funding for high-quality early childhood education and care (ECEC) plays a key role in facilitating female labour force participation, but also participation in high-quality employment. In countries with higher expenditure on public childcare, occupational status penalties on motherhood tend to be lower, presumably because mothers have less need to accept lower-status (and often part-time) jobs to be able to care for their children (Abendroth, Huffman and Treas, 2014[8]). Evidence from Austria shows that the probability of mothers’ labour force participation is significantly related to their children’s preschool attendance (Fessler and Schneebaum, 2019[11]). It also points to a substantial negative elasticity of mothers’ employment to childcare costs (Mahringer and Zulehner, 2013[12]). Significantly, care infrastructure influences female labour market participation across the life course, as grandparents currently play a significant role in childcare provision in Austria, especially in rural areas (Mayrhuber and Mairhuber, 2020[2]).
Enrolment rates in early childhood education and care are low in Austria, particularly in younger age groups (Figure 4.5). In 2021, the enrolment rate in ECEC services for children aged below three was only 20.3%, significantly below both the OECD (35.9%) and EU average (34.2%). The enrolment rate for the age group 3‑5 is substantially higher, at 86.1%, though it remains below the EU average (88.6%) and just below the OECD average (86.4%). Both rates are significantly below the revised Barcelona targets set by the European Union which, by 2030, aim for an enrolment rate of 45% of children below age three and 96% of children between the age of three and the starting age of compulsory primary education. In addition, there is pronounced regional inequality in enrolment rates (Statistik Austria, 2024[13]).
Austria has taken action to expand early childhood education and care over the last decade and increased investments in childcare provision substantially, but public expenditure on ECEC remains lower than the OECD average (OECD, 2024[14]). Further investment in the expansion of childcare services, which are a provincial and local government matter, is needed. This should be targeted at increasing the number of places and extending hours of service provision, but also at increasing the number of qualified personnel and lowering the costs associated with childcare (Mayrhuber and Mairhuber, 2020[2]). Policy action taken by other OECD countries to improve the quantity and quality of early childhood education and care provides examples of potential policy measures to be taken (Box 4.1). Moreover, affordable childcare services include not only early childhood education and care, but also after-school care services, as the majority of compulsory schooling in Austria is provided on a half-day basis (Mayrhuber and Mairhuber, 2020[2]).
Share of children enrolled in early childhood education and care services, latest available year
Note: Panel A: Data generally include children enrolled in early childhood education services (ISCED 2011 level 0) and other registered ECEC services (ECEC services outside the scope of ISCED 0, because they are not in adherence with all ISCED‑2011 criteria). Data refer to: 2018 (Costa Rica, Iceland, the United Kingdom); 2019 (Japan); 2021 (Australia, Austria, Chile, Colombia, Costa Rica, Denmark, Estonia, Finland, Germany, Iceland, Israel, Korea, Lithuania, Mexico, New Zealand, Norway, Slovenia, Spain, Sweden, Switzerland, Türkiye). Data for Belgium, Czechia, France, Greece, Hungary, Ireland, Italy, Latvia, Luxembourg, the Netherlands, Poland, Portugal, the Slovak Republic and the United Kingdom are OECD estimates for 2022 based on information from EU-SILC. For this latter group and Japan, data refer to children using centre‑based services (e.g. nurseries or day care centres and pre‑schools, both public and private), organised family day care, and care services provided by (paid) professional childminders, regardless of whether the service is registered or ISCED-recognised. OECD is an average of the 36 countries shown.
Panel B: Data refer to: 2019 (Belgium, Greece) and 2018 (United States). Data include children enrolled in early childhood education and care (ISCED 2011 level 0) and primary education (ISCED 2011 Level 1). For Greece, data include only part of the children enrolled in Early childhood development programmes (ISCED 01). OECD is an average of the 37 countries shown.
Potential mismatches between the enrolment data and the coverage of the population data (in terms of geographic coverage and/or the reference dates used) may affect enrolment rates. For details on the ISCED 2011 level 0 criteria and how services are mapped and classified, see OECD (2023), Education at a Glance 2023: OECD Indicators, https://doi.org/10.1787/e13bef63-en, Indicator B2.
Source: OECD Family Database indicator PF3.2.
