COMMISSION STAFF WORKING DOCUMENT Assessment of the 2013 national reform programme and stability programme for AUSTRIA Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on Austria’s 2013 national reform programme and delivering a Council Opinion on Austria’s 2013 stability programme for 2012-2017
Date: 2013-05-29
Institutions: European Commission
Subjects: Austria, banking system, budgetary equilibrium, economic recession, educational reform, female work, health costs, migrant worker, tertiary sector

EUROPEAN 
COMMISSION 

Brussels, 29.5.2013  
SWD(2013) 370 final 

COMMISSION STAFF WORKING DOCUMENT 

Assessment of the 2013 national reform programme and stability programme for 
AUSTRIA 

Accompanying the document 

Recommendation for a COUNCIL RECOMMENDATION  

on Austria’s 2013 national reform programme and delivering a Council Opinion on 
Austria’s 2013 stability programme for 2012-2017 

{COM(2013) 370 final} 

EN 

   EN 

 
 
 
 
  
 
CONTENTS 

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

1. 

2. 

2.1. 

2.2. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

3.5. 

4. 

5. 

Introduction .................................................................................................................. 5 

Economic developments and challenges...................................................................... 7 

Recent economic developments and outlook............................................................... 7 

Challenges .................................................................................................................... 8 

Assessment of policy agenda ..................................................................................... 10 

Fiscal policy and taxation........................................................................................... 10 

Financial Sector.......................................................................................................... 16 

Labour market, education and social policies ............................................................ 18 

Structural measures promoting growth and competitiveness..................................... 22 

Modernisation of public administration ..................................................................... 26 

Overview table ........................................................................................................... 28 

Annex ......................................................................................................................... 32 

2 

 
 
 
 
EXECUTIVE SUMMARY 

Economic Outlook  

In 2013, Austria's GDP growth is expected to slow down to 0.6% (from 0.8% in 2012), 
picking up to 1.8% in 2014. Unemployment is forecast to rise slightly from 4.3% in 2012 to 
4.7%  in  2013  and  2014.  Employment  and  real  wage  growth  are  set  to  stay  positive,  and 
provide  for  moderate  increases  in  consumption.  Inflationary  pressures  are  expected  to  ease 
from 2.6% on average for 2012 to below 2% in 2014. The external balance is projected to stay 
in surplus and support growth. 

Buoyed by robust personal income tax and social security contributions, Austria kept its 
budget deficit at 2.5% of GDP in 2012, outperforming its targeted 3%, and is on track to 
correct  its  excessive  deficit.  The  headline  government  deficit  is  forecast  to  fall  to  2.2%  in 
2013  and  1.8%  in  2014  (slightly  higher  than  the  Austrian  estimate  of  1.5%).  However,  the 
structural  budget  deficit  (net  of  one-off  and  temporary  measures)  is  projected  to  worsen  to 
1.7% of GDP in 2014 (from 1.5% in 2012), while the Programme envisages an improvement 
to 1.1% of GDP. Austria's medium-term budgetary objective is a structural deficit of 0.45% of 
GDP,  which  it  plans  to  reach  by  2017,  whereas  according  to  the  structural  balance 
recalculated  by  the  Commission  based  on  programme  data  the  objective  could  be  reached 
already  in  2015.  Government  debt  is  expected  to  increase  from  73.4%  of  GDP  in  2012  to 
around 73.8% in 2013 and 2014.  

Key Issues 

Austria has had a remarkable record in coping with the difficult economic environment. 
Economic  growth  has  remained  low  but  positive,  employment  and  income  growth  have 
remained robust and financing conditions have stayed relatively favourable.  

Austria has made some progress on measures taken to address the 2012 CSRs. Austria's 
public finances are improving. The government has kept the budget deficit at 2.5% of GDP 
and the adjustment effort was in line with the recommentadions. Some measures were taken 
in 2012 to increase the effective retirement age, to reform tertiaty education and to enhance 
the  efficiency  of  the  health  care  system,  however,  implementation  needs  to  be  closely 
monitored.  Measures  to  improve  the  provision  of  childcare  and  long-term  care,  the 
employment  of  older  workers  and  people  with  a  migrant  background  and  the  quality  of  the 
education system are underway. 

In  the  medium  to  long-term,  Austria  still  faces  challenges  with  age-related  costs 
(pensions and healthcare), the labour market, product and service markets, the business 
environment and the financial sector.  

•  Healthcare: Ensuring the financial sustainability of the pension, health and long-term 
care  systems  are  important  challenges.  Rising  costs  in  the  health  system  need  to  be 
contained while safeguarding high quality and equal access to health services. Access 

3 

 
 
to  high-quality  long-term  care  needs  to  be  improved  to  respond  to  the  rapidly 
increasing needs of an ageing population and to foster labour market participation of 
women.  Moreover, there is a long-standing need  to  streamline the  complex  relations 
between layers of government in Austria. 

•  Education: Austria's spending on education (5.56% of GDP) is above the EU average 
(5.34%),  but  education  outcomes  are  below  average  for  10  and  15-year-olds.    The 
influence  of  socio-economic  background  on  educational  achievement  is  particularly 
high  and  achievement  gaps  between  young  people  with  a  migrant  background  and 
their  native  peers  are  among  the  highest  in  the  EU.  Student  numbers  in  higher 
education  are  increasing  but  the  percentage  of  students  completing  their  studies 
successfully is low (26.8% in 2012 compared with 36.5% for EU27). 

•  Labour market: While Austria has the lowest unemployment rate in the EU in 2012 
(4.3%), its labour force is projected to shrink from 2020, so there is scope to better tap 
the  potential  of  older  workers,  women  and  people  with  a  migrant  background.  The 
employment  rate  of  older  workers  is  below  the  EU  average  (43.1%  compared  to 
48.8% in the EU in 2012) and the gap between the effective and statutory retirement 
age  is  considerable  (5.8  years  for  men  and  2.7  years  for  women),  both  of  which  put 
significant  pressure  on  the  pension  system.  While  the  employment  rate  of  women 
(70.3%) is above EU average, there are far fewer women in full-time work (55.6% in 
2011),  and  Austria  has  the  third-highest  gender  pay  gap  in  the  EU  (24%  in  2010). 
Moreover, the unemployment rate for people with a migrant background is more than 
twice as high as for EU nationals (9.7% vs. 3.6%). A shift of the high tax burden for 
low  income  earners  to  recurrent  property  taxation  (third  lowest  in  the  EU)  could 
provide further incentives to increase labour market participation. 

•  Business environment: Austria needs to promote dynamism of the services sector and 
effective competition, notably by reducing barriers to entry in the services sector and 
ensuring sound competition in the railway sector. 

•  Financial sector: Some nationalised banks require continued attention. 

