COMMISSION STAFF WORKING DOCUMENT Assessment of the 2012 national reform programme and stability programme for AUSTRIA Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on Austria's 2012 national reform programme and delivering a Council opinion on Austria's stability programme, 2011-2016
Date: 2012-05-30
Institutions: European Commission
Subjects: Austria, administrative reform, banking system, budget deficit, budgetary equilibrium, dropout, free competition, retirement conditions, tax reform

EUROPEAN COMMISSION 

Brussels, 30.5.2012  
SWD(2012) 306 final 

COMMISSION STAFF WORKING DOCUMENT 

Assessment of the 2012 national reform programme and stability programme for 
AUSTRIA 

Accompanying the document 

Recommendation for a  

COUNCIL RECOMMENDATION 

on Austria's 2012 national reform programme and delivering a Council opinion on 
Austria's stability programme, 2011-2016 

{COM(2012) 306 final} 

EN 

   EN 

 
 
 
 
  
 
 
CONTENTS 

Executive summary .................................................................................................................... 3 

1. 

2. 

Introduction .................................................................................................................. 4 

Economic developments and challenges...................................................................... 5 

2.1. 

2.2. 

Recent economic developments and outlook ................................................... 5 

Challenges ........................................................................................................ 6 

3. 

Assessment of policy agenda ....................................................................................... 8 

3.1. 

3.2. 

3.3. 

3.4. 

3.5. 

Fiscal policy and taxation................................................................................. 8 

Financial sector .............................................................................................. 15 

Labour market, education and social policies ................................................ 16 

Structural measures promoting growth and competitiveness......................... 20 

Modernisation of public administration ......................................................... 24 

4. 

5. 

Overview table ........................................................................................................... 26 

Annex ......................................................................................................................... 29 

2 

 
 
EXECUTIVE SUMMARY 

In  2011,  the  Austrian  economy  surpassed  its  pre-crisis  output  and  employment  levels. 
GDP  growth  strengthened  to  3.1 %,  significantly  above  the  EU  average.  Employment 
grew at 1.4 % compared to the year before, bringing the employment rate to an estimated 
75.2 %. Austria's economic activity is expected to significantly slow down as compared 
to  2011.  GDP  growth  is  projected  to  increase  by  0.7%.  Unemployment  is  foreseen  to 
slightly increase - to 4.3%.  

With the adoption of the fiscal consolidation package at the beginning of 2012, Austria 
has  embarked  on  a  path  towards  more  sustainable  public  finances.  Measures  were 
notably  taken  among  others  to  reduce  expenditure  on  pensions,  subsidies  and  public 
servants'  salaries  as  well  as  to  close  loopholes  in  VAT  collection.  They  were 
complemented by measures aimed at expanding child-care and all-day school places. At 
the  end  of  2011,  a  debt  brake  starting  in  2017  was  introduced,  however  not  in  the 
Constitution. 

Even  though  the  Austrian  economy  and  labour  market  have  been  performing  well  in 
comparison  to  other  Member  States,  the  country  faces  numerous  challenges.  Since  the 
country’s labour force potential is projected to shrink from 2020 onwards, Austria needs 
to  tap  the  full  potential  of  the  working  age  population,  in  particular  of  older  workers. 
Faced with increasing competition from low-cost countries, Austria needs to improve its 
non-price competitiveness through increased emphasis on research and innovation. The 
supply  of  skilled  human  resources  at  all  educational  levels,  but  especially  at  tertiary 
level,  is  too  low.  The  long-term  growth  prospects  of  the  economy  will  depend 
increasingly on a diversifying services sector and a business environment conducive to 
innovation  and  entrepreneurial  dynamism.  However,  entry  barriers  currently  hamper 
sound competition. Austria also faces particular challenges due to the high exposure of 
its banks to the countries of Central and Eastern Europe. The fiscal relations between the 
federal,  regional  and  local  governments  are  the  source  of  widely  recognised 
inefficiencies – not adequately addressed until now. 

3 

 
 
1. 

INTRODUCTION 

The national reform programme was submitted to the Commission on 25 April and the 
stability programme on 24 April. 

In June 2011, the Commission proposed five country-specific recommendations (CSRs) 
for economic and structural reform policies for Austria. In July 2011, the Council of the 
European  Union  adopted  these  recommendations  which  concerned  public  finances, 
taxation,  inter-governmental  fiscal  relations,  the  pension  system,  education,  the  labour 
market, and competition and market functioning in the services sector. 
In  November  2011,  the  Commission  published  its  Annual  Growth  Survey  for  20121 
presented the basis for building the necessary common understanding on the priorities for 
action at national and EU levels in 2012. It focused on five priorities — ensuring growth-
friendly fiscal consolidation, restoring normal lending to the economy, promoting growth 
and  competitiveness,  tackling  unemployment  and  the  social  consequences  of  the  crisis, 
and modernising public administration — and encouraged Member States to implement 
them in the 2012 European Semester. 

Against this background, Austria presented updates of its national reform programme and 
stability  programme  in  April  2012.  These  programmes  present  details  of  the  progress 
made since July 2011 and the plans for going forward. 

This Staff Working Document assesses the state of implementation of the 2011 country-
specific  recommendations  and  the  Annual  Growth  Survey  2012  in  Austria,  identifies 
current policy challenges and, in this light, examines the country’s latest policy plans. 

Overall assessment 

Austria  has  implemented  the  Council  recommendations  only  partially.  The  substantial 
package of measures recently adopted by parliament has addressed the need for prompt 
fiscal  consolidation  in  Austria,  recommended  by  both  the  2011  country-specific 
recommendations  and  the  Annual  Growth  Survey  2012,  and  for  raising  the  effective 
retirement  age.  However,  the  consolidation  package  has  not  tackled  sufficiently  the 
inefficiencies  in  fiscal  relations  between  the  federal,  regional  and  local  authorities, 
identified  as  a  major  challenge  for  Austria.  Moreover,  instead  of  shifting  the  burden 
away  from  labour  taxation  to  consumption,  environmental  and  property  taxes,  it  has 
increased the tax burden on labour for some groups. Some measures have been taken to 
improve  the  situation  of  women  on  the  labour  market  and  to  enhance  education 
outcomes, in particular for vulnerable youth. Reforms with significant potential, such as 
the  New  Secondary  School,  have  been  enacted  in  the  education  system.  Austria  has 
succeeded in eliminating the transposition deficit with respect to the Services Directive, 
although increasing competition and consumer choice in the services area requires further 
attention. 

The policy plans submitted by the Austrian authorities in the national reform programme 
and stability programme 2012 are relevant, but their scope is not commensurate with the 
existing  challenges.  Further  efforts  are  needed  to  raise  the  effective  retirement  age, 
improve  the  situation  of  women  and  migrants  in  the  labour  market,  and  enhance 
education outcomes.  

1 

COM(2011) 815 final of 23 November 2011 

4 

 
                                                 
Moreover,  significant  structural  reforms,  relating  in  particular  to  the  healthcare  and 
education systems, the social security and tax burden on labour, the powers and resources 
of  the  competition  authority  and  the  barriers  to  business  start-ups  are  still  outstanding. 
Last but not least, the restructuring of banks that have benefited from public support in 
the recent past should be stepped up. 

2. 

ECONOMIC DEVELOPMENTS AND CHALLENGES 

2.1. 

Recent economic developments and outlook 

In  2011  the  Austrian  economy  surpassed  its  pre-crisis  output  and  employment  levels. 
GDP  growth  strengthened  to  3.1 %,  significantly  above  the  EU  average.  In  contrast  to 
2010,  domestic  demand  played  a  more  important  role,  while  the  contribution  of  net 
exports  weakened  with  the  easing  of  global  trade  growth.  The  main  contribution  came 
from capital formation, reflecting the strong revival in investment activity that started in 
2010 and held up throughout most of 2011. Employment grew at 1.4 % compared to the 
year  before,  bringing  the  employment  rate  to  an  estimated  75.2 %  and  helping  to  keep 
unemployment down to the lowest level in the EU. 

Economic growth is set to weaken in 2012. Statistical data indicate a marked increase in 
inventory  build-up  in  2011,  which  possibly  signals  worsening  growth  prospects  in  the 
near future. Indeed, export and overall growth tailed off in the course of last year, even 
posting slightly negative rates in the fourth quarter. In addition, despite further advances 
in employment, the growth of private consumption was rather modest. Corporations and 
households still seem to hesitate with investment and consumption spending, setting the 
stage for rather subdued growth throughout most of 2012. GDP is projected to grow by 
just 0.8 % in 2012 before regaining some momentum in 2013. 

Private consumption is likely to stay sluggish as the recovery in household confidence is 
at  a  very  early  stage  and  employment  growth  is  slowing  down.  The  decline  in 
unemployment came to a halt in August 2011 and has fluctuated around a rate of 4.2 %, 
with the number of job-seekers still 23 % above the pre-crisis trough according to data for 
February 2012. The latest wage negotiations have raised negotiated wages by an average 
3.2 %  year-on-year  as  of  March  2012.  This  limits  the  scope  for  sustaining  the  pace  of 
employment gains during 2012. The overall impact of these counteracting trends on the 
real disposable income of households is rather uncertain. 

Manufacturers’  order  inflows  and  backlogs  weakened  throughout  2011  as  did  their 
expectations for exports. Indeed, firms have boosted their competitiveness by renewing 
capacity and withholding the compensation of productivity gains realised in the course of 
2010  and  early  2011.  Their  capacity  to  accommodate  demands  for  wage  increases  has 
strengthened.  However,  the  outcomes  of  the  latest  wage  negotiations  may  put  upward 
pressure  on  unit  labour  costs  as  output  and  productivity  are  still  struggling  to  recover 
from the decline in the second half of 2011. 

The  prospects  for  weaker  export  and  overall  growth  as  well  as  the  levelling-off  of 
capacity  utilisation  rates  will  continue  to  be  a  drag  on  investment  activity  in  the 
following  quarters.  Financing  conditions  may  tighten  as  banks  focus  on  raising  capital 
buffers and further cleaning up their balance sheets. Credit demand from both companies 
and  households  has  been  weakened  by  the  uncertainty  due  to  the  economic  outlook, 
while  the  renewed  tightening  of  credit  standards  may  weigh  additionally  on  credit 
activity in the coming months. 

5 

 
On the whole, the risk balance seems neutral. Foreign trade holds both downside (weak 
demand from the euro area) and upside risks (upbeat domestic demand in Germany, and 
indirect benefits from still growing import demand in emerging markets). Domestically, 
solid sentiment in the construction sector, together with sound corporate and household 
balance  sheets,  bodes  well  for  investment  activity.  On  the  other  hand,  the  recovery  of 
consumer confidence remains subject to risk in both directions. 

Driven  by  higher  motor  and  heating  fuel  prices,  as  well  as  rising  food  prices,  headline 
inflation averaged 3.8 % from April to November 2011, but fell to 2.7 % in March 2012. 
Core  inflation  (the  harmonised  index  of  consumer  prices,  excluding  energy  and 
unprocessed  food)  has  been  affected  by  spillovers  into  prices  of  services,  where  the 
annual  rate  of  change  peaked  at  3.9 %  in  August  2011.  These  effects  are  projected  to 
disappear gradually, leading to a moderation of inflation in 2012. Wage growth is likely 
to  remain  contained,  as  the  pace  of  economic  expansion  decelerates,  although  the 
translation of wage increases negotiated in various sectors into effective wage levels may 
well exert upward pressure on producer and consumer prices. 

2.2. 

Challenges 

Even though the Austrian economy has been systematically outperforming the euro area 
as a whole in terms of GDP growth, the country faces numerous challenges, which have 
remained  broadly  unchanged  since  last  year’s  European  Semester  report.  With  the 
adoption  of  the  latest  fiscal  consolidation  package,  Austria  has  embarked  on  a  path 
towards  more  sustainable  public  finances.  However,  despite  repeated  calls  by  Austrian 
experts  and  international  institutions,  the  measures  contained  in  the  package  do  not 
provide for significant streamlining in fiscal relations between the federal, regional and 
local  governments,  widely  acknowledged  as  a  major  source  of  potential  savings,  in 
particular  in  health  and  education.  Regarding  the  healthcare  sector,  there  is  further 
potential  for  savings  in  stronger  integration  of  healthcare  planning  and  financing,  in  a 
shift  from  hospital  care,  characterised  by  a  relatively  high  number  of  hospital  beds,  to 
outpatient  care,  and  in  enhanced  health  promotion  and  prevention,  where  Austria’s 
spending is well below the EU average. In the education sector, significant benefits could 
be reaped from aligning funding and spending on teacher salaries between the federal and 
regional authorities. 

The performance of the Austrian labour market has been very good, as witnessed by the 
lowest  unemployment  rate  in  the  EU  in  2010  and  2011.  However,  since  the  country’s 
labour  force  potential  is  projected  to  shrink  from  2020  onwards,  Austria  will  need  to 
strive to tap the full potential of the working age population by addressing the problems 
of the low employment rate of older workers, the widespread take-up of early retirement 
and  invalidity  pension  schemes,  the  high  tax  and  social  security  burden  on  labour 
income,  and  the  relatively  high  degree  of  gender  segmentation,  where  women  are 
concentrated in marginal and low-wage employment and perform the bulk of unpaid care 
work.  The  employment  impact  of  parenthood  is  above  the  EU  average,  and  is  much 
higher  for  women  than  for  men  leading  to  a  very  high  gender  pay  gap.  A  related 
challenge is a slightly above EU average poverty risk of elderly women due to substantial 
gender inequality in pension outcomes. The lower pension age for women (by five years) 
is  not  necessarily  to  their  advantage  as  they  have  substantially  less  time  to  build 
individual  entitlements.  It  also  raises  pension  expenditure  markedly.  Moving  forward 
with  harmonising  the  statutory  retirement  age  for  men  and  women  would  improve  the 
equity and sustainability of the pension system. Furthermore, the potential of people with 

6 

 
a  migration  background  is  not  fully  harnessed  due  to  low  educational  achievement  or 
difficulties with the recognition of skills acquired abroad. 