In recent decades, many OECD countries have expanded their efforts to improve the quantity and quality of early childhood education and care services. These efforts have included increased subsidies for investment in the ECEC system or expansion of the right to preschool education for young children. Entitlements to ECEC services can significantly influence enrolment rates. A number of OECD countries have introduced a universal entitlement to ECEC from age 1, including, Germany, Latvia, Norway and Sweden. In some countries, entitlements even exist from age 0. For instance, in Korea, the country with the highest enrolment rate for children under age 2, children have a universal entitlement to early childhood educational development programmes within their first year and are entitled to some free care from birth.
Countries have also taken measures to improve the affordability of ECEC, particularly for low-income households, for instance through increased subsidies, childcare allowances or vouchers. Some countries have significantly limited costs. For example, in Estonia, childcare fees are limited to 20% of the monthly minimum wage, while in Norway, they are capped at 6% of gross household income and a right to 20 hours of free childcare for low-earning parents has been introduced.
Furthermore, policy measures have targeted the quality of ECEC services by tackling issues such as child-staff ratios shortages of qualified personnel and relatedly, poor working conditions in ECEC. Denmark and Norway have introduced minimum requirements for child-staff ratios in ECEC. Other policy measures include the introduction of vocational standards or obligations for further education of carers (Czechia), funds for staff education (Denmark), automation of administration (Hungary, Italy, Korea) and service reorganisation to better respond to needs (Korea).
Source: Adapted from OECD (2023[15]), Joining Forces for Gender Equality: What is Holding us Back?, https://doi.org/10.1787/67d48024-en; and OECD (2023[16]), Education at a Glance 2023: OECD Indicators, https://doi.org/10.1787/e13bef63-en.
In addition to early childhood education and care, it is also essential to improve the provision of care services for adults. The need to provide informal care for a family member or other dependent can constitute a significant impediment for the ability of women to increase their working hours or work at all in the mid- or late career. Among people aged 50 and over, 23% of individuals were providing informal care to someone at least weekly in 2019 in Austria (OECD, 2023[17]). This is the second-highest share across OECD countries, where the average of people reporting informal care at least weekly was 13%. Conversely, the share of formal long-term care workers is relatively low (Figure 4.6). In 2021, there were 4.1 long-term care workers per 100 people aged 65 and over, significantly below the OECD average (5.7). To enable labour force participation of mid-career and older workers, especially women, the long-term care infrastructure therefore needs to be strengthened. As in the case of childcare, accessibility but also affordability and quality of services are key issues (Mayrhuber and Mairhuber, 2020[2]).
Long-term care workers per 100 people aged 65 and over, 2011 and 2021 (or nearest year)
Note: The purple markers refer to the average of the 22 countries shown with data for both years.
Source: OECD (2023[17]), Health at a Glance 2023: OECD Indicators, https://doi.org/10.1787/7a7afb35-en, Figure 10.12.
Moving towards greater working time flexibility and an equal division of paid and unpaid labour
Supply side factors to incentivise women to increase their working hours, such as greater availability of care services, are significant, but only one side of the equation. Much of the labour market disadvantage associated with part-time work relates to the fact that it often entails a move into a low-status, low-waged occupations, with relatively short working hours. To achieve transitions of women into higher-quality employment, high-quality jobs need to be available in the first place. This in turn requires a move away from gendered working time norms and towards greater flexibility.
In Austria, the division of time spent on paid and unpaid labour is fundamentally shaped by the conservative‑corporatist welfare state and the underlying norms related to female caregiving and the male breadwinner model (Fritsch, Liedl and Paulinger, 2020[3]). For men, a full-time working norm is prevalent and high time availability is typically expected (Riederer and Berghammer, 2019[4]). Average full-time hours in Austria are among the highest in Europe (Figure 4.7). In 2023, full-time workers worked 41.7 hours on average (EU27 40.4 hours), while part-time workers worked 22.3 hours (EU27 22 hours).
To improve female labour market outcomes and move towards equalising working time between men and women, a normalisation of different working time schedules beyond the (low) part-time/full-time binary needs to be encouraged. Greater flexibility in working time would enable the creation of more high-quality part-time jobs and a more gender-equal division of paid and unpaid labour in the household.
On the one hand, excessively long working hours should be curtailed to encourage a move away from the norm of (male) full-time employment. Exceptionally long working hours could be disincentivised through several measures, including restrictions to overtime and the abolition of tax advantages for overtime (Mayrhuber and Mairhuber, 2020[2]). This would encourage increased sharing of working hours within couples.