4 

 
 
 
 
1.  INTRODUCTION 

In  May  2012,  the  Commission  proposed  a  set  of  country-specific  recommendations  (CSRs) 
these 
for  economic  and  structural  reform  policies  for  Austria.  On 
recommendations, the Council of the European Union adopted seven CSRs in the form of a 
Council  Recommendation  in  July  2012.  These  CSRs  concerned  fiscal  policy  and  public 
finances, pensions, taxation, the labour market, education, the business environment and the 
banking sector. This Staff Working Document (SWD) assesses the state of implementation of 
these recommendations in Austria. 

the  basis  of 

The  SWD  assesses  policy  measures  in  light  of  the  findings  of  the  Commission’s  Annual 
Growth Survey 2013 (AGS)1 and the second annual Alert Mechanism Report (AMR)2, which 
were  published  in  November  2012.  The  AGS  sets  out  the  Commission’s  proposals  for 
building a common understanding of the priorities for action at national and EU level in 2013. 
It identifies five priorities to guide Member States to renewed growth: pursuing differentiated, 
growth-friendly  fiscal  consolidation;  restoring  normal  lending  to  the  economy;  promoting 
growth and competitiveness for today and tomorrow; tackling unemployment and the social 
consequences  of  the  crisis;  and  modernising  public  administration.  The  AMR  serves  as  an 
initial  screening  device  to  determine  whether  macroeconomic  imbalances  exist  or  risk 
emerging in Member States. The AMR found positive signs that macroeconomic imbalances 
in  Europe  are  being  corrected.  To  achieve  a  complete  and  durable  rebalancing  of  the 
economy,  14  Member  States  were  selected  for  a  review  of  progress  in  addressing  these 
imbalances.3 

Against  the  background  of  the  2012  Council  Recommendation,  the  AGS  and  the  AMR, 
Austria  presented  updates  of  its  national  reform  programme  (NRP)  and  of  its  stability 
programme  in  April  2013.  These  programmes  provide  detailed  information  on  the  progress 
made  since  July  2012  and  on  the  government’s  future  plans.  The  information  contained  in 
these  programmes  provides  the  basis  for  the  assessment  made  in  this  Staff  Working 
Document. 

The update of the Austrian stability programme for the period 2012-2017 was submitted on 
16  April  2013.  It  was  produced  in  consideration  of  internal  budgetary  coordination  and 
adopted by the Council of Ministers, together with the national reform programme. While the 
Austrian  federal  government  generally  seeks  close  involvement  of  the  federal  provinces, 
regions,  municipalities  and  relevant  representatives  of  interest  groups  and  stakeholders  in 
policy  reforms,  these  stakeholders  have  not  been  directly  involved  in  the  drawing  up  of  the 
national  reform  programme.  The  coordination  responsibility 
the  Federal 
Chancellery.  The  National  Reform  Programme  is  presented  as  a  report  of  the  federal 
government  to  the  Budget  Committee  of  the  National  Council,  thus  the  involvement  of  the 
parliament also seems to be fairly limited. 

lies  with 

1 COM(2012) 750 final. 
2 COM(2012) 751 final. 
3  13  in-depth  reviews  were  published  on  10  April  2013.  While  selected  for  an  in-depth  review  in  the  AMR, 
Cyprus  was  ultimately  not  reviewed  under  the  Macroeconomic  Imbalance  Procedure  in  view  of  the  advanced 
preparations for a financial assistance programme. 

5 

 
 
                                                 
Overall assessment  

The analysis in this SWD leads to the conclusion that Austria has made some progress on 
measures taken to address the CSRs of the Council Recommendation. 

Austria’s  public  finances  are  improving.  Buoyed  by  robust  personal  income  tax  and  social 
security  contribution  revenues  on  the  back  of  sustained  employment  and  wage  growth  in 
2012,  Austria  has  kept  its  budget  deficit  at  2.5 %  of  GDP.  It  has  strengthened  its  fiscal 
framework  and  the  banking  sector  is  restructuring.  Some  measures  were  taken  in  2012  to 
increase  the  effective  retirement  age,  to  reform  tertiary  education  and  to  enhance  the 
efficiency of the health care system, however, implementation needs to be closely monitored. 
Measures to improve the provision of childcare and long-term care services, the employment 
of  older  workers  and  people  with  a  migrant  background  and  the  quality  of  the  education 
system  are  underway.  Nevertheless,  further  efforts  are  needed  to  address  the  challenges.  In 
other areas, reforms have been even more limited. This concerns in particular streamlining the 
complex relations between layers of government, harmonising of the statutory retirement age 
between women and men and linking it to gains in life expectancy, addressing the gender pay 
and  pension  gap,  reducing  the  high  tax  burden  on  labour,  and  liberalising  service  markets 
(notably  the  regulated  professions,  where  the  justification  of  restrictions  needs  to  be 
reviewed),  and  railway  transport.  The  financial  and  human  resources  of  the  Competition 
Authority still fall behind the levels observed in economies of similar or smaller size. There 
are still pockets of vulnerability in the banking sector, which need to be closely monitored. 

The  challenges  identified  in  July  2012  and  reflected  in  the  AGS  remain  valid.  In  the  short 
term, ensuring a consistent and timely implementation of the measures adopted in the areas of 
fiscal  relations,  pensions,  healthcare  and  education  and  developing  a  long-term  strategy  for 
enhancing  access  to  long-term  care  while  keeping  costs  under  control  would  be  warranted. 
Providing  the  necessary  incentives  and  the  conditions  to  improve  the  labour  market 
participation  of  women,  people  with  migrant  background  and  older  workers,  as  well  as 
optimising  education  outcomes  and  improving  the  organisation  of  higher  education  would 
help maintain and enhance the quality of human capital and innovation capacity. This in turn 
would  improve  Austria’s  medium-  and  long-term growth  prospects.  Another  challenge  is  to 
promote competition in sheltered markets. The outlook for the public finance involvement in 
the banking sector remains uncertain. 

The update of the Stability Programme for 2012-17 confirms the MTO of a structural deficit 
of 0.45 % of GDP to be met by 2017. The plans should ensure sufficient progress towards the 
MTO  as  well  as  compliance  with  the  expenditure  benchmark  and  the  debt  criterion.  The 
programme is based on a fairly optimistic macroeconomic scenario and projects an ambitious 
reduction  in  the  expenditure  ratio.  However,  downside  risks  to  the  revenue  projections  may 
not  be  sufficiently  taken  into  account.  The  National  Reform  Programme  for  2013  and  the 
update  of  the  Stability  Programme  for  2012-2017  report  measures  of  some  relevance  to  the 
CSRs  of  2012.  However,  some  of  the  measures  had  already  been  announced  before  the 
Council Recommendations and the programmes generally lack significant new initiatives for 
comprehensively addressing some of the CSRs. 

6 

 
 
2.  ECONOMIC DEVELOPMENTS AND CHALLENGES 

2.1.  Recent economic developments and outlook 

Recent economic developments 

In  2012  and  early  2013,  economic  growth  in  Austria  has  been  affected  by  the  general 
weakening of global activity and subdued domestic business and consumer confidence.  

In  2012,  these  events  had  a  dampening  impact  on  net  exports  and  domestic  demand.  As 
external demand weakened, export growth slowed down considerably from 7.2 % in 2011 to 
1.7 % in 2012. Domestic demand was held back by stagnating consumption and investment. 
Despite  these  trends,  employment  and  income  growth  have  remained  robust  and  financing 
conditions  have  stayed  relatively  favourable  as  the  flight  to  security  associated  with  the 
European sovereign debt crisis increased demand for Austrian government securities. 

Economic outlook 

According to the 2013 Commission spring forecast, economic growth will be marginal in 
2013 and may rise in 2014. Employment and real wage growth are set to stay positive, and 
provide  for  moderate  increases  in  consumption.  Investment  is  not  likely  to  increase  before 
2014.  Still,  the  investment  volume  should  ensure  the  adequacy  of  the  capital  stock  in 
anticipation of a pick-up in demand. The corporate sector has accumulated significant savings 
over  recent  years  and  should  not  have  financing  difficulties,  provided  companies  keep  cost 
pressures at bay. 

