Read news from:
Austria
SHARE
COPY LINK
For members

STUDYING IN AUSTRIA

Why Austria wants to overhaul its contentious ‘educational leave’ scheme

Austria's so-called "Bildungskarenz" allows workers to take paid time off from work to invest in their education, but the government claims there's an urgent need to reform the system. Why is that?

Published: 11 April 2024 13:26 CEST
Why Austria wants to overhaul its contentious 'educational leave' scheme
It's possible to take paid time off from work to study in Austria - but there may be some major changes coming to the educational leave system. (Photo by Josefa nDiaz on Unsplash)

People in Austria looking to develop new skills or change careers can take advantage of a state program offering financial support during any time off work for educational reasons.

The program, called Bildungskarenz (educational leave), allows employees to take time off work to pursue studies or training relevant to their professions while receiving payments from the state.

This program isn’t just for university degrees – professional development courses like business German or technical training are also covered. The courses can be taken abroad, although domestic options are also available.  

The leave itself is flexible, ranging from a minimum of two months to a maximum of twelve months, depending on what you arrange with your employer.

There’s a catch, though: the total amount of leave cannot exceed one year within a four-year period. This allows employees to structure their Weiterbildung in a way that best suits them. One person might take a full year off at once, while another might prefer to spread their leave out over several two-month blocks.

READ ALSO: What to know about Austria’s paid leave for further education

What’s the controversy?

The federal government has been discussing an overhaul of the system. The criticism is that educational leave has not been used by the target groups: low-skilled workers and people looking to change careers. Instead, an industry of Bildungskarenz courses has boomed in Austria since the COVID-19 pandemic: mostly online, self-paced courses, and many very basic language courses that comply with the minimum requirements for Bildungskarenz.

In some, the online class takes a few hours a week, with the rest of the mandatory hours assumed as “study hours.”

Famously, in Austria, Bildungskarenz has been used by new parents as a way to “extend” their parental leave—and there are entire websites aimed at targeting new moms with easy-to-follow courses so they can continue at home with their kids.

According to a study by the economic think tank Agenda Austria, it’s not the poorly qualified who are predominantly learning new skills and increasing their market value with state support, instead it’s those who already have a good education.

“Quite a few apparently see it as an opportunity to take a sabbatical at the general public’s expense,” they wrote.

According to the study, educational leave is becoming increasingly popular, and the costs are rising rapidly. Between 2013 and 2023, expenditures—not to mention social security contributions—rose from €109 million to €337 million. Costs have almost doubled since 2020 alone.

According to the study, the proportion of people receiving continuing education allowance directly after parental leave was already more than 50 percent in 2021 (no more recent figures are available). 

READ ALSO: EXPLAINED: What you need to know about parental leave in Austria

Saving at the expense of the Bildungskarenz

There is another front on which educational leave is being used differently to what its creators originally intended, according to Agenda Austria. 

Companies can misuse educational leave as a cost-cutting measure in difficult economic times or during crises in individual sectors. This was evident, for example, during the economic and financial crisis from 2008 onwards, when many employers—particularly in the industrial sector—motivated their employees to take educational leave to save on wage costs and bridge crises without having to fire people. 

Another use for the educational leave is as a “golden handshake”, the writers explained. It “is s sometimes used as a nice transition to a subsequent termination by mutual agreement. The “golden handshake” means that employment remains in place for a few more months without an active employment relationship still existing. 

READ ALSO: Am I entitled to any severance pay from my job in Austria?

The employer does not incur any costs, and the departing employees have plenty of time to reorient themselves or take a short break at the general public’s expense.”

Reforms proposed

The think tank suggests several reforms to tighten access to the benefits. The recommendations include raising the requirements for type, duration, and tracking of education progress, but they also suggest that companies cover part of the costs of educational leave themselves. 

Austria’s Labour Minister Martin Kocher (ÖVP) has also proposed key points for a reform of the system. One of the main proposals is that the applicant must go through a consultation with the Labour Market Agency AMS before taking the leave so that it’s clear what are the goals of the person and which qualifications they already have – it aims to improve statistical recording of those getting the benefit.

Another significant proposal is that any “self-study” period be recognised only as supplementary in the future. In that way, a course would have to offer all 20 hours a week of classes instead of providing the minimum amount and then assuming “reading” and “studying” time for the rest of the hours. 

Of course, the debate is ongoing. Mothers, a group that could be particularly affected by reforms, have come forward in Austrian media to defend the use of educational leave following parental leave—in many cases, there simply aren’t enough childcare options in Austria.

READ ALSO: How does childcare work in Austria?

Some studies also show a slight increase in the employment rate of those who took educational leave after the parental leave twelve years later, with monthly income also a few percentage points higher for those with Bildungskarenz. However, Minister Kocher sees only a “moderate” benefit and still recommends reform.

Freelance mothers in Germany aren't entitled to as many benefits as employees.

Mothers looking to extend their parental leave have often resorted to the educational leave in Austria. Photo: Matilda Wormwood/Pexels

So, when will there be reforms?

That’s difficult to say. The junior coalition partner, the Greens, have not been too keen on controversial changes to the current rules, mainly because they affect their own student voters. 

The Greens also point out that around half of those receiving continuing education allowance earn more three years after parental leave than before. “Of course, we are available for improvements in the interests of those affected, but not for a tightening of access to educational leave,” said Markus Koza, the Greens’ labour market policy spokesman.

And this is an election year in Austria, with the ruling coalition not very popular among voters – this without the approval of laws that could make the lives of many people harder. 

Without the support of the coalition partners, it’s unlikely that anything will change soon.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

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. 

SHOW COMMENTS