The  country’s  competitiveness  will  depend  on  a  flexible  and  efficient  education  and 
training system that can adapt to new realities and prepare students in the best possible 
way  for  their  future  working  lives.  Despite  above-average  spending  on  education  in 
Austria,  the  PISA  results  in  all  tested  subject  areas  are  below  average.  The  inter-
generational  transmission  of  educational  attainment  is  particularly  high  in  Austria.  In 
comparison  with  the  rest  of  the  EU,  pupils  with  a  migration  background  in  particular 
show  substantial  underachievement  compared  to  natives.  One  contributing  factor  is  the 
‘early tracking’ into two different schooling streams at the age of 10, which, combined 
with widespread half-day schooling, has a negative effect on the educational attainment 
of vulnerable youth. Some reforms have recently been enacted in the area of education, 
but they are expected to meet the challenges only partially. The supply of skilled human 
resources  at  all  educational  levels,  but  especially  at  tertiary  level,  is  too  low,  which  is 
likely  to  jeopardise  efforts  to  foster  the  technological  intensity  of  production  in  the 
business sector and excellence in research in the academic sector. In particular, despite 
the increasing number of tertiary mathematics, science and technology graduates in the 
recent past, the shortage of such graduates might hamper growth in a number of sectors 
of the economy. 

The  long-term  growth  prospects  of  the  economy  will  depend  increasingly  on  a 
diversifying  services  sector  and  a  business  environment  conducive  to  innovation  and 
entrepreneurial  dynamism.  The  Structural  Funds  are  investing  in  these  areas,  and  it  is 
strongly  recommended  that  they  continue  to  do  so,  for  example  by  setting  up  and 
boosting  risk  capital  funds  for  innovative  start-ups  where  appropriate.  Faced  with 
increasing  competition  from  low-cost  countries  in  the  middle  technology  segment, 
Austria  needs  to  improve  its  non-price  competitiveness  through  increased  emphasis  on 
research and innovation. In the wake of the new strategy ‘The way to innovation leader’, 
this  will  require  adopting  a  more  integrated  and  better  coordinated  approach  to  policy 
development and implementation, supported by top-level political steering and continued 
budgetary prioritisation. In this regard, the scarcity of venture capital may also prove to 
be a constraint. The challenge of further lowering market entry barriers including start-up 
conditions  for  enterprises  as  well  as  promoting  consumer  choice  and  value  through 
increasing competition, especially in the provision of services, has to be addressed on an 
on-going  basis.  In  this  context,  it  is  imperative  that  the  competition  authority  is  vested 
with appropriate powers and resources. Sectors that require particular attention include, 
but are not limited to, railway freight and postal services. 

Last  but  not  least,  maintaining  the  stability  of  the  Austrian  financial  sector  is  of  the 
utmost  importance.  In  this  respect,  Austria  faces  particular  challenges  due  to  the  high 
exposure of its banks to the countries of Central and Eastern Europe, as asset quality may 
still be deteriorating in several of these economies. Another challenge is to mitigate the 
risks  associated  with  foreign  currency  lending  to  unhedged  borrowers,  especially  the 
outstanding stock of loans in Swiss francs. Also, authorities need to continue to monitor 
closely  and  restructure  those  banks  that  have  benefited  from  public  sector  support, 
especially the credit institutions that were nationalised. 

7 

 
3. 

ASSESSMENT OF POLICY AGENDA  

3.1. 

Fiscal policy and taxation 

Budgetary developments 

The main goal of the medium-term budgetary strategy presented in the Austrian stability 
programme  for  the  years  2011-2016  consists  in  gradually  reducing  the  general 
government  deficit  to  zero  in  nominal  terms  and  to  a  close-to-balance  position  in 
structural  terms  by  2016.  This  means  that  Austria's  medium-term  objective  (MTO) 
defined  as  a  structural  deficit  of  0.45%  of  GDP  would  be  achieved  by  the  end  of  the 
programme's period. It should be noted that the MTO set by the Austrian authorities in 
this programme is less ambitious than the target of a balanced budget over the business 
cycle  chosen  in  previous  years.  Nevertheless,  the  new  MTO,  although  lower  than  the 
previous one, adequately reflects the requirements of the Stability and Growth Pact. The 
strategy  also  envisages  that  the  nominal  general  government  deficit  falling  to  2.1%  of 
GDP in 2013 (from 3% of GDP in 2012) allowing Austria to correct its excessive deficit 
in line with the deadline set in a Council Recommendation issued in the context of the 
Excessive Deficit Procedure (EDP) in December 2009.  

The  general  government  deficit  turned  out  at  2.6%  of  GDP  in  2011  which  was 
significantly  lower  than  the  3.9%  of  GDP  planned  in  the  previous  year's  update  of  the 
programme and the 3.4% of GDP forecast by the Commission in autumn 2011. Part of 
the difference can be explained by the postponement of the cancellation of government 
participation  in  the  "bad  bank"  KA  Finanz  from  2011  to  2012,  based  on  a  decision  by 
Eurostat  (equivalent  to  about  0.3%  of  GDP).  The  rest  was  due  to  lower  than  planned 
expenditure at all levels of government and more favourable economic conditions, which 
resulted in higher than expected revenue growth.  

For  2012,  both  the  programme  and  the  Commission's  Spring  2012  Forecast  foresee  an 
increase  in  the  nominal  general  government  deficit  to  3%  of  GDP,  partly  due  to  the 
capital  transfers  to  be  paid  in  connection  with  government  participation  in  the  two 
struggling  banks  (KA  Finanz  and  ÖVAG),  considered  by  both  the  Austrian  authorities 
and  the  Commission  to  be  one-off  measures.  The  consolidation  effort  planned  for  the 
remaining  period  of  the  programme  is  fairly  evenly  spread  in  terms  of  the  headline 
deficit, primary balance and (recalculated) structural balance2 (for details see Table III in 
the  annex).  The  deficit  targets  contained  in  the  latest  programme  are  lower  than  in  the 
previous year's programme for all the overlapping years. In particular, in the years 2013 
and  2014  they  are  lower  by  almost  1%  of  GDP.  As  this  is  accompanied  by  a  more 
pessimistic economic scenario especially in 2012 and 2013, the lower deficit targets are a 
result of the better than foreseen outcome in 2011 and the new policy measures adopted 
by the Austrian parliament for the period 2012-2016 in March 2012.  

The  programme  envisages  that  about  70%  of  the  consolidation  effort  will  be  on  the 
expenditure side (reduction in the expenditure ratio by 1.8% of GDP between 2011 and 
2016). Cuts are to be made in all primary expenditure categories. However, almost half 
of the consolidation effort on the expenditure side is to fall within the category "other" 
which is not fully explained. The programme foresees that the revenue-to-GDP ratio will 

2  Cyclically  adjusted  balance  net  of  one-off  and  temporary  measures,  recalculated  by  the  Commission 
services  on  the  basis  of  the  information  provided  in  the  programme,  using  the  commonly  agreed 
methodology 

8 

 
                                                 
 
grow  by  0.8  p.p.  in  the  period  2011-2016,  with  a  shift  towards  higher  revenue  from 
income and wealth taxes and lower taxation of production.  

The  measures  on  which  the  consolidation  plans  rely  are  specified  in  fairly  sufficient 
detail for the period 2012-2013. However, it should be stressed that the budgetary effect 
of  the  advanced  taxation  of  pension  funds  (in  2012)  and  the  tax  repatriation  agreement 
with  Switzerland  (in  2013)  is  difficult  to  quantify,  as  it  depends  on  individual  uptake. 
The consolidation effort for the remaining years of the programme is less well defined, in 
particular in terms of expenditure cuts at sub-national level. Also the consolidation effort 
on  the  revenue  side  in  2014  relies  to  some  extent  on  the  introduction  of  a  financial 
transaction tax for which there is no legal basis at the moment. 

9 

 
Box 1. Main measures 

The  consolidation  effort  presented  in  the  2012  stability  programme  is  based  on  two 
consolidation  packages  adopted  by  the  Austrian  parliament  in  December  2010  and  in 
March 2012 respectively. On the revenue side, they include closing loopholes in VAT 
collection, taxing gains accrued due to rezoning of land, hikes in income tax for high-
earners  and  rise  in  social  contributions  for  certain  groups.  On  top  of  that,  additional 
revenue  is  expected  from  advanced  taxation  of  pension  funds  (in  2012)  and  the  tax 
repatriation  agreement  with  Switzerland  (2013).  However,  their  budgetary  impact  is 
highly uncertain as it depends heavily on uptake by individuals. The additional revenue 
from the financial transaction tax is also doubtful as there is no legal basis for it at the 
moment.  On  the  expenditure  side,  the  measures  consist  mainly  in  cuts  in  pension 
allowances,  freezing  the  salaries  of  civil  servants  and  reducing  administrative  costs 
across the board, but they will be partly offset by additional spending on education. The 
consolidation  effort  in  2012  will  be  hampered  by  significant  capital  transfers  due  to 
government participation in two struggling banks, ÖVAG and KA Finanz. 

Main budgetary measures 

  Revenue 

  2011 

•  Bank levy (0.1% of GDP) 

  2012 

Expenditure 

•  Advanced  taxation  of  pension  funds 
(0.3% of GDP) – its budgetary effect is 
highly  uncertain  as  it  depends  heavily 
on uptake 

•  Reduction in subsidies (-0.1% of GDP) 

•  Administrative  cuts  across  the  board  (-

0.1% of GDP) 

•  Additional  spending  on  schools  (0.1% 

of GDP) 

•  Capital  transfers  due  to  government 
participation  in  struggling  banks  (0.6% 
of GDP) 

•  Cuts  in  pension  and  unemployment 

allowances (-0.3% of GDP) 

•  Administrative reform and salary freeze 

for civil servants (-0.1% of GDP) 

•  Additional  spending  on  universities 

(0.1% of GDP) 

  2013 

•  Tax 

repatriation 

agreement  with 
its 
Switzerland  (0.3%  of  GDP)  – 
budgetary effect is highly uncertain as it 
depends heavily on uptake 

•  Changes in real estate taxation (0.1% of 

GDP) 

•  Closing of loopholes in VAT collection 

(0.1% of GDP) 

10 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  2014 

•  Financial 

transaction 

tax  (0.2%  of 
GDP) – doubtful effect as no legal basis 
yet 

•  Further impact of changes in real estate 
taxation  and  closing  of  loopholes  in 
VAT collection  (0.1% of GDP) 

  2015 

•  Cuts  in  pension  and  unemployment 

allowances (-0.2% of GDP) 

•  Administrative  reform  and  cuts 

in 

subsidies (-0.1% of GDP) 

•  Cuts  in  pension  and  unemployment 

allowances (-0.2% of GDP) 

•  Administrative  reform  and  cuts 

in 

subsidies (-0.2% of GDP) 

1.  Note: The budgetary impact in the table is the impact reported in the programme, i.e. by the national 
authorities.  A  positive  sign  means  that  revenue  /  expenditure  increases  as  a  consequence  of  this 
measure.  The  degree  of  detail  reflects  the  type  of  information  made  available  in  the  stability  or 
convergence programme and, where available, the multiannual budget.   

The programme foresees that the structural deficit will gradually fall from 2.4% of GDP 
in 2011 to 0.2% of GDP in 2016. The structural fiscal adjustment planned is spread fairly 
evenly over the programme period. The average annual fiscal effort for the period up to 
the deadline for correcting the excessive deficit, i.e. 2011-2013, is projected both by the 
programme  and  the  Commission's  2012  Spring  Forecast  to  amount  to  about  0.5%  of 
GDP, which is below the 0.75% of GDP recommended by the Council in the context of 
the Excessive Deficit Procedure . Last year's country-specific recommendation issued for 
Austria  on  the  budgetary  strategy  called  for  action  to  ensure  the  average  annual 
adjustment  effort  of  0.75%  of  GDP.  In  that  respect,  this  recommendation  has  been 
addressed partially as the 0.5% adjustment planned in the 2012 programme is higher than 
the 0.2% envisaged in the previous one, but lower than the required effort. 

Both  the  programme  and  the  Commission's  2012  Spring  Forecast  expect  the  excessive 
deficit  to  be  corrected  in  2013.  For  the  remaining  period  of  the  programme,  varied 
progress  towards  the  MTO  is  planned.  It  is  sufficient  in  the  year  2015  (a  structural 
adjustment of 0.6% of GDP), but insufficient in 2014 and 2016 (0.3% and 0.4% of GDP 
respectively). However, the deviations from the appropriate adjustment path towards the 
MTO  in  these  two  years  are  not  significant,  as  they  do  not  exceed  0.5%  of  GDP. 
According  to  the  information  provided  in  the  programme,  the  growth  in  government 
expenditure over the period 2014-2015 will be in line with the spirit of the expenditure 
benchmark.  Following  an  overall  assessment  of  Austria's  budgetary  plans  with  the 
structural balance as a reference, including an analysis of expenditure net of discretionary 
revenue measures, the adjustment path towards the MTO seems to be appropriate. 

After  having  been  declining  until  2007,  the  debt-to-GDP  ratio  has  been  growing 
continuously  since  2008  on  the  back  of  the  substantially  increased  general  government 
deficits  and  massive  government  support  for  the  banking  sector.  At  the  end  of  2011,  it 
amounted  to  72.2%  of  GDP.  The  2012  stability  programme  stipulates  that  the  debt-to-
GDP ratio should continue its upward trend until 2013 and will start declining thereafter 

11 

 
 
 
 
 
 
 
 
 
 
 
 
(see Table IV in the annex). In terms of the debt reduction benchmark, Austria will be in 
transition  in  the  years  2014-2016  and  the  plans  presented  in  the  programme  should 
ensure sufficient progress towards compliance with the debt criterion. However, there are 
some risks attached to this projection. Firstly, a source of concern is the growing debt of 
state-owned  companies  classified  outside  the  government  sector  (such  as  the  Austrian 
Federal  Railways  and  the  Austrian  Highway  Authority).  Secondly,  further  burdens  on 
debt  as  a  result  of  government  measures  to  support  the  banking  sector  cannot  be 
excluded. 

Long-term sustainability  

With regard to the sustainability of public finances, the long-term change in age-related 
expenditure  is  above  the  EU  average3.  The  initial  budgetary  position  compounds  the 
long-term  costs.  Under  a  no-policy  change  assumption,  debt  would  stabilise  at  72%  of 
GDP  by  2020.  Additional  fiscal  consolidation  beyond  the  forecast  horizon  would  be 
needed to meet the reference value for government debt beyond the short-term. However, 
the full implementation of the programme would be enough to put debt on a downward 
path by 2020, though would still be above the reference value of 60% of GDP. Recent 
reform  measures  undertaken  in  the  field  of  pensions  would  reduce  sustainability  risks. 
Ensuring  sufficient  primary  surpluses  over  the  medium-term,  as  planned  in  the  2012 
programme, would improve the sustainability of public finances.  