The exporting sectors are forecast to benefit from gradually improving external demand 
conditions  in  relevant  markets  over  2013-14.  All  in  all,  the  external  balance  is  projected  to 
stay in surplus and support growth. 

Inflationary  pressures  are  expected  to  dissipate  in  the  course  of  2013-14,  with  inflation 
easing from 2.6 % on average for 2012 to below 2 % in 2014. 

The  update  of  the  Austrian  Stability  Programme  for  the  period  2012-17  and  the  National 
Reform  Programme  2013,  both  submitted in April 2013, share the same short and medium-
term macroeconomic scenario. 

The baseline scenario assumes a swifter recovery of growth dynamics in the short term, 
than  that  contained  in  the  Commission  Spring  Forecast.  In  comparison  to  last  year’s 
Stability Programme, the current programme scenario has revised GDP growth projections for 
2013-16 downwards by 0.3 percentage points on average. Nevertheless, the assumed growth 
outlook  remains  optimistic,  assuming  sustained  and  relatively  strong  potential  growth, 
possibly incorporating the positive effects of policy measures. 

Regrettably,  the  documents  offer  no  explicit  quantification  of  the  growth  impact  of 
structural  policies.  Indeed  some  of  the  measures,  notably  on  enhancing  labour  market 
participation  of  vulnerable  groups,  are  specified  in  terms  of  dedicated  expenditure  over  the 
short-to-medium term, however failing to provide an estimate of the effect on employment. 

7 

 
 
2.2.  Challenges  

Austria faces important challenges with regards to ensuring long-term growth prospects 
and fiscal sustainability. They consist in tapping the full potential of the labour market and 
improving educational outcomes as its labour force potential is projected to shrink from 2020 
and  the  economy  is  becoming  more  skills-intensive;  increasing  the  sustainability  of  the 
pension  system;  improving  the  efficiency  of  the  health  care  system;  developing  a  fiscally 
sustainable long-term strategy for enhancing access to long-term care; removing market entry 
barriers in various sectors. 

These  challenges  were  identified  in  the  2012  SWD.  In  July  2012,  relevant  policy  responses 
were noted and integrated in the CSRs of the Council Recommendations issued for Austria. 
As  suggested  by  the  AGS  and  the  AMR,  all  of  these  challenges  remain  fully  or  partly 
relevant. 

The employment rate of older workers is below the EU average (43.1 % compared to the 
EU average of 48.8 % in 2012). This is due largely to the still relatively widespread take-up 
of early retirement and invalidity pensions, and to the relatively low statutory retirement age 
for women. The gap between the effective and statutory retirement age is considerable, i.e. 5.8 
years  for  men  and  2.7  years  for  women.  Combined  with  the  difficulties  faced  by  older 
workers  to  stay  in  employment,  this  puts  significant  pressure  on  the  sustainability  of  the 
Austrian pension system. 

While  the  employment  rate  of  women  of  70.3 %  is  above  EU  average,  it  is  far  less 
favourable in full-time equivalents (55.6 % in 2012), largely due to limited availability of 
affordable and quality childcare services. Gender segmentation is very high as testified by the 
concentration of women in marginal and low-wage employment, the third highest gender pay-
gap in the EU and an old-age poverty risk for women that is above the EU average.  

The  labour  market  performance  of  people  with  a  migrant  background  falls  below 
nationals  in  terms  of  employment  and  unemployment  rates,  (the  unemployment  rate  of 
people  with  migrant  background  is  more  than  twice  as  high  as  for  EU  nationals:  9.7 %  vs. 
3.6 %),  education  outcomes  and  poverty  risk.  The  proportion  of  over-qualified  migrants  is 
among  the  highest  in  the  OECD,  linked  to  difficulties  regarding  the  recognition  of 
qualifications and experience. 

The  tax  burden  for  low  income  earners  continues  to  be  a  disincentive  to  full-time 
employment of women and to labour market participation of migrants. The structure of 
the Austrian tax system provides the space to shift taxation towards other sources, considered 
less detrimental to growth. While the labour tax burden for low income earners is 6th highest 
in the EU, revenues from recurrent taxes on immovable property which are considered to be 
the least detrimental to growth are the third lowest. 

The  health  care  sector  faces  a  key  challenge  in  terms  of  ensuring  the  financial 
sustainability  of  the  system.  Rising  costs  in  the  health  system  need  to  be  contained,  while 
safeguarding  high  quality  and  equal  access  to  health  services.  Sufficient  incentives  to  shift 
treatments from the relatively large and costly inpatient sector to primary care physicians are 
lacking  and  preventive  health  care  is  underdeveloped.  This  increases  long-term  costs  in  the 
health sector, and has indirect negative effects on long-term care. Access to high quality long-
term  care  needs  to  be  improved  to  respond  to  the  rapidly  increasing  needs  of  an  ageing 
population and to foster the labour market participation of women. 

8 

 
 
The  need  to  improve  the  organisational  settings  of  Austria’s  fiscal  relations  is  a  long-
standing  issue  widely  acknowledged  by  a  wide  range  of  stakeholders.  The  AGSAGS 
highlights the positive impact on growth of a modern and efficient public administration. The 
complex mechanism of overlapping responsibilities and continuous negotiations between the 
national,  provincial  and  local  government  and,  where  relevant,  social  insurance  providers, 
lacks transparency and poses challenges to public expenditure effictiveness.  

At 5.56 % of GDP, Austria’s spending on education is above the EU average of 5.34 % 
(2011), but education outcomes are below average for 10 and 15 year olds as measured by 
PIRLS4,  TIMSS5  and  PISA6  tests.  The  influence  of  socio-economic  background  on 
educational  achievement  is  particularly  high  and  achievement  gaps  between  young  people 
with a migrant background and their native peers are among the highest in the EU. In higher 
education,  increasing  numbers  of  students  are  putting  pressure  on  the  financial  and 
organisational systems, but the percentage of students completing their studies successfully is 
low.  

Austria needs  to  lower market entry barriers including start-up and operating conditions 
for  businesses  and  individual  professionals.  It  also  needs  to  promote  consumer  choice  and 
value through increasing competition, especially in the provision of services. 

In  recent  years,  the  Austrian  banking  sector  has  remained  resilient  but  not  free  of 
structural  weaknesses.  A  number  of  banks  depend  on  public  support  and  face  difficult 
restructuring choices. 

4 Progress in International Reading Literacy Study. 
5 Trends in International Mathematics and Science Study. 
6 Programme for International Student Assessment. 

9 

 
 
                                                 
3.  ASSESSMENT OF POLICY AGENDA  

3.1. 

Fiscal policy and taxation 

Budgetary developments and debt dynamics 

Austria has surpassed its nominal deficit target set by the previous Stability Programme. 
In 2012 the general government deficit was 2.5 % of GDP, against the target of -3 % of GDP. 
This better-than-expected outcome is mainly due to the robust dynamics of household income, 
which  fuelled  revenue  from  personal  income  tax  and  social  contributions  leading  to  higher 
revenue elasticity of these revenues with respect to GDP. However, there are risks related to 
possible  additional  costs  to  finance  the  unwinding  of  a  large  bank  which  could  have  a 
significant deficit-increasing impact. 