Average number of usual weekly hours of work in main job, employed persons aged 15‑64, 2023
Source: Eurostat dataset Average number of usual weekly hours of work in main job, by sex, age, professional status, full-time/part-time and economic activities (from 2008 onwards, NACE Rev. 2) (accessed 04 October 2024).
On the other hand, action should be taken to encourage the creation of longer-hours part-time jobs of high quality. Moving to a system where part-time work entails relatively longer hours, is higher-skilled and less marginalised on the labour market, while simultaneously curtailing excessively long hours for full-time workers, could enable greater participation (Tomlinson, Olsen and Purdam, 2008[7]). One option forward is the introduction of a right to choosing one’s working hours within a certain corridor, with the aim of normalising more flexible working hours across the working population (Huemer et al., 2017[18]). Another option is the introduction of a right to request flexible work, which has recently been done in the United Kingdom (Box 4.2).
Since April 2024, all employees in the United Kingdom have the right to request flexible work from their first day in a job. This includes changes to their working hours, their start or finish time, the days they work and their place of work. To make a request, employees have to make a statutory application by writing to their employer.
The employer is required to make a decision on the request within two months. Employers have to deal with requests in a “reasonable manner” and are required to discuss applications with employees before refusing any request. They can refuse an application provided there is a good business reason to do so. The employee may be able to complain in an employment tribunal.
Norms on the gendered division of labour and female caregiving remain deeply rooted in Austria, despite increasing political and societal efforts towards more equal participation in recent years. Even in couples where women earn a greater share of household income or spend more time on paid employment than their partner, they currently undertake a greater share of childcare (Statistik Austria, 2023[5]). Research has shown that women themselves rarely question the unequal division of unpaid labour, as they do not conceive of changes as feasible (Mayrhuber and Mairhuber, 2020[2]). Cultural norms also manifest in the devaluation of typically female occupations, which can result in them being lower-paid (Hijzen, 2023[19]).
Greater diversity and flexibility in working time is only one element of policies that can contribute to greater equality in participation. For instance, while the parental leave system has been reformed several times, incentives for fathers to take up leave could be increased further, for example through increased non-transferable entitlements or “bonus weeks” ( (Fluchtmann, 2023[20]). Consideration may also be given to the design of tax incentives for full-time and part-time work (Huemer et al., 2017[18]). Finally, active labour market policy can play a role in enabling transitions into higher-quality jobs and ultimately changing perceptions around mid-career employment for women. The debate around the Austrian educational leave scheme, which has seen high take‑up by mothers to prolong their parental leave, illustrates how insufficient childcare provision and policy measures to alleviate the burden of unpaid care work for mothers can lead to unintended consequences in other policy areas (for a detailed discussion, see Chapter 3). However, if educational leave were used by mothers to undertake labour market relevant training, it could contribute to enabling transitions back into high-quality employment after parental leave.
Part-time work can be an attractive option for workers at the end of their career and may prolong labour market participation in some cases. Reductions in working hours could motivate individuals to work longer than they were planning to and enable participation for groups who face specific barriers, such as health issues, care responsibilities, or physically or mentally demanding jobs (Eurofound, 2016[21]). Research has shown that workers in sectors or occupations where flexible work patterns are more common are more likely to remain in employment in the preretirement period (Albinowski, 2024[22]). With the aim of prolonging working lives, many OECD countries have introduced schemes for flexible or phased retirement. However, these schemes have to be designed carefully.
In Austria, an option to work part-time from up to five years before retirement age (Altersteilzeit or old age part-time) has existed since 2000, on the condition of employer agreement. Employees can reduce their working time by between 40% and 60% while receiving wage compensation of 50% of the lost income, as well as continuing full social security contributions based on their previous income, from their employer. There are two variants of subsidised old age part-time, a continuous and a block version. While the continuous option involves continuous part-time work for up to five years, the block version involves a first period of full-time work, up to 2.5 years, followed by a period of not working (again, up to 2.5 years). Public subsidies for old age part-time, which the PES provides to the employer, amount to at least 90% of the incurred costs for continuous old age part-time1 and 35% (in 2025) for the block version. The latter is effectively a subsidised early-retirement option. Subsidies for the block version have gradually been reduced and are being phased out altogether until 2029.