Fiscal framework 

It is widely acknowledged that fiscal relations between the three layers of government in 
Austria (federal, regional and local) are complex and lack transparency. Decision-making 
in  many  areas  is  divided  among  various  levels  of  authority.  Revenue-raising  and 
spending  responsibilities  for  a  number  of  activities  do  not  lie  within  the  same  level  of 
government 
the  2011  country-specific 
recommendations  issued  to  Austria  called  for  improving  the  budgetary  framework  by 
aligning  legislative,  administrative  and  financing  responsibilities  between  the  different 
levels of government, in particular in healthcare and education. 

(for  examples  see  Box  2).  One  of 

31The impact of the most recent reform is not included in the figures. 

12 

 
                                                 
 
 
Box 2: Inefficiencies in fiscal relations between the layers of government 

The Austrian healthcare system is organised in a fairly complex way. The social security 
system  funds  practising  physicians.  Where  hospitals  are  concerned,  the  federal 
government  sets  the  framework  conditions,  but  the  provinces  are  the  real  decision-
makers, even though they provide less than half of the government funding for hospitals 
(the  rest  comes  from  social  insurance  and  from  the  federal  and  local  governments).  In 
running  hospitals,  the  provinces  and  municipalities  do  not  always  pursue  an  agenda 
exclusively  concerned  with  health  service  provision.  There  are  also  economic  and 
political  interests  at  stake,  which  make  closing  down  redundant  hospitals  literally 
impossible. Since different agents are responsible for in-patient and out-patient services, 
there  is  no  incentive  to  move  workload  from  costly  hospitals  to  practising  physicians 
whose services are cheaper. The number of hospital stays in Austria is among the highest 
in  the  OECD  countries.  According  to  the  Federal  Audit  Court,  hospital  services  worth 
more  than  1 %  of  GDP  should  be  shifted  from  the  hospital  sector  to  practising 
physicians4. Another important weakness of the Austrian health system is that it has its 
primary  focus  on  curative  treatment,  whereas  preventive  health  care  is  underdeveloped 
(1.8% of overall health spending in AT, compared to the EU average of 2.9%). This has a 
negative  impact  on  cost  developments  in  the  health  sector,  as  well  as  indirect  negative 
effects on long-term care. 

The  financing  of  the  education  system  is  also  controversial.  The  federal  government 
funds  the  salaries  of  teachers  to  a  large  extent  as  well  as  the  entire  cost  of  teachers’ 
pensions.  However,  teachers  are  formally  employed  by  the  provinces.  The  federal 
government  is  responsible  for  the  curriculum  but  the  provinces  have  far-reaching 
competences in terms of the organisation of schooling (including pupil numbers per class 
and teaching periods). Local governments have the task of maintaining the infrastructure 
of  compulsory  schools.  This  division  of  competences  does  not  encourage  effective 
allocation of resources and weakens cost-cutting incentives. 

this  country-specific 
The  Austrian  authorities  have  only  partially  addressed 
recommendation.  The  latest  consolidation  package  provides  for  the  streamlining  of 
subsidies granted by the various levels of government. It also envisages changes  to  the 
way healthcare is organised and financed, but the operational details of that reform have 
still  to  be  agreed  by  the  central  and  regional  governments.  Nevertheless,  the  tentative 
agreement  made  between  the  federal  and  regional  governments  in  May  2012  that 
healthcare would in future be financed from a centralised fund, raises hopes that many of 
the current inefficiencies could be removed from the system. 

Another  new  development  aimed  at  improving  the  Austrian  fiscal  framework  was  the 
introduction of a debt brake in December 2011 to limit the structural federal government 
deficit to 0.35 % of GDP, starting in 2017. The original attempt to enshrine the debt brake 
in the constitution in order to limit the structural general government deficit to 0.45 % of 
GDP failed due to insufficient support from the opposition parties in parliament. Despite 
the  lack  of  constitutional  status,  i.e.  not  applying  to  sub-national  authorities,  the 
provinces have undertaken to respect it.  

This is now reflected in the updated goals of the Austrian Stability Pact, which sets fiscal 
targets for the three layers of government. The newest edition of the Pact was signed by 
the  federal,  regional  and  local  governments  on  9  May  2012.  Apart  from  aligning  the 

4  

Vorschläge des Rechnungshofes zur Verwaltungsreform, Positionen Reihe 2011/1. 

13 

 
 
                                                 
budgetary targets for each layer of government with the above-mentioned debt brake and 
the general government fiscal goals presented in the 2012 stability programme, the new 
agreement  also  aims  to  enhance  oversight  of  the  provinces'  budgets  by  the  federal 
government and make the sanction mechanisms (modelled on those under the SGP) more 
stringent. Moreover, the Pact has now been transformed into a permanent instrument as 
opposed to its previous time-limited editions, which had to be renegotiated periodically5. 
Another novelty is an 'expenditure brake', whereby public expenditure growth should not 
exceed the medium-term GDP growth. 

Tax system 

The tax and social security burdens on labour income in Austria are among the highest in 
the EU and have increased for all family types over the last decade. Average combined 
tax  and  social  security  contribution  rates  are  high  for  almost  all  workers.  Marginal 
effective  tax  rates,  however,  are  particularly  high  at  low  income  levels,  due  to  the 
interaction of social security contributions, personal income tax and the benefit system6. 
Even  though  Austria  performs  well  in  nearly  all  labour  market  groups,  also  among  the 
low-skilled,  it  has  set  itself  an  even  more  ambitious  Europe  2020  employment  target 
(77 %–78 %  compared  to  a  2011  employment  rate  of  75.2 %)  and  will  need  further 
growth in employment to reach it. 

One  of  the  2011  country-specific  recommendations  issued  to  Austria,  backed  by  the 
general  Annual  Growth  Survey  2012  priorities,  called  for  reducing,  in  a  budget-neutral 
way,  the  effective  tax  and  social  security  burden  on  labour,  especially  for  low-  and 
medium-income  earners.  This  issue  was  not  addressed  in  the  budget  law  for  2012 
adopted by the Austrian parliament in November 2011. The newly adopted consolidation 
package contains tax measures going in the opposite direction, namely increases in social 
security  contributions  and  personal  income  taxation  as  well  as  reductions  in  tax-free 
earnings  for  the  self-employed.  As  most  of  these  measures  target  high-income 
individuals,  whose  response  to  labour  tax  incentives  is  rather  inelastic  according  to 
empirical research, no significant impact on the labour market is expected. However, the  
abolition  of  the  exemption  from  unemployment  contributions  for  older  workers  is  not 
conducive to enhancing the employment of older workers. 

Instead  of  further  increasing  the  tax  burden  on  labour,  Austria  would  benefit  from 
shifting  the  tax  burden  towards  recurrent  real  estate  taxes  and  a  further  and  faster  shift 
towards environmental taxation, given the currently rather low receipts from such taxes. 
Austria  would  thus  have  room  to  address  the  recommendation  for  a  budgetary  neutral 
shift away from labour taxation with a view to increasing employment rates further given 
the need to counteract the impact of demographic change on the working population. The 
restrictions  on  input  VAT  deductibility  for  certain  real  estate  transactions  and  the 
abolition  of  mineral  oil  tax  reimbursements,  contained  in  the  latest  consolidation 
package,  certainly  broaden  the  tax  bases  and,  in  the  latter  case,  also  eliminate 
environmentally  harmful  subsidies.  However,  given  that  these  measures  apply  to  only 
very limited areas, they are certainly not very ambitious. In particular, the private use of 
company cars continues to be subsidised via the tax system. Estimates indicate a subsidy 
of over 30 %, amounting to up to 0.6 % of GDP. Increasing the land tax for agricultural 
enterprises, taxing gains from the rezoning of land and taxing  all gains stemming from 
real estate transfers, with the exception of owner-occupied housing, will increase the low 

5  However,  the  Pact  can be  suspended  in  special  circumstances,  e.g.  significant  changes  in  the financing 
needs of the health care or long-term care sector, unexpected fall in tax revenue, etc.  
6 

OECD Economic Survey on Austria (July 2011). 

14 

 
                                                 
share  of  Austrian  property  taxation.  However,  with  the  exception  of  the  land  tax  on 
agricultural enterprises, the newly proposed changes to the tax system concern taxes on 
real estate transactions and not the recurrent taxes on property that are less detrimental to 
growth. 

Future challenges remain, as the share of taxation considered less detrimental to growth 
remains low and is decreasing further due to increases in labour taxation. Despite initial 
measures to increase less growth-detrimental property taxation, further steps need to be 
taken.  Currently,  the  recurrent  taxation  of  real  estate  is  among  the  lowest  in  Europe. 
Further steps should focus on increasing it, e.g. by adjusting the tax factor determining 
the tax base, as it uses 1982 values. 

3.2. 

Financial sector 

Financial stability 

The capitalisation of the banking sector improved in 2011 (i.e. as in June 2011), as the 
average Tier 1 capital of Austrian banks increased to 10.3 % compared to 10.0 % at the 
end  of  2010.  Following  the  call  by  the  European  Council  on  27  October  2011  for  a 
temporary increase in bank capital up to 9 % core Tier 1, in December 2011 the European 
Banking  Authority  (EBA)  recommended  that  three  Austrian  institutions  (Erste  Group, 
Raiffeisen  and  Volksbank)  should  further  increase  their  capital.  Individual  compliance 
plans  are  now  being  implemented.  The  total  capital  increase  needed  according  to  the 
EBA was EUR 3.9 billion. Erste Bank recently announced that its financial results in the 
last  quarter  of  2011  had  enabled  it  to  reduce  the  capital  amount  requested  by  the  EBA 
from EUR 743 million to EUR 166 million. 

The EBA considered the restructuring of Volksbank to be an appropriate response to the 
December 2011 recapitalisation recommendation. Therefore, the bank will no longer be 
assessed  against  the  core  Tier  1  ratio  of  9 %  after  taking  into  account  an  appropriate 
sovereign buffer. Volksbank, the fourth largest Austrian bank, is currently undergoing a 
significant  restructuring.  Following  a  first  round  of  public  sector  support  in  2009,  the 
state  had  to  inject  further  capital  into  the  bank  on  27  February  2012.  Therefore,  the 
Austrian  state  is  now  a  major  minority  shareholder  (with  roughly  49 %  of  the  capital). 
Kommunalkredit, the ‘good bank’ of the former Kommunalkredit AG (taken over by the 
Austrian  state  in  2008),  participated  in  the  Greek  private-sector  involvement  (PSI) 
package and is likely to have ended 2011 in negative territory. Furthermore, KA Finanz 
(i.e. the ‘bad bank’ of Kommunalkredit) suffered a significant impacted from the Greek 
PSI  due  to  its  exposure  to  Greek  sovereign  debt  and  its  sizeable  credit  default  swap 
(CDS) portfolio and may also need further public support. Hypo Alpe Adria, which was 
taken  over  by  the  Austrian  government  in  2009,  managed  to  earn  a  slight  profit 
(according to International Financial Reporting Standards) in 2011 after four consecutive 
years of losses7. However, the upward trend in delinquencies on the loan portfolio in the 
western Balkan countries may continue to put a strain on the profitability and solvency of 
Hypo Alpe Adria going forward. Given the still difficult situation of these banks, further 
public support for their restructuring may be necessary in the future. 

The deterioration in asset quality continued in 2011 and led to a further increase in loan-
loss  provisions.  Given  this  trend  in  impaired  assets,  coupled  with  upward  pressures  on 
bank funding costs, profitability remained subdued throughout 2011. 

7  

According to the stricter Austrian accounting standards, the bank ended 2011 in negative territory. 

15 

 
                                                 
Funding of the economy 

Against  the  backdrop  of  the  increase  in  credit  demand  in  the  corporate  sector,  credit 
activity  improved  only  marginally  in  2011  compared  to  the  previous  year.  Foreign 
currency  loans  to  households  and  corporations  (i.e.  loans  in  Swiss  francs  and  Japanese 
yen), one of the main vulnerabilities of the banking sector, still represent roughly 30 % of 
total  loans.  However,  the  situation  has  eased  since  the  onset  of  the  financial  crisis. 
According to recent data, the outstanding stock of foreign currency loans to households 
amounted to EUR 37 billion at the end of 2011 (compared to around EUR 39 billion at 
the end of 2010), which corresponds to 28.4 % of the total loans to households. Foreign 
currency  loans  are  largely  denominated  in  Swiss  francs  (i.e.  roughly  93 %),  and  the 
remainder  in  Japanese  yen.  Moreover,  the  Austrian  extension  of  Article  16  of  the 
Consumer Credit Directive to mortgages seems to have considerably reduced the offer of 
fixed-rate  mortgages  in  favour  of  floating-rate  mortgages  with  complicated  rate-cap 
structures. 

Whereas  exposure  to  the  countries  of  Central  and  Eastern  Europe  (CEE)  remained 
broadly  stable  by  mid-2011  compared  to  the  end  of  December  2010,  more  recent  data 
indicate  a  downward  trend.  According  to  BIS  (Bank  of  International  Settlements)  data, 
the total exposure of Austrian banks to the CEE countries amounted to USD 295 billion 
at the end of the third quarter of 2011. To address the vulnerabilities associated with this 
exposure,  in  November  2011  the  Austrian  banking  supervisors  announced  measures  to 
improve the sustainability of the business models of Austrian banks in the CEE region. 
The decision to announce these measures, which would have an impact on new lending 
in several CEE countries (in particular those with high loan-to-deposit ratios), was taken 
unilaterally by the Austrian supervisors, as host supervisors in the CEE region were not 
previously  informed.  Therefore,  further  improvements  in  cooperation  and  exchanges  of 
information with home- and host-country financial sector supervisors in the CEE region 
may be needed. Following consultations with the European Commission and with host-
country  supervisors,  these  measures  were  amended  and  subsequently  included  in  a 
supervisory guideline of the Austrian supervisors published on 14 March 2012. 