The main goal of the programme is to reach a balanced budget in 2016 and to meet the 
Medium  Term  Objective  (MTO)  by  2017.  The  current  Programme  confirms  last  year’s 
MTO of a structural deficit of 0.45 % of GDP, reflecting the objective of the Pact. The new 
Programme indicates a minor slippage in the headline government deficit in 2013 with respect 
to the objective set last year (-2.3 versus -2.1, COM SF2013: -2.2), but for the later years, the 
medium-term  fiscal  strategy  is  confirmed.  The  upward  revision  in  the  target  for  the  general 
government deficit for 2013 is mainly due to larger one-off measures to support the banking 
sector and due to a rebound in certain  expenditure categories,  that saw  subdued growth last 
year. 

According  to  Commission’s  forecast,  the  general  government  deficit  in  2014  will  be 
slightly higher than the estimate given in the Programme (1.8 % versus 1.5 %). This is 
mainly  due  to  more  cautious  projections  of  revenues  and  expenditure  in  the  Commission’s 
forecast. Over the whole programme period the macroeconomic scenario seems optimistic in 
the current context. While the underlying revenue elasticity with respect to GDP is plausible 
the  dynamics  of  expenditure  seems  overly  positive  Expenditure  as  a  percentage  of  GDP  is 
expected to fall from 51.2 % in 2012 to 48.6 % in 2017, the lowest ratio in more than fifteen 
years. In addition, the amount of discretionary savings planned up to 2016 (no measures are 
specified for 2017) may not be sufficient to achieve these ambitious targets. The consolidation 
effort  is  slightly  more  focused  on  expenditure  savings,  except  for  2013,  when  spending  on 
education and universities almost offset planned expenditure savings. 

The size of the average structural effort in years 2011-12 is above the one recommended 
in  the  EDP.  After  a  strong  improvement  in  the  structural  balance  that  exceeded  the 
adjustment path required in the EDP in the last two years (0.9 % versus 0.7 %), the structural 
deficit  is  expected  to  slightly  increase  in  2013  according  to  the  programme  and  the 
Commission  forecast.  From  2014  onwards,  the  recalculated  structural  balance7  improves  by 
more 0.5 % in 2014 and 2015 enabling Austria to reach the MTO two years ahead of the plan 
presented  in  the  programme8,  i.e.  2015  instead  of  2017.  The  discrepancies  between  the 

7 Cyclical 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 common agreed methodology. 
8 The main source of this difference is the robust rate of real GDP growth projected by the programme, which 
leads to higher potential output and therefore a larger negative output gap. According to the scenario underlying 
the  recalculated  structural  balance,  the  negative  output  gap  will  close  only  in  2016,  while  the  programme 

10 

 
 
                                                 
 
recalculated structural balance and the structural balance included in the programme questions 
the credibility of the medium-term budgetary strategy presented by the government since the 
underlying  projections  of  the  programme  differs  considerably  with  the  structural  balance 
targets  of  the  programme  itself  (see  footnote  8).  The  Commission’s  forecast  for  2014 
highlights  a  downside  risk  with  respect  to  the  projected  structural  adjustment  since  it 
estimates  that  the  structural  balance  would  worsen  in  2014  from  -1.6 %  to  -1.7 %  of  GDP. 
This is mainly due to the larger headline deficit estimated by the Commission (1.8 % versus 
1.5 % in the programme), to a less negative output gap in the Commission’s forecast and to 
one-off measures on the revenue side not taken into account in the programme, accounting for 
0.1 % of GDP  

The  programme  shows  compliance  with  the  expenditure  benchmark.  According  to  the 
information provided in the programme and in the Commission’s forecast the growth rate of 
government expenditure, net of discretionary revenue measures, between 2014 and 2016 it is 
expected to contribute to an annual structural adjustment towards the MTO by 0.5 % of GDP. 
However, as mentioned above, the expenditure dynamic projected by the programme seems 
rather optimistic. 

The programme continues to projects that the general government debt will rise in 2013 
(see  Table  IV  in  the  annex).  General  government  debt  increased  from  a  ratio  of  60.2 %  in 
2007  to  an  estimated  of  73.6 %  in  2013.  However,  from  2014  onwards,  debt  is  expected  to 
reverse  this  trend  and  fall  to  67 %  in  2017.  The  credibility  of  this  scenario  depends  on  the 
ability  of  the  Austrian  government  to  contain  the  debt  of  state-owned  companies  classified 
outside the government sector. Furthermore, possible additional support to the banking sector 
represents a concrete downside risk for the debt path. In terms of meeting the debt reduction 
benchmark, Austria will be in a transition period9 from 2014 to 2016. Implementation of the 
above  plans  should  ensure  sufficient  progress  is  made  to  meet  the  debt  criterion.  The  full 
implementation of the programme would lead to a smaller debt-to-GDP ratio by 2020, though 
it  would  still  be  above  the  60 %  of  GDP  reference  value  (see  Graph  under  Table  V  in  the 
annex). 

projects a positive output gap already in 2015. The scenario underlying the ‘recalculated structural balance’ leads 
to  larger  negative  cyclical  components  in 2014  and 2015,  which  enable Austria  to  complete  the  adjustment  in 
structural  terms  already  in  2015.  It  is  not  clear  why  it  is  not  reflected  in  the  values  of  the  structural  balance 
presented by the programme. 
9 A ‘transition period’ applies to countries that were in EDP on 8 November 2011. It starts in the year after the 
correction of the excessive deficit.  

11 

 
 
                                                                                                                                                         
Box 1. Main measures 

The  consolidation  measures  included  in  the  programme  reflects  those  presented  last  year  and 
approved  by  the  consolidation  package  of  March  2012.  Minor  changes  have  been  implemented 
with  the  2013  budget.  This  year’s  programme  presents  year  a  detailed  outline  of  the  measures 
leading to additional spending in the coming years. These measures accounting for 0.4 % per cent 
of GDP in 2013 and mainly on the education and the university sector (0.3 % of GDP) and the 
health and long-term care sector (0.1 % of GDP). On the revenue side, a new tax agreement with 
Liechtenstein  was  signed  in  2013.  It  is  expected  to  generate  additional  revenue  accounting  for 
0.1 %  of  GDP  in  2014.  This  is  likely  to  be  an  optimistic  estimate.  Another  risk  concerns  the 
financial transaction tax, projected to provide revenue accounting for 0.1 % of GDP from 2014. 
Although  Austria  is  in  the  group  of  countries  that  agreed  to  adopt  the  European  Financial 
Transaction tax, the volume of revenue allocated to national budgets is still uncertain. 

  Main budgetary measures 

  Revenue 

  2012 

Expenditure 

•  Advanced taxation of pension funds 

(0.3 % of GDP) – one off 

•  Reduction in subsidies (-0.1 % of 

GDP) 

•  Administrative cuts (-0.1 % of 

GDP). 

•  Additional spending on schools 

(0.1 % of GDP). 

•  Capital transfers to the banking 

sectors (0.4 % of GDP). 

  2013 

•  Withholding tax on capital gains in 
Switzerland (0.3 % of GDP) – Its 
budgetary effect is highly uncertain 
as it depends on high uptake. 
•  VAT closure of loopholes (0.1 of 

GDP). 

•  Pension and unemployment 

insurance system (-0.3 % of GDP). 

•  Health care reform (-0.1 % of 

GDP). 

•  Administration and public services 

law (-0.1 % of GDP). 

•  Change in real estate taxation 

•  Additional spending on university 

(0.1 % of GDP). 

(0.1 % of GDP). 

