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WORKING IN AUSTRIA

Is Austria planning to adopt a longer work week of 41 hours?

Industry experts propose increasing the working hours in Austria and now the chancellor has added his opinion - here's the latest on the possible expansion of the working week.

Published: 24 April 2024 16:40 CEST
Is Austria planning to adopt a longer work week of 41 hours?
Austrian Chancellor Karl Nehammer addresses a press conference after the Migration Summit in Vienna on July 7, 2023. (Photo by Alex HALADA / AFP)

A new debate has been taking place in Austria as the Association of Austrian Industries (IV) has called for a 41-hour work week, forcing politicians to take a stance on the issue. 

Last week, the heads of the association said that Austria could only continue to be competitive internationally if the regular working hours for everyone were extended – reaching a 41-hour work week. They argue that this is necessary to increase productivity and maintain the country’s economic competitiveness.

Currently, working hours cannot exceed a 40-hour limit in the week for most employees, and most industries have collective agreements providing for a 38.5-hour week. 

“In order to increase the overall volume of labour, we must therefore put an increase in working hours – by half an hour a day, for example, ie 41 hours a week – on the agenda. Otherwise, we will not be able to maintain our welfare state,” Christoph Neumayer, General Secretary of the IV, is quoted as saying.

The statements prompted a debate in Austria, and when Constitutional Minister Karoline Edtstadler (ÖVP), a government member, said she was in favour of ‘working more’, things got even more heated. 

READ ALSO: Will a 4-day week and free German lessons help Vienna’s transport network find staff?

“If we want to maintain our prosperity, we have to work more instead of less,” said the politician at an event in the House of Industry on Tuesday. At the same time, she reckoned with “left-wing dreams” of reducing working hours, which “will not work out,” said Edtstadler.

The Social Party SPÖ and trade unions strongly criticised the plans of the IV and ÖVP. Extension of working hours is an “affront to the employees who have made our country one of the richest in Europe through their commitment”, said union leader Barbara Treiber.

Instead, they propose a reduction in working hours to improve work-life balance and protect workers’ rights.

Edtstadler later had to clarify that her statements were “not an endorsement of a 41-hour working week”. Instead, she was concerned with “getting more people into full-time employment and employment in general”, she said.

‘Certainly not coming’

With the debate still ongoing, Chancellor Karl Nehammer (ÖVP) came out to clarify the situation, Austrian media has reported. 

“An extension of the statutory standard working week is out of the question for me,” he explained in a statement. “I also think a 32-hour week is completely the wrong way to go.” 

He further elaborated on his view, stating that he believes in finding a balance between productivity and workers’ well-being and that any changes to the work week should be carefully considered and based on thorough research.

READ ALSO: Could a 4-day week with full salary become a reality in Austria?

ÖVP’s Karlheinz Kopf, a member of the Austrian parliament, was also asked about the Austrian Industries’ demand for a longer work week. He said it would be unrealistic to extend working hours politically but that “the industry’s cry for help” must be taken seriously as labour is becoming more expensive and the country’s competitiveness is “constantly deteriorating as a result.”

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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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