Overall, subsidised old age part-time plays a very significant role in the transition to retirement in Austria. Of all new pension entrants in 2022, 15.3% of men and 16.1% of women were previously in old age part-time (BMSGPK, 2023[23]). Moreover, in the context of increasingly restricted access to early retirement, take‑up of old age part-time increased significantly in Austria over the last decade (Horvath et al., 2022[24]). The total stock of individuals in old age part-time peaked at 40 353 in 2018, an increase from 17 350 in 2013 (Figure 4.8). In 2021, this number decreased slightly but remained high, at 37 830. Approximately a quarter of individuals in old age part-time made use of the blocked version in 2021. This share has decreased significantly since 2013 (41.8%). In the early years of the scheme, the large majority opted for the blocked variant at a time when other early retirement options were being phased out.
Stock of individuals in old age part-time, Austria, 2013‑21
Note: Partial pensions (Teilpension) not included.
Source: OECD calculations based on Horvath et al. (2022[24]), Ältere am Arbeitsmarkt: Eine Vorausschau bis 2040 als Grundlage für wirtschaftspolitische Maßnahmen.
From a theoretical point of view, the impact of subsidised old-age part-time schemes is ambiguous (Graf et al., 2008[25]; Horvath et al., 2022[24]). By enabling greater flexibility and less demanding work schedules, these schemes may incentivise individuals who would have ordinarily exited the labour market to prolong their participation. At the same time, the subsidy lowers the financial cost of a reduction in working hours and may be subsidising part-time work for individuals who would have continued working full-time in its absence. The most recent empirical evaluation of the Austrian old-age part-time scheme shows rather modest results (Graf, Hofer and Winter-Ebmer, 2011[26]; Graf et al., 2008[25]). For individuals participating in the scheme, a reduction in unemployment risk and a significant decline in working hours are observed, while the probability of employment increases very slightly. At macroeconomic level, the effects on employment, unemployment and the volume of working hours are very modest.
The blocked version of old age part-time work should be regarded particularly critically. It does not enable phased entry into retirement or less physically demanding work but is rather de facto a way to enable early retirement (Huemer et al., 2017[18]). Blocked part-time models are particularly likely to effectively lower, rather than raise, the labour supply of older workers (OECD, 2019[27]). The decision to phase out subsidies for blocked part-time work is therefore a positive development.
More fundamentally, one may question why old age part-time should be subsidised at all (OECD, 2005[28]). The evaluation of the Austrian scheme shows that it tends to be taken up by relatively high earners (Graf, Hofer and Winter-Ebmer, 2011[26]). For low-wage workers, the reduction in income associated with old age part-time, despite partial compensation, is likely not feasible (Eurofound, 2016[21]). In addition, there are requirements on minimum contribution periods to be eligible for old age part-time, which means the scheme is only relevant for individuals who are well-integrated in the labour market (Huemer et al., 2017[18]). This increases the risk that the old age part-time scheme mainly subsidises individuals who can afford to work part-time anyway and face a limited risk of labour market exit. While a more recent evaluation of the policy would be useful, abolishing wage subsidies for part-time work should be considered, particularly in view of the very substantial cost of the scheme – ca. EUR 530 million in 2023 (AMS, 2023[29]). More targeted interventions focusing on specific workers at risk who are not able to work full-time, such as workers with health issues, could instead be envisioned (Section 4.3).
This notwithstanding, the option to reduce working hours can have substantial benefits for older workers’ quality of life, not all of which can be easily monetised, such as the well-being effects of greater flexibility (Horvath et al., 2022[24]). It can also have benefits for companies by enabling retention and gradual transfer of the knowledge and skills of older workers (Eurofound, 2016[21]). Policies to enable gradual labour market exit, while not directly subsidising it, should therefore be strengthened. Several OECD countries have introduced a right to request flexible working hours – while this usually applies to all workers, it could have particular relevance for older workers. One could consider strengthening these rights for older workers in particular, for instance by limiting the ability of employers to refuse older workers’ request to work part-time (Albinowski, 2024[22]). In addition, while not funding old-age part-time as such, it would be desirable to introduce a possibility to maintain pension contributions at the level they would have been if the person was still working full-time. Different funding arrangements for these pension contributions could be envisioned, including contributions by employers, the state or workers themselves. General policies to increase acceptance for flexible work schedules and the ability to determine one’s hours and work schedule (see section 4.2) should complement these provisions.
Social partners could also play an important role in improving working time regulation. Greater flexibility could be facilitated through collective bargaining agreements or even at company level, and policymakers can play a role in raising awareness and sharing best practices (OECD, 2017[30]). Some examples already exist in this regard. For example, the collective bargaining agreement for the Austrian social services sector establishes an entitlement to continuous old age part-time for all workers, without employer approval (Sozialwirtschaft Österreich, 2024[31]).