•  Additional spending on health and 
long-term care (0.2 % of GDP). 

12 

 
 
 
 
 
 
 
 
 
 
 
  2014 

•  Withholding tax on capital gains in 
Liechtenstein (0.1 % of GDP) – its 
budgetary effect is highly uncertain 
as it depends on high uptake. 
•  Financial transaction tax (0.1 % of 
GDP) – uncertainty with respect to 
the related measures. 

•  Pension and unemployment 

insurance system (-0.2 % of GDP). 

•  Health care reform (-0.2 % of 

GDP). 

•  Additional spending on health and 
long-term care (0.2 % of GDP). 

  2015 

  2016 

•  Further impact of changes in real 
estate taxation (0.1 % of GDP). 

•  Pension and unemployment 

insurance system (-0.2 % of GDP). 

•  Health care reform (-0.3 % of 

GDP). 

•  Administration and public services 

law (-0.1 % of GDP). 

•  Additional spending on health and 
long-term care (0.2 % of GDP). 

•  Pension and unemployment 

insurance system (-0.1 % of GDP). 
•  Healthcare reform (-0.3 % of GDP). 
•  Additional spending on health and 
long-term care (0.2 % of GDP). 

  Note: The budgetary impact in the table is the impact reported in the programme, i.e. by the 

national authorities. A positive sign implies that revenue / expenditure increases as a 
consequence of this measure. The degree of detail reflects the information made available in 
the stability programme and, where available, of a multiannual budget.  

Box 2. Excessive deficit procedure for Austria 

On  02  December  2009,  the  Council  decided  that  an  excessive  deficit  existed  in  Austria  and 
adopted  the  most  recent  Council  Recommendation  under  Art.  126(7)  TFEU.  The  Council 
recommended that the Austrian authorities should put an end to the excessive deficit by 2013. 
Specifically, in order to bring the general government deficit below 3% of GDP in a credible 
and sustainable manner, the Austrian authorities were recommended to (a) ensure an average 
annual fiscal effort of ¾% of GDP over the period 2010-2013, which should also contribute 
to bringing the gross debt ratio back on a declining path that approaches the reference value 
at a satisfactory pace by restoring an adequate level of the primary surplus; (b) specify the 
measures  that  are  necessary  to  achieve  the  correction  of  the  excessive  deficit  by  2013, 
cyclical  conditions  permitting,  and  to  accelerate  the  reduction  of  the  deficit  if  economic  or 
budgetary conditions turned out better than expected at the time the EDP recommendations 
13 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
were  issued.  In  addition  the  Austrian  authorities  were  recommended  to  seize  opportunities 
beyond  the  fiscal  effort,  including  from  better  economic  conditions,  to  accelerate  the 
reduction of the gross debt ratio back towards the reference value. Furthermore, the Council 
invited  the  Austrian  authorities  to  improve  the  budgetary  framework  to  strengthen  fiscal 
discipline  at  all  levels  of  government  through  enhanced  transparency  and  accountability 
notably  by  aligning  legislative,  administrative  and  financing  responsibilities  between  the 
different levels of government and implement reforms improving incentives for older workers 
to  continue  working  by  implementing  a  comprehensive  strategy  including  enhanced  job-
related  training,  adaptation  of  working  conditions,  and  tightening  the  conditions  for  early 
retirement. 

An overview of the current state of excessive deficit procedures is available on: 
http://ec.europa.eu/economy_finance/economic_governance/sgp/deficit/index_en.htm (please 
refer to country sections at the bottom of the page). 

Long-term sustainability 

Austria appears not to face a risk of fiscal stress in the short term, while it is at medium 
risk in the medium and long term due to the cost of ageing. Government debt (73.4 % of 
GDP in 2012) is above the 60 % of GDP Treaty threshold agreed in the Stability and Growth 
Pact. Austria should therefore maintain its consolidation effort in order to reduce government 
debt.  Moreover,  containing  age-related  expenditure  growth  further  is  crucial  to  help  make 
public  finances  more  sustainable  in  the  long  term.  According  to  the  Ageing  Report  2012, 
projected increases in pension and the healthcare expenditure and, to a lesser extent, in long-
term care expenditure pose risks to public finance sustainability. Indeed, Austria’s 2010 level 
of public spending is  14.1 %  of  GDP on pensions, 7.1 % on health and 1.6 % on long-term 
care,  but  expenditure  is  projected  to  increase  by  2,  1.6  and  1.2  percentage  points.  of  GDP 
respectively  over  the  period  2010-60.  Recent  reforms  to  the  pension  system  are  likely  to 
reduce  the  sustainability  risks  to  some  degree,  provided  they  are  accompanied  by 
improvements  in  labour  market  conditions  to  allow  older  workers  to  stay  longer  in 
employment. The recent policy measures taken in the health sector are also likely to go in the 
right direction, although a careful assessment on their effectiveness has to be carried out in the 
coming years.10 

Fiscal framework 

The  budgetary  framework  has  been  strengthened  but  fiscal  relations  among  layers  of 
government  are  still  very  complex.  The  reinforcement  of  the  Internal  Stability  Pact 
represents a positive step towards a strengthened budgetary framework. In May 2012 a new 
and  comprehensive  Austria  Internal  Stability  Pact  was  signed  by  all  levels  of  government. 
The  key  element  of  the  pact  is  the  introduction  of  a  new  system  of  multiple  fiscal  rules 
covering  also  states  and  municipalities.  The  main  rules  involve:  a)  more  stringent  deficit 
targets set in last year’s Austria Stability Programme; b) a new structural balance rule, which 

10  For  additional  details  look  at  below  section  on  fiscal  framework  and  the  section  3.3,  in  particular  the 
paragraphs on longer working lives and health.  

14 

 
 
 
                                                 
will be applied from 2017 onwards, that sets a lower limit of general government structural 
deficit  at  -0.45 %  of  GDP  (-0.35 %  for  the  central  government  and  -0.1 %  for  states  and 
municipalities); c) in line with the preventive arm of the European Stability and Growth Pact, 
expenditure growth in all government levels (net of discretionary measures) must not exceed 
average potential growth and must follow appropriate adjustment path towards the MTO; d) 
stronger  enforcement  mechanisms  based  on  penalties  have  been  introduced  to  ensure  the 
credibility of these provisions. 

Central  and  federal  state  governments  agreed  to  limit  the  increase  of  healthcare 
expenditure, by setting an expenditure benchmark. The expenditure benchmark is equal to 
average  nominal  GDP  growth  until  2016,  while  from  2016  onwards  health  expenditure 
growth should not exceed a threshold of 3.6 %. The extension of tighter fiscal rules to federal 
state governments, the introduction of enforcement mechanisms and the adoption of specific 
targets  to  contain  health  expenditure  dynamic  are  all  positive  steps  with  strong  potential  to 
increase spending efficiency  

There  are,  however,  implementation  risks  which  could  affect  the  effectiveness  of  these 
measures. For instance it is questionable to what extent tighter fiscal rules will translate into 
savings  in  those  specific  areas  where  inefficiencies  materialise.  The  approach  taken  by  the 
government  is  mainly  based  on  output-targets,  but  the  issues  of  overlapping  responsibilities 
among the different layers of government and numerous inconsistencies between funding and 
spending powers remain largely untouched. In this respect the recent transfer of competences 
for long-term-care cash benefits to the sole responsibility of the Federal State can be seen as a 
good practice to be extended to other areas.  

the 

insurance  providers  and 

The  complex  mechanism  of  continuous  agreements  between  the  national  government, 
federal  states,  are  another  example  of 
social 
implementation risks. For instance the shift of hospital services from inpatient to outpatient 
care  which  should  lead  to  a  certain  degree  of  consolidation  of  excess  hospital  capacity 
(specifically  as  regards  the  number  of  acute  care  hospital  beds)  in  order  to  fully  exploit  the 
saving potential of this measure. Decisions on such capacity consolidation are in the hands of 
federal  state  governments  which  therefore  bear  the  political  cost  of  this  choice.  Since  state 
governments provide less than half of hospital funding, they will benefit only partially from 
the related savings.  The overall effect is that the federal states have no real incentive to agree 
on hospital capacity consolidation. In addition, the current lack of a comprehensive package 
of  cost-containment  measures  to  make  concrete  the  agreement  on  limiting  the  increase  of 
health expenditure means that the credibility of the targets cannot be assessed. There is also a 
lack of specific tools to gather sufficient patient-level information which make it im possibile 
to address technical feasibility questions. 