As regards access to credit for SMEs, the situation further improved in 2011. The rate of 
rejected  loan  applications  and  unacceptable  loan  conditions  decreased,  making  Austria 
one of the countries with the most favourable debt-financing conditions for SMEs. After 
the  contraction  in  2009-2010,  loans  to  non-financial  firms  have  been  consistently 
expanding  at  a  moderate  pace,  reaching  2.2 %  (year  on  year)  in  September  20118.  The 
number  of  SMEs  using  debt  financing  increased  in  the  period  2009-2011  from  68  to 
73 %. On the other hand, the relatively underdeveloped stock market and venture capital 
industry  do  not  offer  sufficient  alternatives  for  raising  capital.  Consequently,  equity 
financing remained below the EU average, with less than 6 % of Austrian SMEs having 
access to it in 2011. The accessibility and supply of equity finance would benefit from 
improving  the  legal  framework  for  venture  capital,  e.g.  by  increasing  the  attractiveness 
and  transparency  of  legal  forms  used  for  (i)  venture  capital  funds  and  (ii)  investment 
vehicles, including measures to mitigate possible tax disincentives. 

3.3. 

Labour market, education and social policies 

Overall,  the  Austrian  labour  market  has  performed  well,  as  witnessed  by  the  high 
employment rate and the lowest unemployment rate in the EU in 2010 and 2011. There 
is,  however,  scope  to  enhance  labour  market  participation  of  certain  groups  of  the 

8  

National Bank of Austria – Kreditmonitor December 2011. 

16 

 
                                                 
population.  The  employment  rate  of  older  workers  is  below  EU  average  and  has 
decreased  from 2010 to 2011 despite a sharp rise in the years before. The average exit 
age  from  the  labour  force  is  also  below  the  EU  average.  The  gap  between  the 
employment rates of migrants and nationals is considerable and above the EU average. 
The unemployment rate of migrants is more than twice as high as that of nationals. The 
female employment rate is above the EU average, but the gap in work intensity between 
women and men as well as the gender pay gap are among the highest in the EU. Most of 
these challenges were reflected in last year's country-specific recommendations issued to 
Austria and have also been highlighted in the Annual Growth Survey 2012. 

Longer working lives 

A  number  of  measures  to  increase  the  effective  retirement  age  were  adopted  in  the 
consolidation  package,  including  a  continued  reform  of  invalidity  pensions  and  an 
enhanced focus on professional rehabilitation. The latter encompasses the replacement of 
invalidity pensions by rehabilitation subsidies for people under 50 with health problems 
from  2014  onwards,  which  will  be  administered  by  the  Public  Employment  Service 
together with enhanced active labour market measures. However, for those above 50 who 
account for the large majority of invalidity pensioners, no structural changes are planned. 
The  2011  Euro-Plus-Pact  commitments  linked  to  this  policy  area  are  "Fit2Work" 
(counselling  infrastructure  in  3  provinces,  a  model  developed  with  the  help  of  the 
European  Social  Fund)  and  the  'Gesundheitsstraße'  (better  streamlined  occupational 
medical examination). Both aim at maintaining the employability of older employees and 
reducing the number of retirements due to ill health. Furthermore, the pension calculation 
method  will  be  simplified  and  made  more  transparent  as  of  2014.  The  early  retirement 
scheme  with  deductions  ('Korridorpensionen')  will  be  reformed  through  increasing  the 
required  contributory  years  from  37.5  to  40  years  and  increasing  the  deduction  factor. 
Additional  incentives  for  companies  to  employ  older  people  (mainly  integration 
subsidies)  are  planned.  However,  no  convincing  plans  have  been  presented  neither  to 
increase the take-up and efficiency of life-long learning for older people nor to enhance 
the  promotion  of  an  active  ageing  culture  in  companies.  Access  to  the  early  retirement 
scheme for long-term insured is not planned to be further restricted and there are also no 
measures announced to harmonise the statutory retirement age between women and men. 
The  proposed  measures  will  therefore  not  be  far-reaching  enough  to  substantially  raise 
the effective retirement age.  

Gender segmentation 

Some  measures  have  been  taken  to  improve  the  situation  of  women  in  the  Austrian 
labour  market.  In  order  to  facilitate  access  to  care  for  dependent  children,  funds  have 
been  made  available  by  the  federal  government  for  the  expansion  of  childcare  places 
(EUR 55 million until 2014, a sum to be matched by an identical contribution from the 
provinces) and the expansion of all-day school places (EUR 320 million until 2014). The 
latter had been announced in the Euro Plus Pact and the commitment is being fulfilled. In 
both  cases,  the  pace  and  scope  of  implementation  will  depend  considerably  on  the 
provinces. For long-term care, a new fund has been created (EUR 685 million) to cover 
the  rising  costs  in  this  area  in  the  period  2011  to  2014.  The  NRP  announces  a 
continuation of this fund until 2016 with an allocated budget of EUR 650 million. On the 
other  hand,  some  smaller-scale  measures  mainly  focusing  on  awareness  raising  have 
been  introduced,  such  as  the  income  calculator  for  women,  staff  income  reports  and 
indication  of  minimum  pay  in  job  advertisements.  Most  of  these  measures  have  been 
taken under the National Action Plan for the equal treatment of women and men on the 
labour market. However, greater effort is necessary to ensure a more equal distribution of 

17 

 
unpaid care work between women and men, e.g. by further promoting take-up of parental 
leave by fathers, and to combat stereotypes with regard to career choices. 

Underutilised potential of people with a migration background 

The NRP includes a number of measures to address the problems people with a migration 
background face on the labour market. In particular, migrants are three times more often 
employed  and  remunerated  below  their  actual  qualification  levels  than  Austrians  –  the 
incidence of over-qualification is among the highest in the OECD9. Besides some support 
measures  designed  to  address  lack  of  language  skills  and  missing  networks,  the  NRP 
announces a project to provide a more centralised structure for the recognition of skills 
acquired  abroad  with  contact  points  at  regional  level.  A  clear  and  transparent  structure 
needs  to  be  put  in  place  to  facilitate  employment  of  foreign  qualified  workers  and  to 
improve information for employers without creating additional bureaucratic obstacles or 
procedures  for  migrants.  As  the  high  gaps  in  labour  market  performance  between 
migrants  and  nationals  also  point  to  the  existence  of  discrimination,  the  study  project 
announced  in  the  NRP  to  look  into  discrimination  of  migrants  on  the  labour  market  is 
considered an important complementary step to be followed up. 

Overall, Austria has addressed the labour market country-specific recommendations only 
partially. Relevant reforms have been implemented or are planned, for example to further 
restrict  access  to  the  invalidity  pension,  make  the  early  retirement  scheme  with 
deductions less attractive and make the calculation of pension benefits more transparent. 
However,  they  are  not  substantial  enough  to  ensure  long-term  sustainability  and 
adequacy of pensions. Reforms to improve the situation of women on the labour market, 
such  as  the  expansion  of  childcare  facilities,  are  relevant,  but  not  adequate  to  meet  the 
challenge.  Indeed,  inactivity  and  part-time  work  due  to  family  responsibilities  are  still 
above  the  EU-average,  while  the  percentage  of  children  cared  for  outside  the  family  is 
below  the  EU  average.  The  measures  implemented  in  order  to  raise  awareness  of  the 
substantial female-male wage gap in Austria are relevant, but neither their effectiveness 
nor their level of ambition is considered sufficient. The recommendation to bring forward 
harmonisation of the pension age between men and women (planned in Austria for 2024-
2033) has not been addressed. 

The  substantial  gender  inequality  in  pension  outcomes  and  the  resulting  degree  of 
poverty  among  elderly  women,  above  the  EU  average  despite  high  public  spending  on 
pensions,  are  drawbacks  of  the  Austrian  pension  system.  Direct  old-age  pensions  for 
women  (not  taking  into  account  the  compensatory  supplement)  amount  only  to 
approximately 60 % of the corresponding benefits for men. More than a quarter of female 
pensioners living alone have incomes below the poverty threshold. Measures to increase 
equality  in  income  and  careers,  and  bringing  forward  harmonisation  of  the  statutory 
retirement  ages  of  women  and  men  could  alleviate  the  situation  to  a  certain  extent 
however only in the medium or even long term. Meanwhile, attention needs to be given 
to the poverty risk of this group. 

A further challenge for the Austrian authorities is to develop a sustainable model for the 
financing of long-term care services, which, due to demographic developments, will need 
to be expanded, also with a view to increasing the availability of care services to improve 
reconciliation of work and family life, especially for women. The consolidation package 
and  the  NRP  foresee  prolongation  of  the  long-term  care  fund  beyond  2014  with  an 

9 Cf. OECD Social, Employment and Migration Working Papers No. 127: The Labour Market Integration 

of Immigrants and their Children in Austria, 2011, Paris 

18 

 
                                                 
 
amount of EUR 650 million. A working group is supposed to develop proposals for the 
sustainable provision and financing of long-term care services by the end of 2012. It will 
be important that these proposals go beyond gradual adaptation of the current system and 
also tackle inequalities regarding access to care services. 

Despite relatively high public spending on education in Austria (5.5 % of GDP vs 5.1 % 
in  the  EU-27  in  2008),  the  PISA  results  in  all  tested  subject  areas  are  below  average. 
Furthermore, while the early school-leaving rate (ESL) is well below the EU average, the 
position of migrants remains particularly problematic, with a persistent ESL gap between 
this  group  and  natives.  The  influence  of  socio-economic  background  on  educational 
achievement is particularly high. In order to address these concerns, Austria is currently 
implementing  several  reforms,  such  as  the  expansion  of  all-day  school  places  (as 
announced in the Euro-Plus-Pact) and the replacement of general secondary schools by 
new secondary schools by 2018/2019. Regarding the latter, general secondary schools in 
rural  areas  with  a  good  reputation  transform  more  readily  into  new  secondary  schools 
than the less well performing schools in larger cities. Therefore, the risk persists that the 
general secondary schools in urban areas with a high percentage of disadvantaged pupils 
with a migrant background will be the last to be transformed. This risks slowing down 
the  improvement  in  educational  outcomes  and  the  decrease  in  drop-outs  (in  particular 
among  disadvantaged  pupils  with  a  migrant  background)  in  urban  areas.  The  focus 
should therefore be on prioritising the transformation of general secondary schools with a 
high proportion of disadvantaged pupils. 

Chart 1. Early school-leavers among specific population sub-groups 

Austria
Standardized LEVEL values (2010)

Early school leavers

Natives

Migrants

Females

Males

Austria
CHANGE values in percentage terms 
(2010/2007)

EU

AT

Early school leavers

Natives

Migrants

Females

Males

-10

-8

-6

-4

-2

0

2

4

-30

-25

-20

-15

-10

-5

0

5

10

Lower share of ESL 
than the EU 

Reduction in the % 
of ESL over time

Note: Migrants are respondents reporting that they were born abroad. In Austria, the share of migrants in the 18-24 age 
group amounts to 16.2 %. 

New measures for early intervention against early school leaving (youth and apprentice 
coaching) and free-of-charge courses to provide basic education qualifications for people 
who did not complete schooling (‘second-chance education’) have also been introduced 
in addition to the already well-established Training Guarantees for young people, which 
include  training  in  designated  training  centres  for  those  who  cannot  find  a  company-
based  apprenticeship  place.  A  comprehensive  Lifelong  Learning  Strategy  for  2020  was 
presented in July 2011, but as no budget or clear responsibilities have been allocated, its 
effectiveness will depend on how high it will come on the political agenda. 

19 

 
 
 
Tertiary attainment is low in comparison to the EU average. In addition, migrants and, to 
a lesser extent, males have a lower tertiary attainment rate than the EU average. In order 
to raise the share of tertiary education graduates in Austria, and meet the skills needs of 
the  labour  market  better,  the  government  has  set  out  to  increase  investment  in  higher 
education to 2 % of GDP by 2020. However, steadily growing numbers of students and 
high  drop-out  rates  (around  40 %)  remain  the  main  challenges  together  with  a 
considerable gap in funding. A Higher Education Plan has been developed, the capacity–
oriented  financing  is  supposed  to  be  introduced  as  from  2013.  Higher  education  is 
currently almost exclusively funded by public sources. The expected need for continued 
fiscal consolidation limits future state funding, prompting exploration of ways to broaden 
the  financial  base.  Tuition  fees,  accompanied  by  state-of-the-art  student  grant  and  loan 
systems  to  facilitate  the  access  of  students  from  disadvantaged  backgrounds,  are  one 
option being discussed. They would also limit the duration of studies and improve their 
completion rate. 

Overall,  the  2011  country-specific  recommendation  calling  for  improved  educational 
outcomes and the Annual Growth Survey 2012 priorities in the area of education are only 
partially addressed. The expansion of all-day school places, the new secondary schools as 
well  as  the  youth  and  apprentice  coaching  have  the  potential  to  improve  education 
outcomes,  in  particular  among  disadvantaged  youth.  However,  the  coaching  measures 
should  be  embedded  in  a  comprehensive  strategy  combating  ESL.  Furthermore,  early 
childhood  education  and  addressing  German  language  deficits  at  an  early  age  would 
deserve a stronger focus in order to ensure that all children have the best possible basis 
for  starting  school.  The  ‘second-chance  education’  scheme  might  improve  the  labour 
market  prospects  of  school  drop-outs,  but  its  uptake  remains  to  be  seen.  The  new 
secondary  school  reform  will  not  completely  solve the issue of early tracking of pupils 
into  different  schooling  streams  at  the  age  of  10,  often  criticised  as  detrimental  to 
vulnerable youth, as academic secondary schools are participating only on a limited basis 
(at most 10 % of all classes).  

3.4. 

Structural measures promoting growth and competitiveness 

Austria  enjoys  a  favourable  position  in  terms  of  competitiveness  and  productivity.  It  is 
one  of  the  few  EU  Member  States  to  have  surpassed  its  pre-crisis  output  peak.  It  has 
maintained  a  current  account  surplus  and  high  export  intensity.  The  regulatory 
environment is generally business-friendly. Nevertheless, Austria faces relative structural 
weaknesses  in  several  areas,  which  may  harm  its  long-term  growth  potential.  Whereas 
manufacturing  has  been  the  driver  of  productivity  growth,  competition  in  the  services 
sector has not been particularly supportive of domestic demand. Expenditure on R&D is 
high  by  European  standards,  but  Austria  may  not  be  exploiting  and  maintaining  its 
innovative  potential  sufficiently.  There  is  also  room  for  improving  resource  efficiency 
and  environmental  protection.  In  addition,  Austria  still  has  a  large  number  of  internal 
market directives left to transpose into national legislation, in particular in the transport 
sector.  The  relevance  of  these  issues,  which  were  subject  of  a  country-specific 
recommendation for Austria last year, was later confirmed in the Annual Growth Survey 
2012 priorities. 

