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WORKING IN AUSTRIA

Who are the skilled workers coming to Austria?

Austria has issued 681 work permits, the Red-White-Red cards, so far this year. Who are these workers, and what jobs are in demand?

Published: 22 February 2024 10:38 CET
Who are the skilled workers coming to Austria?
Photo: Firmbee.com/Unsplash.

Austria’s Rot-Weiss-Rot (Red-White-Red) card is the residence permit connected to a job offer for skilled workers who do not have citizenship from an EU country. If a worker comes from a “third country” and has no other ties to Austria (such as being married to a citizen, for example), this is the permit they look for in order to be able to work here.

And it is not an easy one to get. Workers must show their qualifications, have a job contract or offer in hand and present a series of documents, often showing they have enough “points” to immigrate to Austria. 

The bureaucratic system doesn’t really help Austria’s skilled worker shortage, but persistent companies looking for employees and hard-working immigrants seeking Austria’s high quality of life sometimes manage to overcome the challenges imposed by Austrian immigration rules. 

READ ALSO: How Austria is making it easier for non-EU workers to get residence permits

In 2023, according to statistics from the Public Employment Service Austria (AMS), 10,953 applications for RWR cards and blue cards (work permits for the EU) were processed, and expert opinions were issued in Austria.

In the same period, 8,078 requests for the permits were approved. Most recently, data from January 2024 shows 900 applications and 681 positive assessments. Where are the applicants from, and what jobs are they filling?

Cooks and chefs – most of them from Bosnia or China

In terms of occupational groups, most permits were issued to applicants who can cook. The statistics show 156 positive assessments for chefs, most of them for Upper Austria – the fewest in Burgenland (3).

IT and business technicians follow in second place. The number of approved permit requests was 118 – most of them in Vienna (21). Other permits were issued for people in healthcare professions (80), technicians, gardeners, sports professionals, hotel and guest industries and office jobs. 

Of the 681 positive assessments in January 2024, 125 were for citizens from Bosnia-Herzegovina, 104 from the People’s Republic of China and 54 from India. The same number of people from Turkey received a work permit. 

READ ALSO: How long can a foreigner stay in Austria after losing a job?

There were also permits issued for people from Serbia (40), Iran (34), Russia (26), the Philippines (23), Kosovo (16), Ukraine (16), the USA (16), Egypt (14), Macedonia (14), Brazil (13), Albania (9) and Tunisia (9), among others.

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WORKING IN AUSTRIA

Why are people in Austria paying more taxes despite federal reforms?

Workers in Austria are still among those with the highest tax burdens in the world, with the taxes and contributions taking more than 40 percent of wages even as the country introduced sweeping tax reforms.

Published: 26 April 2024 12:21 CEST
Why are people in Austria paying more taxes despite federal reforms?

It’s often said that Austria is a country with high quality of living and high taxes, but a new OECD study shows just how high the tax burden is here compared to other OECD countries.

According to the report, Austria has the third-highest tax burden on workers and the so-called “tax wedge”, how much of a worker’s wage is taken by the government,  increased as well.

According to the OECD, in most countries, the increase in labour taxation was primarily driven by increases in personal income tax.

This is because nominal wages increased in 37 out of 38 OECD countries as inflation remained above historic levels. However, since most of these countries do not have automatic indexation of tax systems, high inflation tends to increase workers’ tax liabilities by pushing them into higher tax brackets. 

However, Austria’s federal tax reforms removed this in the country in 2023. This means that once inflation rises, the tax brackets that define how much taxes you will pay on your income will also rise – and they have risen in 2023 and in 2024 since the change. 

The measure was known as the “end of the cold progression” in Austria and should have protected workers’ incomes from inflation losses.

READ ALSO: The tax benefits that parents and families receive in Austria

What is the tax ‘wedge’?

The OECD defines a tax wedge as “income tax plus employee and employer social security contributions, minus cash benefits.” 

In other words, if an employer has a labour cost of €100, how much will they actually see in their pockets, and how much of this goes to the state? According to the organisation, the percentage is the tax wedge.

In Austria, €100 earned by a single employee without children was taxed at an average of €47.2 last year. The amount was only smaller than in Germany (47.9 percent) and Belgium (52.7 percent) and it rose compared to the previous year when it was still at 46.9 percent.

The average of the 38 OECD countries was 34.8 percent.

Married single-earner couples with two children also have high tax burdens, with a tax wedge of 32.8 percent (OECD average: 25.7 percent), which is the eleventh-highest tax and contribution burden within the OECD for this group (2022: 13th place). For married dual-earner couples, the wedge was 40.6 percent.

The tax wedge for individuals or households with children is generally lower than those without children, as many OECD countries grant households with children a tax advantage or cash benefits.

READ ALSO: Why it’s worth filling in your annual tax return in Austria

Why is Austria’s tax burden higher this year?

Despite the tax reform presented by the government, Austria’s tax wedge has increased compared to the year before. 

The reason is the relief granted in Austria in 2022 in the form of one-off state payments. With the rising cost of living, the federal government released several temporary measures to help people in the country cushion the effects, including the popular €500 Klimabonus payment every person who had been a resident of Austria for at least six months was entitled to. 

These payments and increases in family allowances reduced the tax burden in 2022 – but they no longer exist or were drastically cut in 2023. Because of that, the tax burden is rising again. 

“The abolition of cold progression and the other measures have merely prevented the tax burden from rising more sharply,” Wifo economist Margit Schratzenstaller told Der Standard.

The report said the increased tax issues show that there is still a need for action. Compared to other industrialised countries, Austria’s tax burden on work for a single person without children is ten percentage points higher. Of course, the expert noted, the fact that many industrialised countries have a different social system with fewer publicly funded benefits also plays a role here. However, labour is also expensive in Austria compared to the EU average.

READ ALSO: What foreign residents in Austria should know about taxes

“The fact that the tax burden on the middle classes has increased is due to the government’s failure. Instead of structural relief, there have been one-off payments that have evaporated,” said Lukas Sustala, head of Neos-Lab, the think tank of the liberal opposition party.

NEOS representatives have urgently called for a ‘comprehensive tax reform’ to alleviate the heavy labour burden, with a significant reduction in non-wage labour costs, according to an ORF report.

In addition, NEOS proposes the creation of ‘tax incentives for full-time work’ – including a full-time bonus and tax exemption for overtime pay. Simultaneously, NEOS aims to eliminate ‘part-time incentives of any kind’, offering a potential boost to the economy and workers’ incomes.

Economist Schratzenstaller also recommends action: She suggests reducing social insurance contributions, for example, for health insurance companies. However, it’s important to note that intervening in this area could affect the largely autonomous financing of Austria’s healthcare system, which is funded mainly through workers’ and companies’ payments via social insurance contributions. 

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