Tax system 

Austria could benefit from shifting the tax burden on labour for low income earners in a 
budgetary neutral way to recurrent property taxes. The AGS stresses the need to pursue 
growth-friendly fiscal consolidation buy shifting the overall tax burden towards tax bases less 
detrimental to growth and job creation and to raise revenue preferably by broadening the tax 
base.  The  Consolidation  Package  2012-2016  includes  several  tax-raising  measures.  They 

15 

 
 
main  measures  with  permanent  effects11  refer  to  a)  closure  of  loopholes  in  the  VAT  tax 
system  b)  taxes  on  real  estate  gains  c)  reform  of  group  taxation,  d)  temporary  (until  2016) 
introduction of a progressive solidarity tax for high income earners (for taxable income above 
EUR  150  000  €)  on  the  usually  flat-taxed  holid ay  and  Christmas  bonuses.  Furthermore,  the 
social contribution rates for some groups have been increased as has the maximum assessment 
basis  for  social 
insurance  contributions,  whereas  exemptions  from  unemployment 
contributions for older workers have been abolished. All these measures lead to an increase in 
non-wage labour costs that particularly affect higher incomes. Except for the rise in the land 
tax  for  agricultural  business  enterprise,  no  measures  have  been  taken  to  increase  recurrent 
immovable property taxation.  

The overall tax burden on labour is among the highest in the EU, but the employment 
participation rate (75.6 % in 2012) is also high. The tax wedge for low income earners, at 
43.7 % in 2011, is clearly above the EU average of 39.6 %, ranking 6th highest in the EU. A 
reduction of the tax burden on labour for low income earners could provide higher incentives 
to reduce the high proportion of part-time employment of women and to increase the labour 
participation  of  people  with  migrant  background.  The  structure  of  the  Austrian  tax  system 
provides  scope  to  shift  taxation  towards  other  sources.  Property  tax  revenues  in  Austria 
account for 0.5 % of GDP and are significantly below the EU-27 average of 2.1 % of GDP. In 
particular revenues from recurrent taxes on immovable property, which are considered to be 
the least detrimental to growth, are the third lowest in the EU, representing 0.2 % of GDP in 
2011 (EU average; 1.3 %). Cadastral values, on which the recurrent property tax is based, date 
back  to  1973  (increased  by  35 %  in  1982),  hence  they  do  not  take  into  account  any  recent 
market developments.  

In  2011,  revenues  from  environmental  taxes  slightly  exceeded  the  EU  average.  The 
increase in environmental taxes in 2011 reflects the rise of excise duties on diesel and petrol, 
which is a step in the right direction. The indexation of environmental taxes to inflation could 
help to prevent tax level from falling over time. The recent increase of commuter allowances 
however goes against achieving the environmental/greenhouse gas emission targets. 

3.2. 

Financial Sector 

In  recent  years,  the  Austrian  banking  sector  has  remained  resilient,  notwithstanding 
several structural weaknesses. The two largest banks complied with the EBA requirement of 
meeting  a  core  Tier  1  capital  ratio  of  9 %  by  end-June  2012  and  the  system-wide  capital 
adequacy ratio has improved marginally since 2010. Banks’ exposure to countries receiving 
financial  assistance  is  limited  and  on  a  downward  trend.  There  are  no  indications  of 
significant  tightening  of  lending  conditions,  including  for  small  and  medium-sized 
enterprises. The loan-to-deposit ratio has been rather stable and lower than in the majority of 
the euro-area countries. However, non-performing loans have been on an upward trend due to 
the  deteriorating  asset  quality  in  several  countries  in  Central,  Eastern  and  South-Eastern 
Europe  (CESEE).  Two  systemically  relevant  banks  depend  on  public  support  and  face 
difficult restructuring choices. 

In  2012,  the  Council  Recommendations  for  Austria  contained  a  CSR  focusing  on  the 
restructuring  of  the  banks  benefiting  from  public  support  and  the  coordination  of  national 

11  One-off  measures,  such  as  an  ex-ante  income  tax  on  private  pensions  insurance  and  a  tax  agreement  with 
Switzerland, account for the bulk of new revenue for the year 2012 and 2013. 

16 

 
 
                                                 
policy decisions which may have cross-border implications with banking sector supervisors in 
other countries and in particular in CESEE. 

Austria  had  to  nationalise  two  banks  during  the  2008/2009  financial  crisis.  In  2012, 
moreover, the ailing Volksbanken AG, the country’s fourth biggest banking group, had to be 
partly  nationalised  as  well.  One  of  the  2012  country-specific-recommendations  for  Austria 
encouraged  further  restructuring  and  continued  monitoring  of  the  banks  that  benefited  from 
public support. Since the adoption of the CSR on the banking sector, further progress has been 
made to  restructure of nationalised/partly nationalised  banks  (in particular  Volksbanken AG 
and Hypo Alpe Adria). However, the restructuring of Hypo Alpe Adria has proven to be more 
difficult than initially expected inter alia due to its operations outside Austria and the still on-
going deterioration in asset quality. The subsidiaries of Hypo Alpe Adria in several countries 
in  the  Western  Balkan  region  are  systemic  relevant  banks.  Against  this  background,  the 
implementation  of  the  restructuring  plans  approved  by  the  Commission  and  the  strict 
oversight of these banks remains a key priority.  

Austrian  banks  have  a  significant  exposure  to  the  countries  of  Central,  Eastern  and 
South-Eastern Europe (CESEE), representing roughly 70 % of Austrian GDP at the end 
of June 2012. The CESEE business remains a net contributor to the overall profitability, but 
the  still  on-going  deterioration  in  asset  quality  in  several  countries  in  this  region  has  put 
pressure on the capitalisation of the Austrian subsidiaries and increased their cost of risk. To 
address the vulnerabilities associated with the exposure to the countries in the Central, Eastern 
and  South  Eastern  Europe,  the  Austrian  authorities  introduced  an  early  warning  indicator 
concerning the funding of new lending by the subsidiaries of Austrian banks operating in the 
CESEE region with a non-binding reference cap of 110 % on the loan-to-stable funding ratio 
(LLFSR) in March 2012. This supervisory guidance aims to improve the sustainability of the 
business  models  of  large  internationally  active  Austrian  banks  and  provides  for  LLSFR 
monitoring. Based on that, the Austrian regulatory authorities could propose to cross-border 
supervisory  colleges  for  Austrian  banks  to  adopt  LLSFR  limits  and  calibrate  them.  The 
implementation of regulatory measures affecting the CESEE region has been taking place in 
the  context  of  improving  coordination  with  the  financial  sector  supervisors  in  the  countries 
concerned. 