Liberalisation, competition and product market reforms 

The Services Directive has finally been implemented through adoption of a ‘horizontal 
law’ and changes in legislation at province level. Nevertheless, a number of restrictions 
in  the  services  sector  remain.  These  include  requirements  prohibited  by  the  Services 
Directive  (e.g.  establishment  and  insurance  obligations).  At  the  same  time,  the 

20 

 
proportionality  of  a  number  of  admissible  requirements  still  has  to  be  examined.  A 
striking fact is  that certain requirements  have been abolished  in some of the  provinces, 
but maintained in others. 

There  is  no  commitment  from  the  Austrian  authorities  with  regard  to  liberalisation  of 
network  services  and  industries,  where  high  network  access  prices  and  distortive 
behaviour  by  incumbent  firms  deter  market  entry,  competition  and  innovation.  For  rail 
freight  services  the  degree  of  competition  is  among  the  lowest  in  the  EU.  The 
infrastructure  manager  and  the  incumbent  rail  transport  operators  are  controlled  by  the 
same holding. The market shares of the state-owned railway carrier OeBB are still 80 % 
in  freight  and  93 %  in  passenger  services10.  It  is  essential  to  ensure  effective 
implementation of the EU directives in order to allow competition between providers of 
rail  freight  services  and,  in  particular,  to  ensure  non-discriminatory  access  to 
infrastructure.  Access  to  postal  infrastructure  remains  an  issue  in  Austria.  Despite 
considerable progress with the replacement of delivery boxes, many such boxes are still 
only  accessible  to  the  incumbent  operator.  Competition  in  electronic  communications 
would  benefit  from  increased  flexibility  in  spectrum  management  and  access  to 
spectrum11.  

The consultations on the design of an entry-exit access scheme for the gas transmission 
system  to  eliminate  gas  transport  along  contractual  paths  are  progressing.  At  the  same 
time, Austria is still lagging behind in transposing the Electricity Directive of the Third 
Energy Package at province level. Network costs are currently among the highest in the 
EU.  In  addition,  the  permit  procedures  for  construction  of  gas  and  electricity 
infrastructure have remained overly time-consuming. 

Unjustified restrictions in the liberal professions (self-imposed regulations, licensing and 
membership  requirements,  and  restrictions  on  the  establishment  of  interdisciplinary 
firms, e.g. between lawyers, tax and management consultants) persist in spite of partial 
progress. Austria has notified 214 regulated professions to the Commission (EU average: 
152), including 23 in business services (EU average: 13). This indicates significant scope 
for assessing the justification and proportionality of regulation in these professions with a 
view to facilitating access to them. 

There  are  now  proposals  to  reform  competition  law  on  the  table  that  would  address 
Austria’s  commitment  (national  reform  programme  2011)  to  strengthen  the  Federal 
Competition  Authority.  The  reform  would  bring  useful  changes  to  the  current 
competition framework such as extended investigative powers for the institution, which 
would make them similar to those of the European Commission; among others the rights 
to search and seal companies premises, to issue requests for information and to sanction 
non- or misinformation in response to such requests. However, the reform proposal does 
not  address  the  need  to  secure  adequate  financial  resources  and  staffing  for  the 
competition  authority  whose  number  of  staff  is  among  the  lowest  in  comparison  to 
analogous institutions in other EU Member States. 

In spite of gradual reductions over recent years, the number of administrative procedures 
required (8, including licensing, registration, certification and announcement), minimum 
capital  and  the  time  needed  (up  to  28  days)  to  set  up  a  business  are  unnecessarily 

10 
11 

Rail Market Monitoring Survey 2012. 
Member States were required by the amended GSM Directive (2009/114/EC) to allow by 9 May 
2010 the introduction of UMTS systems in the 900 MHz and 1 800 MHz bands and by Decision 
2011/251 EU to allow by 31 December 2011 the introduction of LTE (Long Term Evolution) and 
WiMAX (Worldwide Interoperability for Microwave Access) in these bands. 

21 

 
                                                 
burdensome  and  would  benefit  from  further  reductions.  The  reform  of  limited  liability 
company,  currently  still  in  discussion,  foresees  a  reduction  of  the  required  (paid-in) 
minimum  capital  and  the  costs  for  notary  certification  in  certain  cases.  However  the 
announcement requirements and other procedures would remain unchanged. 

All  in  all,  the  action  on  the  recommendation  issued  in  2011  has  lacked  scope, 
determination  and  hence  tangible  results  and  important  structural  weaknesses  in  the 
functioning  of  services  markets  have  persisted.  The  relevance  and  validity  of  the 
recommendation  remains  just  as  strong  and  this  justifies  reissuing  it  with  enhanced 
rigour.  The  progress  with  respect  to  research  and  innovation,  environment  and  climate 
protection, energy and resource efficiency will also warrant monitoring to ensure optimal 
use  of  limited  public  funding,  expand  the  utilisation  of  structural  funds  and  avoid 
perverse incentives. 

Research and innovation 

Expenditure on R&D is high by European standards, but Austria may not be sufficiently 
exploiting  and  maintaining  its  innovative  potential.  One  reason  for  this  problem  is  an 
underdeveloped venture capital market (seed and start-up investment amount to 0.06 % of 
GDP compared to an EU average of 0.14% in 2010), which suffers from an unfavourable 
legal  framework  and  a  disadvantageous  tax  treatment  of  equity  financing  compared  to 
debt financing. Education has to provide the adequate skills as a basis for innovation and 
competitiveness. 

The economic crisis and the shortage of venture capital are among the factors behind the 
recent  decline  in  the  domestic  private  sector  share  of  R&D  expenditure  from  49 %  in 
2007  to  44 %  in  2010,  thus  putting  at  risk  achievement  of  the  ambitious  Europe  2020 
target  of  3.76 %  of  GDP  for  gross  expenditure  on  research  and  development  (GERD). 
Indeed, R&D is concentrated in  a  limited number of companies,  while the start-up and 
growth dynamics of  innovative  firms  are low. Austria formulates  R&D  policies from a 
position of contentment with its relatively favourable standing in terms of overall R&D 
intensity.  However,  it  remains  an  innovation  follower,  lagging  behind  in  terms  of  the 
economic  effects  of  innovation  (e.g. knowledge-intensive  exports,  revenue  from 
innovative  products,  licence  and  patent  revenue  from  abroad).  Despite  recent  strong 
increases  in  public  R&D  funding,  the  Austrian  research  and  innovation  system  is 
underperforming, in particular due to a relatively low tertiary education rate, especially in 
science  and  engineering,  and  a  complex  governance  system  leading  to  inefficiencies  in 
policy  implementation.  Published  in  2011,  the  Austrian  RTDI  Strategy  ‘The  way  to 
innovation leader’ contains many initiatives to improve the performance of the research 
and  innovation  system.  These  are  echoed  and  enhanced  in  the  2012  national  reform 
programme  and  the  Euro  Plus  Pact  commitments.  The  most  prominent  measure  is  the 
simplification of the tax regime of innovation activities to a single tax credit raised from 
8 %  to  10 %.  In  addition,  the  cap  on  the  amount  which  could  be  subcontracted  while 
remaining eligible for tax credit rises from 100 thousand EUR to 1 million EUR. While 
budget  neutral  these  measures  are  expected  to  encourage  subcontracting  to  research 
centres  or  universities.  On  the  other  hand,  this  approach  favours  established  activities 
more than the breakthrough research needed for an economy like Austria's at the expense 
of  direct  funding  of  research  activities.  Moreover,  whereas  the  NRP  lists  numerous 
initiatives  it  lacks  clear  prioritisation  and  details  of  players  and  budgets  and 
implementation timetables. 

Energy and resource efficiency 

22 

 
Austria  has  committed  itself  to  reduce  its  greenhouse  gas  emissions  in  sectors  not 
covered  by  the  Emissions  Trading  System  (ETS)  by  16 %  compared  to  2005  by  2020. 
Until  2010,  emissions  decreased  by  9 %  which  is  in  line  with  the  target.  According  to 
Austria’s  latest  projections  based  on  existing  measures  emissions  are  expected  to  be 
reduced by 5.2 % by 2020, leading to a shortfall of the target by 10.8 percentage points. 
Austria  has  also  exceeded  the  2010  national  emission  ceiling  for  nitrogen  oxides  by 
about  40 %.  The  cost  of  health  damage  due  to  non-compliance  is  estimated  at  €
 500 
million. 

In  the  light  of  Austria’s  ongoing  fiscal  consolidation,  it  is  important  to  review  climate 
policies,  and  contain  adverse  effects  on  climate  change  targets.  In  January  2012,  the 
government  announced  a  new  campaign  to  promote  the  thermal  insulation  of  buildings 
older than 20 years, offering grants totalling €
 130 million and additional funding if the 
materials  used  are  made  from  renewable  sources.  In  addition,  Austria  is  planning  to 
increase fuel tax levels to those of Germany and Italy by 2021, in an attempt to reduce 
emissions  from  fuel  exports.  At  the  beginning  of  2011,  mineral  oil  tax  increased  by 
EUR 20/t.  The  cost  of  insuring  CO2-intensive  vehicles  had  already  been  increased  to 
tackle emissions from transport. At the same time, though, the introduction of allowances 
for  commuter  and  business  trips  is  slowing  the  shift  away  from  emission-intensive 
mobility.  More  decisive  steps  to  tap  the  emission  reduction  potential  in  the  transport 
sector would be required to achieve the climate target. It is also important for the Brenner 
Base Tunnel to be completed without delay since this will remove a major cross-border 
transport bottleneck and help reduce pollution from road traffic in the Brenner area. 

The 2011 Staff Working Document highlighted the need for a coherent, transparent and 
predictable renewable energy policy to achieve the 2020 target of 34 % from renewable 
sources.  Indeed,  progress  has  been  made  in  increasing  the  share  of  renewable  energies 
through  legal  frameworks  and  fiscal  incentives.  The  Climate  Change  Bill,  passed  in 
October  2011,  provides  an  institutional  framework  for  increasing  energy  efficiency, 
supporting renewable energies and enhancing incentives for climate change mitigation. It 
sets emission limits until 2020, and a legal framework for non-compliance. In February 
2012,  to  support  the  Climate  Change  Bill,  Austria  passed  the  Green  Electricity  Act  to 
further  promote  energy  security  and  increase  the  share  of  renewables  with  a  view  to 
reducing  Austria’s  dependence  on  imported  fossil  fuels12  and  nuclear  power  as  well  as 
creating  green  jobs.  Approximately  EUR 110  million  will  be  used  to  bring  forward  the 
construction of 5000 wind and solar plants originally scheduled between 2015 and 2026. 
Austria  would  benefit  from  accelerating  the  full  transposition  of  the  RES  Directive 
(2009/28/EC),  the  implementation  of  the  National  Renewable  Energy  Action  Plan,  the 
revision of the national energy efficiency strategy, and the transposition of the Electricity 
Directive 2009/72/EU of the Third Energy Package directives. 

Austria  has  made  good  progress  in  diversifying  access  routes  for  natural  gas.  Physical 
reverse-flow  capabilities  from  Italy  to  Austria,  co-financed  by  the  European  Energy 
Programme for Recovery, became operational in October 2011. However, there has been 
very limited progress with trans-border electricity interconnections13, which is hampering 
the  ability  to  provide  balance  capacity  to  the  Central  European  Network  via  Austria’s 
hydro-storage  potential.  The  380  KV14  ring  network  still  has  to  be  completed  and  the 
internal grid reinforced to integrate power from wind and pump storage plants. However, 

12 
13 

14 

65 % of overall energy consumption compared to an EU-27 average of 53.9 %. 
With  the  exception  of  the  construction  of  a  merchant  12  km  132  kV  interconnector  between 
Amoldstein and Tarvisio, Italy, in 2011. 
High-voltage networks reduce transmission losses. 

23 

 
                                                 
discussions  have  been  held  with  neighbouring  countries  on  a  joint  exit  from  nuclear 
power. Austria has also announced its ambition to be independent of foreign electricity 
by  2050.  The  Ministry  of  the  Economy  has  proposed  a  decree  requiring  the  roll-out  of 
smart meters for 95 % of end-users by 201815. 

To  address  the  high  per  capita  consumption  of  material  and  production  of  municipal 
waste, a resource efficiency action plan containing national targets to increase resource 
efficiency by 50 % up to 2020 was adopted by the government in January 2012. The Plan 
contains numerous measures and instruments but is not legally binding. There is potential 
to  use  new  economic  instruments  to  promote  prevention,  avoid  incinerating  reusable 
waste  and  make  reuse  and  recycling  economically  more  attractive.  Further  steps  would 
be to analyse and improve the cost effectiveness of producer responsibility systems and 
to  apply  them  to  other  waste  streams.  A  further  contribution  could  be  to  introduce 
incentive  systems  to  favour  prevention  and  participation  in  the  separate  collection 
systems across Austria. 

3.5.  Modernisation of public administration 

Overall,  Austria  performs  better  than  the  EU  average  in  terms  of  the  efficiency  of  its 
public administration. Next to the ongoing implementation of a programme (2007-2012) 
to reduce the administrative burden for enterprises, with an intermediate target for 2010 
already  achieved,  a  complementary  programme  is  now  focusing  on  the  burden  on 
citizens.  Based  on  a  baseline  measurement  of  the  most  burdensome  administrative 
procedures, 150 simplification measures have been identified and partly implemented. 

The  point  of  single  contact  is  now  well  established,  although  there  is  scope  for 
improving the clarity of information and linguistic availability beyond German. 

In  parallel  and  in  order  to  further  reduce  administrative  costs  for  enterprises  by  about 
EUR 200 million, an online business service portal (USP) is being set up for companies 
based in Austria.  It should establish progressively as a single point of contact for a wide 
range  of  services  (e.g.  tax  declarations,  social  security  contributions  and  public 
procurement  procedures).  However,  the  second  stage  scheduled  to  become  fully 
operational by 2013 might be delayed. E-procurement is not yet widely used, but Austria 
has presented an e-procurement master plan that covers both tendering guidelines and e-
invoicing.  Markets  for  publicly  procured  goods  and  services  are  often  characterised  by 
barriers  to  entry  and  de  facto  limited  competition  (especially  the  health  and 
pharmaceutical  markets)16.  A  more  pro-competitive  approach  would  stimulate 
productivity growth and help control costs. 