In addition, a true partial pension instrument – i.e. a scheme which allows individuals to draw a pension benefit while continuing in paid work – could be an alternative to part-time wage subsidies (OECD, 2017[32]). Schemes that allow for combining income from work and pensions - both before and after retirement age - have been introduced in a number of OECD countries, such as Sweden and Finland (Box 4.3). This could serve as a way to enable a gradual transition towards retirement and longer labour market participation.
Partial pension schemes in Sweden enable both early and late retirement. Earnings-related pension benefits can be withdrawn from age 63 in the national pension scheme. Pensions can be withdrawn partially (at 25, 50 or 75% of the full pension). There is no fixed retirement age, but an automatic actuarial reduction in pension benefit is applied depending on the age of retirement.
At age 66, the guaranteed pension benefit can be claimed. It is adjusted against other pensions from the Swedish national old-age pension system and comparable foreign national pensions. Work and receipt of the guaranteed pension can be combined, and the guaranteed pension is not reduced by wage income. It is also possible to defer the earnings-related pension with no upper age limit, with automatic actuarial adjustments, and work and pension receipt can be combined.
Similarly, in Finland, it is possible to take out 25 or 50% of the accrued pension at the age of 61, without any requirements to be working or not. A 0.4% reduction is applied for each month that the part of the pension is taken before the lowest pensionable age. In addition, the national pension can be deferred after the normal retirement age of 65 and is increased by 0.6% for each month by which retirement is postponed. It is possible to combine receipt of pension and earnings from work. After taking an old-age pension, individuals can commence a new employment contract, with earnings accruing additional pension with an accrual rate of 1.5% per year.
Workers with chronic health issues may experience long-term reductions in their ability to work. For this group of workers, part-time work could be a way to enable continued labour market participation while accounting for the additional strain caused by illness (Huemer et al., 2017[18]). This includes older workers with health issues in the transition towards retirement (Eurofound, 2016[21]), but could equally be a solution for younger and mid-career workers who would otherwise have to drop out of the labour market permanently.
In Austria, options for gradual or stepwise return to work after sickness traditionally did not exist, reflecting a wait-and-see culture where return to work was seen as following from, not as being part of, recovery from illness or an accident (OECD, 2015[33]). As part of the push towards policy development for labour market reintegration after sickness absence, an option to work part-time following a period of sickness absence (Wiedereingliederungsteilzeit or WIETZ) was introduced in 2017, in line with previous OECD recommendations (OECD, 2015[33]). Under the scheme, individuals who have been on sick leave for at least six weeks can, with employer agreement, return to work while reducing their previous working time by 25‑50%. The arrangement can last for six months initially, with the possibility of extension for a further three months. While on reintegration part-time, workers receive a reintegration benefit to compensate for lost earnings due to part-time work, at the level of sickness benefit proportional to the lost working time. To be eligible for reintegration part-time, workers have to conclude a reintegration agreement with their employer, which is done in consultation with either fit2work or an occupational doctor within the company. The introduction of reintegration part-time is a significant improvement over the previous status quo, which did not allow for any partial return to work after sickness absence – i.e. it is a first and gradual shift away from the strict view to be either fully able or fully unable to work.
Table 4.1 shows descriptive statistics on individuals who made use of reintegration part-time from its introduction in 2017 until April 2024. Overall, 28 162 cases of reintegration part-time were recorded. The largest share of WIETZ participants falls into the age group 50‑59 (43.9%), followed by those aged 40‑49 (29.4%). Women were more likely to make use of WIETZ than men (56.2%). By type of disorder, by far the largest share of WIETZ participants were diagnosed with mental and behavioural disorders (32.4%), with musculoskeletal disorders the second-most common (16.7%).
The data also shows that take‑up of reintegration part-time work is increasing over time, with a peak in 2022 at 6 261 participants. For roughly one‑third of individuals who made use of WIETZ, a duration of more than 185 days was recorded (34.7%), implying that these individuals made use of the option to prolong their reintegration part-time agreement after the initial six‑months period. For the majority of participants, reintegration part-time lasts between three and six months (55.4%).
Characteristics of reintegration part-time users, Austria, 2017‑24
Source: OECD calculations based on data from the Austrian Health Insurance (ÖGK).