In line with the December 2011 European Banking Authority recapitalisation exercise, 
the two largest Austrian banks (Erste Bank, Raiffeisen) met the requirement of meeting 
a core Tier 1 capital ratio of 9 % by end-June 2012. Still, the largest Austrian banks tend to 
lag  behind  their  European  peers  as  well  as  other  local  and  regional  banks  in  terms  of 
capitalisation ratios. At system level, capitalisation has improved only marginally over the last 
two years, as the capital adequacy ratio increased from 13.2 % at the end of 2010 to 13.7 % at 
the end of June 2012. Notwithstanding continuous improvements, the further strengthening of 
bank solvency ratios should remain a key priority given the banks’ risk profile, tighter future 
regulatory requirements and repayment of government support. 

The  outstanding  stock  of  Swiss  franc  denominated  loans  still  constitutes  a  source  of 
vulnerability despite several supervisory measures adopted by the banking regulator to curb 
foreign  currency  lending  to  unhedged  borrowers  and  the  exchange  rate  policy  of  the  Swiss 
Central Bank, Most foreign currency loans are bullet loans expiring in ten to twenty years and 
the risks of important adverse wealth effects remain significant. 

17 

 
 
Concerns about a credit crunch in Austria due to higher capital requirements, strained 
funding  markets  or  deteriorating  asset  quality  have  so  far  not  materialized  so  far. 
Deposits  Austrian  banks  increased  above  the  European  average  over  the  past  year  and  the 
level of domestic non-performing loans on the local market has barely increased going from 
4.2 %  in  2009  to  4.6 %  in  mid-2012.  Furthermore,  the  subsidiaries  of  Austrian  banks 
operating  in  the  Central,  Eastern  and  South-Eastern  Europe  region  have  also  managed  to 
increase  their  local  deposit  base  by  5.3 %  over  2012,  while  the  loan-to-deposit  ratio  of  the 
CESEE subsidiaries shrank to 104 %. Therefore, the dependence of Austrian banks on ECB 
financing is still comparatively low. 

A  new  bank  insolvency  and  restructuring  law  has  been  drafted  and  presented  by  the 
Ministry of finance for adoption by parliament to limit the need for costly public bail-outs 
of  banks.  Most  importantly,  by  frontloading  several  provisions  of  the  EU  draft  directive  on 
bank restructuring and resolution, this law will vest early intervention powers into the banking 
sector supervisor to impose restructuring measures on banks in distress. 

3.3.  Labour market, education and social policies  

In  2012,  the  labour  market  situation  in  Austria  improved  overall  but  low  employment 
rates  of  older  workers,  a  significant  gender  pay  gap  and  poor  performance  of  people 
with migrant background have persisted. Austria’s unemployment rate edged up to 4.3 % 
but  remained  the  lowest  in  the  EU.  The  employment  rate  of  persons  aged  20-64  increased 
further  to  75.6 %,  well  above  the  EU  average  and  on  track  to  meet  the  ambitious  national 
target of 77-78 % by 2020. Nevertheless the employment rate of older workers is significantly 
below the EU average, the incidence of part-time and low paid work is extraordinarily high 
among  women  and  the  unemployment  among  workers  of  migrant  background  is  more  than 
twice as high as for Austrian nationals. 

In 2012 the Council Recommendations for Austria contained CSRs regarding longer working 
lives, gender segmentation and education. 

Overall Austria has made limited progress in increasing the effective retirement age and 
of  tackling  gender  segmentation.  Although  Austrian  authorities  have  started  to  design  a 
strategy  to  address  flaws  in  the  health  care  sector,  improving  of  the  financial  sustainability 
and  the  efficiency  in  the  healthcare  is  still  an  issue  that  needs  to  be  addressed  and  closely 
monitored to evaluate progresses. Some measures to improve education outcomes have been 
put forward, but progress is slow. No measures have been taken to reduce the tax burden on 
labour but taxes on recurrent property taxes and environmental taxes have been increased to 
some extent. 

Longer working lives 

A  number  of  measures  were  adopted  in  2012to  increase  the  effective  retirement  age, 
mainly by to reducing the use of early retirement and invalidity pensions that accounted 
for more than two thirds of all new pensions in 2011. The qualifying years for the so-called 
"corridor  pension"  will  be  increased  and  temporary  invalidity  pension  will  be  gradually 
phased out. A new pension calculation method called "pension account"12 , which is likely to 

12 The pension account relates to the introduction of a single pensions account system to increase incentives to 
work longer based on enhanced transparency on the future pension benefits.  

18 

 
 
                                                 
increase the incentive to stay longer in employment, will be implemented as of 2014. Overall, 
recent reforms are steps in the right direction but their full impact will only be visible over the 
next 10-15 years and they may not be sufficient to fully address demographic challenges for 
fiscal  sustainability.  Effective  implementation  and  close  monitoring  of  the  impact  of  the 
reforms  on  the  effective  retirement  age  will  be  important.  There  are,  however,  no  current 
plans to align the pension age with longevity nor to speed up the very slow harmonisation of 
the  retirement  age  of  women  and  men,  as  recommended  in  the  CSR  and  SWD2012,  which 
would additionally contribute to longer working lives and fiscal sustainability. 

Almost 30 % of people spend between one hand half and three years in unemployment 
or on sick leave before retiring. Against this background, the professional rehabilitation and 
counselling measures, for which substantial new funds have been made available, need to be 
effectively  implemented  and  supported  by  better  lifelong  learning  opportunities,  the 
promotion  of  more  substantial  measures  on  the  employers’  side  concerning  age-friendly 
working environments, well-being at work, occupational mobility and health promotion. On 
health  prevention  particular  attention  must  be  paid  to  cardiovascular  conditions  and  cancer, 
two  of  the  main  medical  categories  causing  early  labour  market  exits  through  disability 
benefits.  To  promote  longer  working  lives  it  will  also  be  important  to  remove  accessibility 
barriers to provide reasonable accommodation at the workplace and to integrate persons with 
disabilities into the labour market. Another obstacle to retaining older workers in employment 
is the steep age-income profile of salaried employees, which could be tackled by promoting a 
wage scheme based more on performance than on seniority. 

Gender segmentation 

The  impact  of  the  measures  to  address  the  gender  pay  gap  is  limited.  Austria  has 
addressed the 2012 CSR mostly by continuing previously adopted measures such as the equal 
pay  reports  and  initiatives  addressing  gender  balance  in  economic  decision  making.  The 
gender pay gap results principally from the fact that women are highly concentrated in part-
time and low-wage employment. Regarding care services, the policy continues to increase the 
availability of childcare places for children up to age 3 by 20,000 places until 2014. However, 
progress is slow and Austria still has a long way to go towards reaching the Barcelona target 
(14 %  in  201113  vs.  33 %  target)  if  it  wants  to  reduce  the  negative  employment  impact  of 
parenthood of women, which is well above the EU-average. A new initiative on all-day care 
places at primary and secondary schools, in addition to the expansion already agreed with the 
federal states, still needs to be signed by the latter. The envisaged increase is substantial, but it 
will most likely not cover the demand and the pace of implementation will largely depend on 
the federal states.  