There is significant scope for improving the performance of Austrian public institutions. 
Impact  assessments  of  new  regulations  are  so  far  largely  limited  to  a  calculation  of 
administrative  burdens  rather  than  an  analysis  of  overall  costs  and  benefits  to  society. 
The establishment of a system for more extensive assessments is not planned until 2013 
and the envisaged assessments are generally limited in scope and depth. As highlighted 
above,  Austria  needs  to  reduce  fragmentation  and  inefficiency  stemming  from  the 
division of competences among federal, state and local government. In many areas there 
are  nine  different  laws  in  place,  one  per  region,  (e.g.  construction  law),  which  leads  to 
unnecessary  burdens  for  enterprises  and  market  fragmentation.  It  also  renders  the 
transposition  of  EU  directives  lengthy  and  inefficient  because  of  the  need  to  transpose 
once at federal level and another nine times at province level (the so-called ‘factor 10’). 

15 
16 

This may have important personal data protection implications. 
OECD country survey AT 2011. 

24 

 
                                                 
25 

 
4. 

OVERVIEW TABLE 

2011 commitments 

Summary assessment 

Country-specific recommendations (CSRs) 

Accelerate  the  correction  of  the  excessive  deficit, 
which is planned mainly on the expenditure side, thus 
bringing  down  the  high  public  debt  ratio,  taking 
advantage  of  the  ongoing  economic  recovery,  in 
order  to  ensure  an  average  annual  fiscal  effort  of 
0.75 %  of  GDP  over  the  period  2011-2013  in  line 
with  the  Council  recommendations  under  the  EDP. 
To  this  end,  adopt  and  implement  the  necessary 
measures,  including  at  sub-national  level.  Specify 
measures  as  needed  to  ensure  adequate  progress 
towards  the  medium-term  objective  in  line  with  the 
Stability  and  Growth  Pact  (SGP)  after  correction  of 
the excessive deficit. 

In  March  2012,  the  Austrian  government  adopted  a 
substantial  package  of  consolidation  measures 
(currently  under  debate  in  the  Austrian  parliament), 
which  will  enable  Austria  to  meet  the  Council’s 
recommendation  to  reduce  the  general  government 
deficit  to  below  3 %  by  2013.  However,  the  0.75 % 
average annual fiscal effort in the period 2011-2013, 
which  the  Council  also  called  for,  will  not  be 
delivered.  Therefore,  Austria  has  implemented  the 
CSR only partially.  

framework  by 

to  further  strengthen 

Take  steps 
budgetary 
administrative, 
responsibilities  across 
government, in particular in the area of healthcare. 

aligning 
and 
the  different 

the  national 
legislative, 
spending 
levels  of 

revenue-raising 

introduce  changes 

The newly proposed consolidation package provides 
for reforms  of  the way  subsidies  are granted by  the 
various levels of government. The package also aims 
to 
the  organisation  and 
to 
financing  of  the  healthcare  sector  that  would  result 
in  savings  equivalent  to  about  0.2 %  of  GDP  by 
2016.  However,  operational  details  of  the  reforms 
have  still  to  be  agreed  by  the  central  and  regional 
governments. All in all, the Austrian authorities have 
only partially addressed this CSR. 

In consultation with the social partners and according 
to national practices, take steps to further limit access 
to the current early retirement scheme for people with 
long  insurance  periods  and  take  steps  to  reduce  the 
transition  period  for  harmonisation  of  the  statutory 
retirement age between men and women to ensure the 
sustainability  and  adequacy  of  the  pension  system. 
Apply  strictly  the  conditions  for  access  to  the 
invalidity pension scheme. 

including 

the  following:  reduce, 

Take measures to enhance participation in the labour 
in  a 
market, 
budgetary  neutral  way,  the  effective  tax  and  social 
security  burden  on  labour,  especially  for  low-  and 
medium-income  earners;  implement  the  National 
Action  Plan  on  the  equal  treatment  of  women  and 
men  in  the  labour  market,  including  improving  the 
availability of care services and all-day school places 
to  increase  the  options  for  women  to  work  full-time 
and  reducing  the  high  gender  pay  gap;  take  steps  to 
improve  educational  outcomes  and  prevent  school 

26 

In  order  to  raise  the  effective  retirement  age,  the 
Austrian  authorities  have  enacted  reforms  to  restrict 
access to the invalidity pension scheme and the early 
retirement  scheme  with  deductions.  However,  no 
action has been taken or is planned to bring forward 
retirement  age 
harmonisation  of 
between  men  and  women  and  no  further  steps  have 
been 
the  deduction-free  early 
retirement  scheme  for  people  with  long  insurance 
periods.  Therefore,  Austria  has  addressed  this  CSR 
only partially.  

the  statutory 

regarding 

taken 

Several measures have been enacted in the education 
sector  in  order  to  address  the  needs  of  vulnerable 
youth  better  but 
to  be  efficiently 
they  need 
implemented  and  early  tracking  has  not  been  fully 
addressed.  Steps  have  been  taken  to  improve  the 
situation of women in the labour market by extending 
care  services  as  well  as  by  introducing  measures  to 
raise  awareness  of  the  substantial  gender  pay  gap  in 
Austria.  However, 
not 
commensurate  with  the  existing  challenges.  Finally, 
instead  of  shifting  the  burden  away  from  labour 
taxation to consumption and property taxes, the latest 

the  measures 

are 

 
 
 
 
 
 
 
 
 
 
 
drop-out. 

unjustified 

Take further steps to foster competition, in particular 
in  the  services  sectors,  by  relaxing  barriers  to  entry, 
some 
removing 
professions,  and  enhancing 
the 
competition  authority.  Accelerate  adoption  of  the 
the 
outstanding 
Services Directive. 

the  powers  of 

implementing 

restrictions 

‘horizontal 

law’ 

on 

consolidation  package  has  in  fact  increased  the  tax 
burden  on  labour  for  some  groups.  To  sum  up, 
Austria has addressed this CSR only partially. 

Services  Directive  transposed;  lack  of  progress  on 
remaining issues. 

Euro Plus Pact (national commitments and progress) 

Public  finance  commitments:  focus  on  raising  the 
effective  retirement  age,  through  discouraging  early 
retirement and maintaining the employability of older 
workers, and on reform of the Austrian Stability Pact 
by  reviewing  binding  upper  limits  on  the  deficits  of 
the various layers of government (federal, provincial 
and 
enhancing 
and  municipal), 
strengthening the enforcement mechanism. 

transparency 

The  public  finance  commitments  are  being  fully 
implemented.  

Labour  market  commitments:  focus  on  combating 
youth 
guaranteed 
apprenticeship 
training  and  other  qualification 
measures. 

unemployment 

through 

Structural  policy  commitments:  focus  on  R&D  and 
education. Additional resources to be provided on an 
annual  basis  over  2011-2014  for  financing  and 
stimulating  research  activity,  for  opening  additional 
places in university equivalent technical colleges and 
for the development of all-day school models. 

Europe 2020 (national targets and progress) 

The  labour  market  commitments  are  being  fully 
implemented.  

The  structural  policy  commitments  are  being  fully 
observed.  

Employment rate target set in the 2011 NRP: 77-78 %  After  a  crisis-related  drop  from  75.1 %  in  2008  to 
74.7 % in 2009, the employment rate for people aged 
20  to  64  has  been  steadily  increasing  and  reached 
74.9 %  in  2010  and  75.2 %  in  2011.  In  spite  of  the 
crisis and compared to other EU countries, Austria is 
thus making good progress towards achieving its EU 
2020 employment target range.  

R&D target set in the 2011 NRP: 3.76 % of GDP  

Greenhouse gas emissions target: -16 % (compared to 
2005  emissions,  ETS  emissions  not  covered  by  this 
national target) 

Gross domestic expenditure on R&D (in % of GDP): 
2.72 %  in  2009  and  2.76 %  in  2010.  There  is  still 
some  way  to  the  target.  Progress  will  depend  on 
involving  the  private  sector  through  a  variety  of 
policies: on competition, education and availability of 
venture capital.  

Change 
between 2005 and 2010: -9 % 

in  non-ETS  greenhouse  gas  emissions 

Renewable energy target set in the 2011 NRP: 34 %  

Share  of  renewable  energy  in  gross  final  energy 

27 

 
 
 
 
 
 
 
 
 
 
consumption:  29.7 %  in  2009  (EUROSTAT)  and 
30.8 %  (National  RES  Progress  Report).  Austria  has 
already  achieved  its  2011/2012  interim  renewable 
energy target.  

The energy efficiency objectives are set according to 
national circumstances and national formulations. As 
the  methodology  for  expressing  the  2020  energy 
consumption  impact  of  these  objectives  in  the  same 
format  was  agreed  only  recently,  the  Commission  is 
not yet able to present an overview. 

Early leavers from education and training (percentage 
of  the  population  aged  18-24  with  at  most  lower 
secondary  education  and  not  in  further  education  or 
training): 8.7 % in 2009 and 8.3 % in 2010. The target 
has  been  achieved,  but  a  big  gap  between  migrants 
and  their  native  peers  persists:  natives  5.8 %  versus 
migrants 21.2 % (2010). 

Tertiary educational attainment is low in comparison 
to  the  EU  average:  23.5 %  in  both  2009  and  2010. 
Migrants  and, to  a  lesser  extent,  males  have  a  lower 
tertiary attainment rate than the EU average, but there 
has been a positive overall development over the last 
three  years,  even  if  no  progress  was  made  towards 
achieving  the  tertiary  education  target  between 2009 
and  2010.  It  has  to  be  noted  that  Austria  has 
traditionally obtained a large part of its higher-skilled 
labour force from VET colleges that grant ISCED 4A 
level qualifications. This is also why the government 
included  this  qualification  level  in  its  national  target 
of  38 %. 
[Tertiary  education  attainment  and 
equivalent  (including  ISCED  4a)  2010:  33.5 % 
(estimate).] 

in  2010 

(both  compared 

The  number  of  people  at  risk  of  poverty  or  social 
exclusion  decreased  by  126 000  in  2009  and  by 
161 000 
to  2008). 
Considerable  progress  has  been  made  towards  the 
target,  since  almost  half  of 
targeted 
reduction  of  235 000  has  already  been  achieved, 
although  this  might  be  partly  due  to  a  purely 
statistical effect.  

total 

the 

Energy  efficiency:  reduction  in  primary  energy 
consumption by 7.16 Mtoe by 2020 

Early school-leaving target: 9.5 % 

Tertiary education target: 38 % 

Target for reducing the population at risk of poverty 
or social exclusion in number of persons: 235 000 

28 

 
 
5. 

ANNEX 

Table I. Macroeconomic indicators 

Core indicators
GDP growth rate
Output gap 1
HICP (annual % change)
Domestic demand (annual % change) 2
Unemployment rate (% of labour force) 3
Gross fixed capital formation (% of GDP)
Gross national saving (% of GDP)
General Government (%  of GDP)
Net lending (+) or net borrowing (-)
Gross debt
Net financial assets 
Total revenue 
Total expenditure
  of which: Interest
Corporations (%  of GDP)
Net lending (+) or net borrowing (-)

1995-
1999

2000-
2004

2005-
2008

2009

2010

2011

2012

2013

3.0
-0.1
1.2
2.2
4.2
24.1
22.8

-3.2
66.3
-37.5
51.2
54.4
3.7

1.9
0.0
1.8
1.2
4.1
23.0
24.4

-1.7
65.8
-36.3
50.0
51.6
3.1

2.8
1.0
2.3
1.8
4.6
21.6
26.4

-1.3
62.6
-34.5
47.9
49.2
2.7

-3.8
-2.9
0.4
-3.0
4.8
20.7
24.2

-4.1
69.5
-40.6
48.7
52.9
2.8

2.3
-1.8
1.7
2.0
4.4
20.5
24.6

-4.5
71.9
-43.7
48.1
52.6
2.7

3.1
-0.1
3.6
4.0
4.2
21.1
25.9

-2.6
72.2
n.a
47.9
50.5
2.6

0.8
-0.6
2.4
0.4
4.3
21.2
26.1

-3.0
74.2
n.a
48.4
51.4
2.7

1.7
-0.3
2.0
1.4
4.2
21.4
26.4

-1.9
74.3
n.a
48.6
50.6
2.7

-2.9

-1.2

-0.4

1.9

4.3

1.3

1.3

1.1

n.a
n.a
17.7
22.8

n.a
n.a
18.0
23.0

-79.2
-1.6
16.7
22.8

-92.4
7.0
14.3
21.6

-68.8
-3.6
16.6
20.6

-90.9
6.2
15.3
22.6

-88.3
2.1
16.5
24.5

3.3
n.a
40.2
4.4
22.8
7.8

4.0
95.7
42.1
6.6
23.8
9.4

3.9
99.2
40.7
6.4
23.8
8.5

5.2
120.8
41.3
5.9
23.8
10.1

3.7
120.3
40.6
4.6
23.7
8.5

5.2
109.6
39.3
8.0
22.2
9.9

Net financial assets, non-financial corporations
Net financial assets, financial corporations
Gross capital formation
Gross operating surplus
Households and NPISH (%  of GDP)
Net lending (+) or net borrowing (-)
Net financial assets
Gross wages and salaries
Net property income
Current transfers received
Gross saving
Rest of the world (%  of GDP)
Net lending (+) or net borrowing (-)
Net financial assets
Net exports of goods and services
Net primary income from the rest of the world
Net capital transactions 
Tradable sector
Non-tradable sector
  of which: Building and construction sector
Real effective exchange rate (index, 2000=100)
Terms of trade goods and services (index, 2000=100)
Market performance of exports (index, 2000=100)
Notes:
1 The output gap constitutes the gap between the actual and potential gross domestic product at 2000 market prices.
2 The indicator for domestic demand includes stocks.
3  Unemployed persons are all persons who were not employed, had actively sought work and were ready to begin working immediately or within two 
weeks. The labour force is the total number of people employed and unemployed. The unemployment rate covers the age group 15-74.

