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WORKING IN AUSTRIA

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

Austria needs more workers, as around 124,000 jobs are currently vacant, but skilled migrants have trouble getting a permit. The government wants to change that.

IT workers workplace
Eligibility criteria for Austria's Red-White-Red card is changing. (Photo by Tim van der Kuip on Unsplash)

Every year, the federal government goes over the country’s unemployment service statistics to see how many openings there are and for which professions.

Then, they compiled a list of “shortage occupations”, and skilled workers in those areas can apply for a residence permit if they get a job. 

It seems simple enough: the government says there is a need for nurses, gardeners, or roof installers.

So a person from outside the European Union who is trained in one of these “shortage occupations” can apply and get a residence permit – helping the country grow and filling in jobs that current residents can’t or won’t take.

However, the current process is complicated, bureaucratic and takes way too long.

“It’s not really [entirely] logical, and they haven’t changed it with the years”, explains Kornelia Epping, a specialist in immigration and relocation and CEO of MOVES consulting in Vienna.

Finally, though, it seems that Austria is about to change, adapt, and make the process for getting the work residence permit, the so-called Rot-Weiss-Rot (RWR) card, much more accessible, according to statements given by the federal government in a press conference this Thursday.

Filling up the positions

Austria has more than 124,000 jobs currently vacant. However, the number is likely to be much higher, as just about half of the open positions are reported to the labour market service (AMS), Labour Minister Martin Kocher (ÖVP) said during the press conference. 

Not only are there demographic changes that pressure the workforce market, but some positions are simply not being filled from the inside due to a lack of skilled workers. 

“It’s hard to find educated people in certain areas, and over the past two years, with the pandemic, many individuals in Austria simply changed fields completely”, Epping explains. 

READ ALSO: Which are the best companies to work for in Austria?

This is true, especially in some shortage occupations hit hard by the pandemic: those in the gastronomy and tourism sectors.

Changes to attract self-educated IT workers

The alpine country also doesn’t make it easy for skilled workers to immigrate, with strict rules on proof of training and education.

“I’ve had cases when I helped an IT worker with plenty of experience, but no formal education get a job outside of Austria”, Epping says. 

“In the Netherlands or Germany, he could get the permit based on professional experience. But in Austria, he needed to prove he had the education background matching the job position”. 

READ ALSO: Can I work for my foreign employer as a self-employed person in Austria?

He didn’t have proof of training, she says. The applicant had a Marketing degree but learned programming and changed fields years ago. He would still be considered a skilled worker in many countries, but not in Austria. 

This is one of the things that are about to change, according to the federal government’s draft proposal. It says explicitly that IT workers with three years of professional experience can also be admitted if they have not completed their studies. 

English language will count as much as German

Currently, skilled workers need to achieve a minimum of points in a system that makes it almost necessary for them to prove some German knowledge. 

In the future, English will award the same amount of points as German if it’s the company language.

“This is particularly important in the startup sector”, emphasised the Minister of Economic Affairs Margarete Schramböck (ÖVP).

And when German knowledge is needed, the certificates presented will be accepted for five years instead of one.

Just like with the IT workers, for all shortage occupations, the professional experience will count more when it comes to receiving a residence permit. Some apprenticeship certificates will be put on equal footing with university degrees in certain areas, including nursing and care.

READ ALSO: The best commuter towns if you work in Vienna

Many of the shortage occupations are in the tourism and gastronomy sectors, including cooks and waiters. The draft proposal addresses this demand by making it easier for seasonal workers to get an RWR permit. Those employed as seasonal for three years could become regular employees – if they get a job offer in the field. 

“No social dumping”

“Austria is a high-level country, with high safety and income. They want to maintain the high lifestyle level and try to keep out those that would need social assistance”, Epping explains. 

One of the ways this is done is by putting a high minimum income for workers that seek the permit. As a result, these workers need to find jobs that pay much more than the average salary, even for their own fields, which, in turn, reduces the incentive for companies to hire from abroad and keeps the positions open for longer than necessary.

READ ALSO: Explained: How to understand your payslip in Austria

The minimum salary will fall for graduates and be lower for certain professionals, including highly qualified academics. 

The changes will not reduce Austria’s quality of living and high salaries, Labour Minister Kocher reiterated, as “collective agreements must continue to be fulfilled”. There will be no social dumping, he explained. 

However, the de-bureaucratisation would bring in much-needed skilled workers and in a process that would be half as long as the current duration of two to three months, the ministers said.

You can check the full list of shortage occupations and the point system to get the permit here.

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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.

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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