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WORKING IN AUSTRIA

Is Austria planning to adopt a 4-day week?

As calls for making full-time work more attractive rise, Austrian companies and unions are looking for ways to bring in more employees.

Published: 27 February 2023 17:31 CET
Is Austria planning to adopt a 4-day week?
(Photo by ludovic MARIN / AFP)

Austrian Labour Minister Martin Kocher (ÖVP) stirred debate when he said the country should make full-time work more attractive – and discussed possibly reducing benefits for those on a part-time job. 

Despite strong criticism, with many saying such a move would not bring more people to full-time but instead would hurt women who work part-time and care for children and older relatives, he recently doubled down during a broadcast interview in ZIB2 on Sunday.

He said that the “demographic change” in Austria, with many people set to retire in the next few years just as companies would need more workers, puts pressure on the labour system.  

What is the work week like now?

Currently, a work week in Austria averages 40 hours, but the actual amount will depend on collective bargaining and even individual contracts. Some industries have a working week of 38 hours, for example. 

By law, workers can have a shift duration of up to twelve hours (with 30-minute breaks every six hours). At the end of the work day, the employee is entitled to an uninterrupted rest period of at least eleven hours. The weekly rest period will also depend on working agreements, but in principle, consists of uninterrupted 36 hours. 

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

This is all for a full-time job, but employees and employers can agree on different relationships, including “flexitime”, with start and end times for work within a framework, forming “blocks of work”, for example. 

Part-time work would be anything below 40 hours or a shorter standard working time stipulated by the collective agreement.  The law states that part-time employees may not be disadvantaged compared to full-time workers and are only required to work overtime if it fits with their own interests (such as with balancing childcare, for example).

What is the 4-day week proposal?

The main proposal on the table is defended by trade unions in Austria. The workers’ representatives want to introduce a 36-hour week with full wage compensation. In many cases, the number of hours wouldn’t be drastically reduced. Instead, workers would concentrate them on 9-hour work days. 

Some unions go further, mentioning experiments in IT companies in Vienna which switched to 32-hour weeks with good results. 

On Monday, February 27th, SPÖ trade unionist Josef Muchitsch spoke on the Ö1 radio program in favour of a pilot trial based on the British model. A UK study published in February showed the results of a four-day week: employees were sick less often, changed jobs less frequently, were more satisfied and less stressed. 

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

At the same time, productivity did not suffer. On the contrary, 56 of the 61 companies from a wide range of industries that took part in the pilot project want to stick with a shorter week, as broadcaster ORF reported.

The employers’ side is not very enthusiastic about this, Ö1 reported. However, trade unionist Muchitisch said there is “no way around” a shorter week.

“If you want to keep good people in these companies and industries, there is no stopping this train”, he said.

How likely is it to be introduced?

A 4-day week has its controversy, especially when speaking with employers. However, economists have said that a trial could be conceivable in individual sectors, including creative industries, management professions and service professions with a high proportion of digitalisation. 

“What can be a problem is if you introduce this across all industries in one fell swoop”, said Eco Austria’s economist Monika Köppl-Turyna. 

READ ALSO: Six official websites to know if you’re planning to work in Austria

She added: “Let’s take other industries that the union doesn’t cite for good reason: A police officer can’t increase productivity any more, nor can a teacher. Health professions, which are already under high pressure, can’t do as much in 30 hours as they can in 40.”

However, Austrian companies already suffering the pressure of the labour shortage could adopt a 4-day week earlier than a nationwide trial. IT companies already offer benefits including a shorter week, flexible work hours or hybrid work. But even more, traditional industries have gone this route searching for workers. 

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

Vienna’s publicly-owned Wiener Linien, which operates public transport services in the Austrian capital, has introduced certain benefits to workers and has an ongoing pilot program with some employees working four days a week. Employees still work 37.5 hours a week but spread those out over four days. 

It’s too early to know the full results, but as the company was looking to hire 900 people to replace a retiring workforce, it had to make jobs more attractive.

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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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