3.5
12.9
5.1
-0.9
-0.1
45.6
44.9
6.4
100.3
99.5
105.0

1.2
n.a
3.0
-0.3
-0.7
n.a
n.a
n.a
100.9
93.2
102.1

1.8
n.a
3.0
-0.4
-0.1
45.1
45.2
6.2
100.7
93.9
101.2

-2.3
15.8
-0.3
-1.3
-0.1
46.4
43.5
7.3
110.0
102.3
99.7

3.0
12.1
4.3
-0.5
0.1
44.4
46.0
6.2
100.5
96.4
99.7

3.3
8.4
4.8
-0.7
0.1
43.9
46.4
6.5
102.8
98.2
102.4

0.9
19.5
3.2
-1.4
-0.2
46.6
43.7
6.7
99.7
101.1
103.8

3.5
n.a
40.8
4.3
23.0
8.0

n.a
n.a
18.1
23.2

3.1
n.a
40.6
4.4
22.8
7.6

1.7
n.a
3.1
-0.3
-0.1
n.a
n.a
n.a
100.5
93.0
102.4

Source :
Commission spring 2012 forecast

29 

 
 
 
 
 
Table II. Comparison of macroeconomic developments and forecasts 

Real GDP (% change)
Private consumption (% change)
Gross fixed capital formation (% change)
Exports of goods and services (% change)
Imports of goods and services (% change)
Contributions to real GDP growth:
- Final domestic demand
- Change in inventories
- Net exports
Output gap1
Employment (% change)
Unemployment rate (%)
Labour productivity (% change)
HICP inflation (%)
GDP deflator (% change)
Comp. of employees (per head, % change)
Net lending/borrowing vis-à-vis the rest of 
the world (% of GDP)

2011
COM SP
3.1
0.6
5.7
6.7
7.0

3.1
0.6
5.7
6.7
7.0

2012
COM SP
0.4
0.8
1.1
3.3
3.2

0.8
0.8
1.4
2.8
2.2

2013
COM SP
1.4
0.9
2.0
5.9
5.0

1.7
1.0
2.3
5.1
4.9

2.0
1.9
0.2
-0.1

1.4
4.2
1.6
3.6
2.1
3.0
1.8

2.0
0.9
0.2
0.0

1.9
4.2
1.2
3.6
2.1
2.7
1.7

0.9
-0.5
0.4
-0.6

0.4
4.3
0.3
2.4
1.9
3.6
1.2

0.5
-0.2
0.2
-0.9

0.8
4.6
-0.4
2.5
1.7
3.3
1.4

1.2
0.2
0.3
-0.3

0.7
4.2
1.0
2.0
1.5
1.9
1.7

0.7
0.1
0.6
-1.0

0.5
4.8
0.9
2.1
1.4
2.3
1.8

2014
SP
2.0
1.0
2.5
6.7
5.8

1.2
0.1
0.8
-0.5

1.0
4.7
1.0
2.1
1.5
2.6
2.3

2015
SP
2.2
1.1
2.9
6.6
5.6

2016
SP
2.1
1.2
3.2
6.0
5.4

1.3
0.1
0.8
0.1

1.1
4.6
1.0
2.3
1.6
3.1
2.7

1.5
0.0
0.6
0.5

1.1
4.4
1.0
2.2
1.7
3.0
2.4

Note:
1In percent of potential GDP, with potential GDP growth according to the programme as recalculated by the Commission.

Source :

Commission spring 2012 forecasts (COM); Stability programme (SP).

30 

 
 
 
 
Table III. Composition of the budgetary adjustment 

(% of GDP)

Revenue
of which:
- Taxes on production and imports
- Current taxes on income, wealth, etc.
- Social contributions
- Other (residual)
Expenditure
of which:
- Primary expenditure

2011

2012

2013

2014

2015

2016

COM COM
48.4
47.9

14.3
12.9
16.2
4.5
50.5

14.4
13.2
16.4
4.4
51.4

SP
48.7

14.4
13.5
16.3
4.5
51.7

COM
48.6

14.4
13.5
16.4
4.3
50.6

SP
48.9

14.4
13.7
16.3
4.5
51.0

SP
48.7

14.3
13.8
16.3
4.3
50.3

SP
48.7

14.2
14.0
16.3
4.2
49.3

SP
48.7

14.1
14.2
16.3
4.1
48.7

47.9

48.7

49.0

47.8

48.3

47.6

46.6

46.1

Change: 
2011-2016

SP
0.8

-0.2
1.3
0.1
-0.4
-1.8

-1.8

-0.9

-0.6

-0.1

-0.2
-0.3
-0.3
-0.1
-0.1
-0.8
0.0
2.6
2.6
0.2
2.4

9.3
4.2
24.7
3.7
0.9
4.7
2.7
-1.5
1.2
0.0
-1.5

9.4
4.1
24.8
3.7
1.0
5.0
2.7
-1.9
0.8
0.0
-1.9

9.5
4.2
24.9
3.6
1.0
5.6
2.7
-3.0
-0.3
-0.6
-2.4

9.5
4.3
25.1
3.6
1.0
5.6
2.7
-3.0
-0.3
-0.5
-2.5

9.2
4.1
24.4
3.5
0.9
4.6
2.7
-0.6
2.0
0.0
-0.6

9.3
4.3
24.5
3.6
1.0
5.2
2.6
-2.6
0.0
-0.2
-2.4

9.1
4.0
24.2
3.5
0.9
4.4
2.6
0.0
2.6
0.0
0.0

9.4
4.2
25.0
3.7
1.0
5.0
2.7
-2.1
0.6
0.0
-2.1

of which:
Compensation of employees
Intermediate consumpiton
Social payments
Subsidies
Gross fixed capital formation
Other (residual)
- Interest expenditure
General government balance (GGB)
Primary balance
One-off and other temporary measures
GGB excl. one-offs
Output gap2
Cyclically-adjusted balance2
Structural balance3
Change in structural balance
Structural primary balance3
Change in structural primary balance
Expenditure benchmark
Public expenditure growth4 (real)
Reference rate5,6
Lower reference rate5,7
Deviation in % GDP 
   from applicable reference rate
Two-year average deviation in % GDP 
   from applicable reference rate
Notes:
1On a no-policy-change basis.
2Output gap (in % of potential GDP) and cyclically-adjusted balance according to the programme as recalculated by the Commission on the basis of 
the information in the programme.
3Structural (primary) balance = cyclically-adjusted (primary) balance excluding one-off and other temporary measures.

0.46
-0.14

0.46
-0.67

0.46
-0.35

0.46
0.16

0.46
0.65

0.46
0.01

-0.7
0.6

-0.2
0.4

-1.8
0.4

-1.6
0.4

-1.3
0.3

-2.1
0.3

-2.1
0.2

n.a.
n.a.

n.a.
n.a.

0.5
0.3

0.6
0.4

0.9
0.4

1.1
0.4

1.4
0.3

2.0
0.6

2.4
0.3

-0.17

-0.07

-0.93

-0.01

-0.27

-0.09

1.49

1.49

1.49

1.49

1.82

0.79

0.47

0.15

1.49

1.49

-2.4

-0.3

-1.0

-0.5

-2.6

-2.7

-2.6

-1.8

-1.6

-1.3

-0.7

-0.2

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

0.5

2.4

2.2

2.1

0.2

0.1

0.5

4Modified expenditure aggregate used for the expenditure benchmark, growth rates net of non-discretionary changes in unemployment benefit and of 
discretionary measures.

5The reference rates applicable to 2014 onwards will be available from mid-2012. For illustrative purposes, the current reference rates have also been 
applied to the years 2014 onwards.
6The (standard) reference rate applies starting in the year following which the country has reached its MTO.
7The lower reference rate applies as long as the country is adjusting towards its MTO, including the year in which it reaches the MTO.

Source :
Stability programme (SP); Commission spring 2012 forecasts (COM); Commission calculations.

31 

 
 
 
 
Table IV. Debt dynamics 

(% of GDP)

average 
2006-10

Gross debt ratio1
Change in the ratio
Contributions 2:

1. Primary balance
2. “S now-ball” effect

Of which:
Interest expenditure
Growth effect
Inflation effect

3. S tock-flow adjustment

Of which:
Cash/accruals diff.
Acc. financial assets
Privatisation

Val. effect & residual

(% of GDP)

Gap to the debt benchmark5,6
S tructural adjustment7
To be compared to:
Required adjustment8

65.6
1.5

-0.3
0.8

2.7
-0.9
-1.0
1.1

-

-

-

2011

72.2
0.3

0.0
-1.0

2.6
-2.1
-1.4
1.3

2011

-

-

-

2012

2013

COM

74.2
2.0

0.3
0.8

2.7
-0.5
-1.4
1.0

CP

74.7
2.5

0.3
1.2

2.7
-0.3
-1.3
1.1

COM

74.3
0.1

-0.8
0.5

2.7
-1.2
-1.1
0.5

CP

75.3
0.6

-0.6
0.6

2.7
-1.0
-1.1
0.6

2012

2013

COM/SP3
-

SP4
-

COM/SP3
-

SP4
-

-

-

-

-

-

-

-

-

2014
CP

74.6
-0.7

-1.2
0.1

2.7
-1.5
-1.1
0.4

2014
SP4
-

0.3

0.0

2015
CP

72.8
-1.8

-2.0
-0.1

2.6
-1.6
-1.1
0.3

2015
SP4
-

0.6

0.0

2016
CP

70.6
-2.2

-2.6
0.0

2.6
-1.5
-1.2
0.5

2016
SP4
-

0.4

0.0

Notes:
1End of period.
2The snow-ball effect captures the impact of interest expenditure on accumulated debt, as well as the impact of real GDP growth and inflation on the debt ratio 
3Assessment of the consolidation path set in the SP assuming growth follows the COM  forecasts.
4Assessment of the consolidation path set in the SP assuming growth follows the SP projections.
5 Not relevant during EDP that were ongoing in November 2011 and in the three years following the correction of the excessive deficit.
6Shows the difference between the debt-to-GDP ratio and the debt benchmark. If positive, projected gross debt-to-GDP ratio does not comply with the debt reduction 
benchmark.
7Applicable only during the transition period of three years from the correction of the excessive deficit for EDP that were ongoing in November 2011.
8Defines the remaining annual structural adjustment over the transition period which ensures that - if followed – M ember State will comply with the debt reduction 
benchmark at the end of the transition period, assuming that COM  (SP) budgetary projections are achieved.
Source :
Stability programme (SP); Commission services’ spring 2012 forecasts (COM); Commission services’ calculations.

32 

 
 
 
 
Table V. Long term sustainability indicators 

AT

EU27

No-policy 
change 
scenario 

Stability 
programme 
scenario

No-policy 
change 
scenario 

SCP's 
scenario

S2
of which:

Initial budgetary position (IBP)
Long-term change in the primary balance (LTC)
 of which:

pensions
health care and long-term care
other

S1 (required adjustment)*

3.7

0.2
3.5

1.7
2.0
-0.1
2.3

2.5

-1.0
3.5

1.6
1.9
0.0
0.8

2.9

0.7
2.3

1.1
1.5
-0.3
2.2

0.7

-1.6
2.4

1.2
1.5
-0.3
-0.1

Debt,  % of GDP (2011)
Age-related expenditure, % of GDP (2011)

72.2
28.9

82.8
25.8

Source:  Commission, 2012 Stability programme. 
Note:  The ‘no policy change’ scenario depicts the sustainability gap under the assumption that the budgetary 
position evolves according to the spring 2012 forecast until 2013. The ‘stability programme’ scenario depicts the 
sustainability gap under the assumption that the budgetary plans in the programme are fully implemented.     

*  The required adjustment of the primary balance until 2020 to reach a public debt of 60% of GDP by 2030.

Graph - Medium-term debt projections  

(% of GDP)

80

Gross debt as % of GDP - AT - Medium term debt projections

75

70

65

60

55

0
0
0
2

1
0
0
2

2
0
0
2

3
0
0
2

4
0
0
2

5
0
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

0
2
0
2

COM no-policy change scenario

COM + Shock ( -1p.p. in the short-term/long-term interest rate on maturing and new debt from 2014)

COM + Shock (+1p.p. in the short-term/long-term interest rate on maturing and new debt from 2014)

COM consolidation scenario (0.5% per year on SB) in order to achieve MTO

COM consolidation scenario (1% per year on SB) in order to achieve MTO

SP scenario

Source: Commission, 2012 stability and convergence programmes. 

33 

 
 
 
Table VI. Taxation indicators 

Total tax revenues (incl. actual compulsory social contributions, % of GDP)
Breakdown by economic function (% of GDP)1
     Consumption

              of which:

              - VAT

             - excise duties on tobacco and alcohol

             - energy

             - other (residual)

     Labour employed

     Labour non-employed

     Capital and business income

     Stocks of capital/wealth
     p.m.  Environmental taxes 2
3
VAT efficiency
     Actual VAT revenues as % of theoretical revenues at standard rate

2001

44.9

2005

42.1

2007

41.7

2008

42.7

2009

42.6

2010

42.0

12.3

12.1

11.6

11.6

12.0

11.8

8.1

0.7

1.7

1.8

7.9

0.7

1.8

1.7

7.7

0.6

1.6

1.6

7.8

0.6

1.6

1.6

8.1

0.6

1.6

1.7

7.9

0.6

1.6

1.6

21.7

20.9

20.7

21.3

21.6

21.3

2.4

7.4

1.1

2.6

2.4

5.7

1.0

2.6

2.4

6.1

1.0

2.4

2.5

6.3

1.0

2.4

2.5

5.5

1.0

2.4

2.5

5.5

1.0

2.4

61.3

60.5

60.5

60.9

60.9

60.2

Note: 
1 T ax revenues are broken down by economic function, i.e. according to whether taxes are raised on consumption, labour or capital. See European Commission (2012), 

T axation trends in the European Union, for a more detailed explanation.

2 T his category comprises taxes on energy, transport and pollution and resources included in taxes on consumption and capital.

3 T he VAT  efficiency is measured via the VAT  revenue ratio. T he VAT  revenue ratio is defined as the ratio between the actual VAT  revenue collected and the revenue 

that would theoretically be raised if VAT  was applied at the standard rate to all final consumption. A low ratio can indicate a reduction of the tax base due to large 

exemptions or the application of reduced rates to a wide range of goods and services ('policy gap') or a failure to collect all tax due to e.g. fraud ('collection gap'). See 

European Commission (2011), T ax reforms in EU Member States, European Economy 5/2011, for a more detailed explanation.