An early evaluation of the reintegration part-time scheme, based on interviews with several stakeholders, led to a very positive assessment (BMAFJ, 2020[34]). It argued that reintegration part-time benefits both employees, who can return to work earlier, with less pressure and without substantial financial loss, and employers, as qualified employees are able to return to the workplace earlier. A quantitative evaluation of reintegration part-time is currently being undertaken and expected to be published in 2025.
The introduction of reintegration part-time in Austria reflects a broader trend across OECD countries towards the introduction of graded work to facilitate a faster return to work from a sick leave. These systems are designed to recognise individuals’ partial work capacity and allow them to gradually increase their hours, if possible. The most effective of these systems include mutual obligations, where there are strong incentives for all actors to introduce graded work (Box 4.4). To further develop reintegration part-time in Austria, the introduction of mutual obligations for employers and employees should be considered. On the one hand, a right to reintegration part-time could be introduced, rather than entitlement being subject to employer approval. On the other hand, mutual obligations would also involve obligations for employees with remaining work capacity to engage in reintegration part-time.
Graded work systems involve the possibility for temporarily sick workers with remaining work capacity to perform regular duties for fewer hours than in their contracts, topped up by partial receipt of sickness benefits of partial sick pay. Systems to enable partial return to work early on during sickness absence exist in several OECD countries, sometimes involving obligatory elements. In Norway, employers and employees have to discuss return to work within the first four weeks of absence, and engagement in graded work after eight weeks of sickness absence is the norm unless the doctor can make a special case for full sick leave. Data has shown that the graded work system significantly reduced working hours lost to sickness absence, due to both a shortened average duration for return to full-time work and a higher share of individuals with remaining work capacity working part-time.
Similarly, in Denmark, obligations to discuss return to work within four weeks of sickness absence exist. The social insurance doctor must conduct regular assessments of remaining work capacity and can initiate various rehabilitation measures, including graded work, and employees with remaining work capacity can be obliged to participate. According to evaluations, graded work programmes are the most effective intervention for improving labour market outcomes of workers on sick leave, with demonstrated positive effects on employment and negative effects on benefit receipt and unemployment.
In the Netherlands, the return-to-work process involves various fixed milestones and corresponding dates. Employers and employees have strictly defined obligations including the development of an action plan on return to work. This action plan must include an assessment on whether a return to the previous job or company is possible and under which conditions, including graded work. Employees with remaining work capacity can be obliged to participate in various vocational rehabilitation measures including graded work. An evaluation has shown that graded work initiated in the first 26 weeks of an absence spell led to an 18‑week increase in working time during sickness absence.
Source: OECD (2023[35]), Disability, Work and Inclusion in Korea: Towards Equitable and Adequate Social Protection for Sick Workers, https://doi.org/10.1787/bf947f82-en.
In relation to the question of obligations for employees with remaining work capacity, is important to note that reintegration part-time in Austria is not a form of partial sick leave; rather, it requires a medical assessment of full ability to work. Consistent with its characterisation as a reintegration measure for people who have regained full ability to work, albeit not full-time ability, it is time‑limited and can be undertaken for a maximum of nine months. Under these constraints, the system does not constitute a complete solution for workers with chronic or recurring illnesses, including notably those with mental health issues, whose ability to work is permanently reduced. Within the current Austrian system, a way for these workers to test and use their remaining ability to work is lacking (Huemer et al., 2017[18]).
The next step forward would be a move towards a partial sick leave system, where partial ability to work can be explicitly recognised. Such a system would need to be carefully designed to ensure it subsidises part-time work only for those workers with reduced capacity to work. To prevent overly high costs of such a system, its use could be limited to people on sick leave for a few weeks, at least initially. A partial sick leave system could significantly increase the labour market participation of workers with chronic and recurring diseases who have remaining work capacity, for whom reintegration part-time is only suited to a limited extent.
However, without a more thorough evaluation of reintegration part-time, it is difficult to come to definitive conclusions about its effectiveness and the necessity for further refinement. The ongoing evaluation should pay particular attention to effects of the scheme on workers with chronic illnesses, notably mental or behavioural disorders, who emerge as the primary group making use of reintegration part-time (Table 4.1).
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← 1. For individuals above age 62 who have worked for 40 years, reimbursement is 100%. This variant, which has existed since 2016, was previously known as “partial pension” (Teilpension) but has been part of the old age part-time scheme since 2024.