Source: Commission

34 

 
 
 
 
 
Table VII. Financial market indicators 

Total assets of the banking sector (% of GDP)
Share of assets of the five largest banks (% of total assets)
Foreign ownership of banking system (% of total assets)
Financial soundness indicators:
              - non-performing loans (% of total loans) 1)
              - capital adequacy ratio (%) 2)
              - return on equity (%) 1), 3)
Bank loans to the private sector (year-on-year % change)
Lending for house purchase (year-on-year % change)
Loan to deposit ratio
CB liquidity as % of liabilities
Banks' exposure to countries receiving official financial assistance  (% of GDP)4)
Private debt (% of GDP)

2007

2008

2009

2010

2011

875.8
50.4
58.7

0.8
10.7
16.4
20.7
11.4
181.1
2.5
6.0
…

962.0
55.3
55.8

2.6
10.6
-8.0
1.4
-6.9
179.0
5.6
6.1
…

1017.5
58.8
49.9

9.0
10.9
-40.6
-5.6
-4.1
162.0
6.0
5.7
222.1

978.9
56.8
…

8.6
14.6
-66.5
-12.6
-2.5
140.8
9.3
1.6
182.8

840.9
…
…

14.1
10.3
-8.6
-4.7
-0.9
133.4
9.1
1.2
168.6

5)

16.1
391.5
8.9
…

Gross external debt (% of GDP) 
            - Public
            - Private
Long term interest rates spread versus Bund (basis points)*
Credit default swap spreads for sovereign securities (5-year)*
Notes: 
1) All licensed banks. Latest June 2011.
2) The capital adequacy ratio is defined as total capital divided by risk weighted assets.   
3) Net income to equity ratio.  Latest June 2011.
4) Covered countries are IE, EL, PT, RO, LV and HU. 
5) Latest data 2011Q3.
* M easured in basis points.
Source :
Bank for International Settlements and Eurostat (exposure to macro-financially vulnerable countries), IMF (financial soundness indicators), 
Commission (long-term interest rates), World Bank (gross external debt) and ECB (all other indicators).

45.6
525.4
200.3
202.1

50.8
668.0
299.6
299.6

33.9
482.6
54.2
89.2

62.5
650.8
699.3
734.7

35 

 
 
 
 
 
 
Table VIII. Labour market and social indicators 

Labour market indicators
Employment rate 
(% of population aged 20-64)
Employment growth 
(% change from previous year)
Employment rate of women 
(% of female population aged 20-64)
Employment rate of men 
(% of male population aged 20-64)
Employment rate of older workers 
(% of population aged 55-64)
Part-time employment 
(% of total employment)
Part-time employment of women  
(% of women employment)
Part-time employment of men  
(% of men employment)
Fixed term employment 
(% of employees with a fixed term contract)
Unemployment rate1 (% of labour force)

Long-term unemployment

2

  (% of labour force)

Youth unemployment rate 
(% of youth labour force aged 15-24)

Youth NEET

3

 rate (% of population aged 15-24)

Early leavers from education and training (% of 
pop. 18-24 with at most lower sec. educ. and not 
in further education or training)
Tertiary educational attainment (% of population 
30-34 having successfully completed tertiary 
education)
Labour productivity per person employed 
(annual % change )
Hours worked per person employed  (annual % 
change)
Labour productivity per hour worked (annual % 
change; constant prices)
Compensation per employee (annual % change; 
constant prices)
Nominal unit labour cost growth (annual % 
change)

2006

2007

2008

2009

2010

2011

73.2

74.4

75.1

74.7

74.9

75.2

2.7

2.5

1.5

-0.3

0.5

1.2

66.4

67.2

68.6

69.4

69.6

69.6

80.0

81.6

81.7

80.1

80.2

80.8

35.5

38.6

41.0

41.1

42.4

41.5

22.0

22.9

23.7

25.1

25.6

25.6

40.6

41.7

42.1

43.6

44.5

44.7

6.6

9.0

4.8

1.3

9.1

7.5

7.3

8.9

4.4

1.2

8.7

7.0

8.2

9.0

3.8

0.9

8.0

7.1

8.9

9.1

4.8

1.0

10.0

7.8

9.8

10.7

10.1

8.7

9.2

9.3

4.4

1.1

8.8

7.1

8.3

19.2

18.9

19.4

21.1

20.8

2.9

1.9

-1.3

-0.3

3.3

1.9

1.1

2.2

0.6

1.2

-0.4

-1.0

0.4

1.3

3.8

2.0

-2.5

-2.6

-0.5

1.2

4.9

3.8

1.7

-0.7

2.1

-0.4

0.0

9.1

9.6

4.2

1.1

8.3

:

:

:

1.7

0.3

1.4

1.7

1.3

Real unit labour cost growth (annual % change)

-0.8

-0.8

Notes:

-1.8

-0.8

1 According to ILO definition, age group 15-74)
2 Share of persons in the labour force who have been unemployed for at least 12 months.
3 NEET are persons that are neither in employment nor in any education or training.

Sources: 
Commission (EU Labour Force Survey and European National Accounts) 

36 

 
 
 
Expenditure on social protection 
benefits (% of GDP)
Sickness/Health care
Invalidity
Old age and survivors
Family/Children
Unemployment
Housing and Social exclusion n.e.c.
Total
of which:  Means tested benefits
Social inclusion indicators
Risk-of-poverty or exclusion1 (% of total 
population)
Risk-of-poverty or exclusion of children (% of 
people aged 0-17)
Risk-of-poverty or exclusion of elderly (% of 
people aged 65+)
At-risk-of-poverty rate2 (% of total population)
Value of relative poverty threshold (single 
household per year) - in PPS
Severe material deprivation3  (% of total 
population)
Share of people living in low work intensity 
households 4 (% of people aged 0-59 not 
student)
In-work at-risk-of poverty rate (% of persons 
employed)

Notes:

2005

2006

2007

2008

2009

7.09
2.36
11.29
2.97
1.62
0.11
28.7
1.78

2006

6.94
2.28
11.31
2.85
1.60
0.12
28.2
1.85

2007

6.98
2.15
11.26
2.73
1.43
0.11
27.8
1.81

2008

7.22
2.13
11.62
2.83
1.37
0.11
28.4
1.89

2009

7.61
2.28
12.65
3.07
1.76
0.12
30.8
2.11

2010

17.8

16.7

18.6

17.0

16.6

19.3

18.5

20.4

17.5

18.8

17.3

12.6

15.1

12.0

17.3

12.4

16.4

12.0

15.8

12.1

10452

10686

11124

11315

11451

3.6

3.3

6.4

4.8

4.3

8.0

6.4

8.1

6.1

7.8

6.4

7.2

5.9

7.7

4.9

1 People at risk of poverty or social exclusion (AROPE): individuals who are at risk of poverty (AROP) 
and/or suffering from severe material deprivation (SM D) and/or living in households with zero or very low 
work intensity (LWI).

2 At-risk-of poverty rate: share of people with an equivalised disposable income below 60% of the national 
equivalised median income. 

3 Share of people who experience at least 4 out of 9 deprivations: people cannot afford to i) pay their rent or 
utility bills, ii) keep their home adequately warm, iii) face unexpected expenses, iv) eat meat, fish, or a protein 
equivalent every second day, v) enjoy a week of holiday away from home once a year, vi) have a car, vii) have 
a washing machine, viii) have a colour TV, or ix) have a telephone.

4 People living in households with very low work intensity: share of people aged 0-59 living in households 
where the adults work less than 20% of their total work-time potential during the previous 12 months.

Sources: 
For expenditure on social protection benefits ESSPROS; for social inclusion EU-SILC.

37 

 
 
Table IX. Product market performance and policy indicators 

2002-
2006

1.4

3.5

1.8

2.3

3.5

2002-
2006

n.a.

n.a.
2.3

Performance indicators

Labour productivity1 total economy (annual 
growth in %)
Labour productivity1 in manufacturing (annual 
growth in %)
Labour productivity1 in electricity, gas, water 
(annual growth in %)
Labour productivity1 in the construction sector 
(annual growth in %)
Patent intensity in manufacturing2 (patents of the 
EPO divided by gross value added of the sector)

Policy indicators

Enforcing contracts3 (days)
Time to start a business 3 (days)
R&D expenditure (% of GDP)
Tertiary educational attainment 
(% of 30-34 years old population)
Total public expenditure on education 
(% of GDP)

Product market regulation4, Overall
(Index; 0=not regulated; 6=most regulated)
Product market regulation4, Retail
(Index; 0=not regulated; 6=most regulated)
Product market regulation4, Network Industries 5
(Index; 0=not regulated; 6=most regulated)

2007

2008

2009

2010

2011

2.0

6.3

-7.8

0.6

3.3

1.7

4.6

-0.6

-3.1

-9.5

1.5

9.0

1.6

n.a.

4.6

n.a.

n.a.

-0.3

-4.2

-6.6

n.a.

2.7

n.a.

n.a.

n.a.

2007

2008

2009

2010

2011

397

28
2.5

397

28
2.7

397

28
2.7

397

28
2.8

20.9

21.1

22.2

23.5

23.5

397

28
n.a.

n.a.

5.5

5.4

5.5

n.a.

n.a.

n.a.

2005

2006

2008

2009

2010

2011

n.a.

n.a.

n.a.

n.a.

1.5

3.6

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

1.9

1.7

1.7*

n.a.

n.a.

n.a.

Notes:
1Labour productivity is defined as gross value added (in constant prices) divided by the number of persons employed.
2Patent data refer to applications to the European Patent Office (EPO). They are counted according to the year in which 
they were filed at the EPO. They are broken down according to the inventor's place of residence, using fractional counting if 
multiple inventors or IPC classes are provided to avoid double counting. 
3 The methodologies, including the assumptions, for this indicator are presented in detail on the website 
http://www.doingbusiness.org/methodology. 
4 The methodologies for the product market regulation indicators are presented in detail on the website 
http://www.oecd.org/document/1/0,3746,en_2649_34323_2367297_1_1_1_1,00.html. The latest available product market 
regulation indicators refer to 2003 and 2008, except for Network Industries.

5 Aggregate ET CR.

*figure for 2007.

Source :

Commission, World Bank - Doing Business  (for enforcing contracts and time to start a business) and OECD (for the 
product market regulation indicators). 

38 

 
 
 
 
 
Table X. Green Growth 

Austria

Green Growth performance

Macroeconomic
Energy intensity 
Carbon intensity 
Resource intensity (reciprocal of resource productivity)
Waste intensity 
Energy balance of trade 
Energy weight in HICP
Difference between energy price change and inflation 
Environmental taxes over labour taxes
Environmental taxes over total taxes

Sectoral 

Industry energy intensity 
Share of energy-intensive industries in the economy
Electricity prices for medium-sized industrial users 
Public R&D for energy 
Public R&D for the environment
Recycling rate of municipal waste
Share of GHG emissions covered by ETS
Transport energy intensity
Transport carbon intensity
Change in the ratio of passenger transport and GDP

Security of energy supply
Energy import dependency
Diversification of oil import sources 
Diversification of energy mix
Share of renewable energy in energy mix

kgoe / €
kg / €
kg / €
kg / €
% GDP
%
%
ratio
ratio

kgoe / € 
% GDP
€ / kWh
% GDP
% GDP
ratio
%
kgoe / €
kg / €
%

%
HHI
HHI
%

2001-
2005

0.15
0.41
0.86
n.a.
-2.2%
7
1.28
11.2%
6.1%

0.17

10.4
n.a.
n.a.
n.a.
82.0%
n.a.
0.58
1.61
-0.5%

69.2%
n.a.
0.29
20.2%

2006

2007

2008

2009

2010

0.15
0.38
0.87
0.23
-3.6%
8
4.6
10.7%
6.0%

0.17

10.8
0.07
0.00%
0.01%
96.2%
35.9%
0.62
1.63
-1.6%

72.2%
0.13
0.28
21.7%

0.14
0.36
0.84
0.23
-2.9%
8
3.8
10.5%
5.8%

0.16

10.9
0.08
0.01%
0.01%
96.7%
36.3%
0.59
1.55
-2.5%

68.7%
0.15
0.28
23.7%

0.14
0.35
0.81
0.23
-3.6%
9
2.5
10.1%
5.6%

0.15

11.0
0.09
0.01%
0.01%
96.8%
36.8%
0.57
1.46
0.4%

68.8%
0.14
0.28
24.8%

0.14
0.34
0.79
n.a.
-2.5%
8
-2.8
10.0%
5.7%

0.15

10.3
n.a.
0.01%
0.01%
99.3%
34.1%
0.59
1.49
n.a.

65.0%
0.20
0.29
27.3%

0.14
n.a.
n.a.
n.a.
-3.0%
8
1.4
n.a.
n.a.

n.a.

n.a.
n.a.

n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

n.a.
n.a.
n.a.
n.a.

Country-specific notes: 
The year 2011 is not included in the table due to lack of data.
General explanation of the table items:
Source: Eurostat unless indicated otherwise; ECFIN explanations given below
All macro intensity indicators are expressed as a ratio of a physical quantity to GDP (in 2000 prices)
          Energy intensity: gross inland energy consumption (in kgoe) divided by GDP (in EUR)
          Carbon intensity: Greenhouse gas emissions (in kg CO2 equivalents) divided by GDP (in EUR)
          Resource intensity: Domestic M aterial Consumption (in kg) divided by GDP (in EUR)
          Waste intensity: waste (in kg) divided by GDP (in EUR)
Energy balance of trade: the balance of energy exports and imports, expressed as % of GDP  
Energy weight in HICP: the share of the "energy" items in the consumption basket used in the construction of the HICP
Difference between energy price change and inflation: energy component of HICP, and total HICP inflation (annual %-change)
Environmental taxes over labour or total taxes: from the Taxation DG's database "Taxation trends in the European Union"
Industry energy intensity: final energy consumption of industry (in kgoe) divided by gross value added of industry (in EUR) 
Share of energy-intensive industries in the economy: share of gross value added of the energy-intensive industries in GDP
Recycling rate of municipal waste: ratio of municipal waste recycled over total municipal waste
Public R&D for energy or for the environment: government spending on R&D (GBAORD) for these categories as % of GDP
Share of GHG emissions covered by ETS: based on greenhouse gas emissions as reported by M ember States to EEA (excl LULUCF)
Transport energy intensity: final energy consumption of transport (in kgoe) divided by gross value added of industry (in EUR) 
Transport carbon intensity:  greenhouse gas emissions in transport divided by gross value added of the transport sector
Passenger transport growth : measured in %-change in passenger kilometres
Energy import dependency: net energy imports divided by gross inland energy consumption incl. of international bunkers

Diversification of oil import sources: Herfindahl index (HHI), calculated as the sum of the squared market shares of countries of origin 

Diversification of the energy mix: Herfindahl Index over natural gas, total petrol products, nuclear heat, renewable energies and solid fuels

Share of renewable energy in energy mix: percentage-share in  gross inland energy consumption, expressed in tonne oil equivalents

39