The  high  gender  pay  and  ensuing  pension  gap  and  the  relatively  high  poverty  risk  of 
women in old age have only been tackled by rather small-scale measures. There is scope 
to  promote  equal  opportunities  on  the  labour  market  including  through  a  more  equal 
distribution of unpaid care work between the genders, and a revision of collectively bargained 
wage arrangements and working conditions in the social service sector. In this sector women 
are  overrepresented  and  wage  agreements  tend  to  be  below  average.  Regarding  long-term 
care,  the  "Long-term  care  fund"  was  prolonged  from  2014  to  2016,  which  was  already 
announced in last year’s NRP (see chapter on "Health and Long-term care" below).  

13  Note  that  EUROSTAT  data  do  not  correspond  to  national  data  which  include  services  of  qualified  child-
minders, which brings the ratio to 22 %.  

19 

 
 
                                                 
Education 

Overall, Austria has partially implemented the 2012 CSR on education. The transition to 
‘new  lower  secondary  schools’  (‘Neue  Mittelschule’),  which  will  replace  the  former  lower 
secondary school (‘Hauptschule’) as of 2018/201914, is on-going. The introduction of this new 
form of school form should be monitored closely in particular with regard to its potential to 
mitigate  the  negative  effects  of  early  tracking  on  the  prospects  of  access  to  university 
education  for  the  socially  disadvantaged  and  its  capacity  to  improve  learning  outcomes. 
Improved teaching plays a key role in this. It will be important to follow-up on the results of 
the  on-going  comprehensive  evaluation  which  is  due  to  report  in  2014.  Further  measures 
concern the expansion of all-day schools and a reform of teacher training, where progress is 
slow. 

Austria has adopted in 2012 a Strategy against early school leaving. Bundling all existing 
measures  from  different  administrative  stakeholders  it  allows  to  better  focus  on  its  3  pillars 
prevention,  intervention  and  compensation  and  has  reduced  the  ESL  rate  to  7.6 %  in  2012. 
This is below the EU average of 12.6 % and the national target of 9.5 %.  

A  sustainable  strategy  underpinned  by  sufficient  financial  resources  is  necessary  for 
early  language  learning  since  23 %  of  pupils  entering  schools  have  difficulties  in  the 
language of instruction. A language acquisition strategy has been developed, with a special 
focus on children with a migrant background. In 2014 a first assessment of these reforms will 
be available. The additional EUR 5 million a year (to be topped up by the Länder), which will 
be allocated to early German language training in kindergartens from 2012 until 2014 are an 
important first step, but do not appear to fully meet the challenge. 

High quality teaching is one key element for maintaining and improving the quality of 
education. Basic agreements at government level have been reached for the important reform 
of  teacher  training.  However,  specific  legal  and  administrative  measures  have  still  to  be 
passed and it is planned to implement the reform in steps starting 2014/15. Quality should be 
further  improved  by  introducing  competence  oriented  teaching,  a  central  administered 
"Matura",  upper  secondary  leaving  exam  as  of  2014/15,  and  a  quality  process  initiated  in 
schools in 2013/14. 

In  response  to  the  challenges  in  the  area  of  higher  education,  including  high  drop-out 
rates,  additional  budgetary  resources  have  been  made  available  since  2012  to  start 
implementing the Austrian Higher Education plan step by step until 2021. This plan has 
been designed to deal with the steadily growing number of students and the problem of high 
incoming  mobility  and  the  difficulties  in  combining  work  and  studies.  Implementation 
depends  also  on  sufficient  resources  and  should  be  closely  monitored.  The  additional  funds 
are intended inter alia to create additional study places, to promote mathematics, science and 
technology  (MST)  subjects  and  to  mitigate  quality  problems  in  oversubscribed  disciplines. 
Other measures needed are adapting infrastructure, and teaching and learning methods to the 
new  volume  of  students,  increasing  the  focus  on  student-centred  learning  and  increasing 
students’ opportunities to gain work-related skills and access to practical work experience. In 
five  study  fields  that  are  totally  overcrowded  a  maximum  number  of  students  will  be  set 
combined  with  increased  teaching  resources  in  order  to  increase  quality  and  to  reduce  drop 
outs.  Guidance  services  prior  to  higher  education  and  during  study  periods  have  been 

14 So far about 698 ‘Neue Mittelschulen’ have been established comprising 4 270 class rooms. 

20 

 
 
                                                 
reinforced, but the quality of the guidance on career planning could be further improved. The 
difficulties in reconciling work and studies due to current study conditions could be addressed 
by further measures. 

In  addition  to  improvement  in  higher  education,  improvements  in  initial  educational 
outcomes  and  a  continued  focus  on  vocational  training  are  essential  with  a  view  of 
ensuring  the  provision  of  skilled  labour.  There  is  still  scope  to  facilitate  transfer  in  the 
education system between different types of education. 

A  comprehensive  Lifelong  Learning  Strategy  2020  covering  all  levels  of  education  and 
training  was  presented  in  July  2012.  However,  a  dedicated  budget  and  a  comprehensive 
evaluation mechanism are missing. 

With the aim of simplifying and improving the governance of the education system, a six 
point  proposal  is  under  negotiation,  including  the  abolition  of  school  authorities  at 
district  level.  This  is  a  welcome  step  towards  streamlining  of  responsibilities  between 
different  layers  of  government,  but  further  simplification  would  be  needed  to  reduce 
fragmentation more substantially. 

Health and long-term care 

Reforms  in  the  health  and  long-term  care  sector  are  taking  place.  In  addition  to  the 
measures  aimed  at  reducing  and  rationalising  health  expenditure  already  discussed  in  the 
section on budgetary framework, the Austrian authorities have taken other measures such as 
the introduction of an electronic health record. It is acknowledged that pricing/internal tariffs 
lack sufficient transparency to be able to make a clear analysis and the targeting of reforms to 
medical needs. The Austrian government has announced that it will address this issue in the 
hospital  sector  (LKF  system).  However,  measures  should  also  be  taken  in  the  outpatient 
sector, e.g. by a clearer definition of the basket of services and goods as well as related item 
costs. Furthermore, the lack of preventive strategies is not addressed in the NRP and there are 
no measures to improve evidence on material inequality and health inequality. In the light of a 
relatively  high  disability  rate  in  Austria15  more  emphasis  should  be  given  to  cost-saving 
prevention and rehabilitation policies and to creating better conditions for independent living, 
so as to better contain expected increasing demands on health and long-term care. The "Long-
term  care  fund"  was  extended  until  2016  with  national  funding  of  EUR  650  million  to  be 
topped up by the Länder and municipalities. As regional differences in the availability of care 
places are substantial it would be important to draw up a nationwide strategy for addressing 
efficiently  the  expanding  demand  for  long-term  care  services.  No  new  measures  have  been 
taken  to  further  improve  access  to  high  quality  long-term  care  and  to  ensure  its  financial 
sustainability  beyond  the  2016,  although  the  NRP  announces  that  respective  measures  are 
being developed. The national-level long-term care database, which was created in 2012, is a 
sound  starting  point  for  debates  about  structural  reform.  However,  as  it  provides  aggregate 
data only at the level of federal province, it is still a relatively limited tool for evidence-based 
policy making. 

Underutilised potential of people with a migrant background 

15 In 2010, 10.8 % of Austrian women and 8 % of men who have severe daily limitations due to health problems, 
against the EU un-weighted averages of 7.9 % and 6.5 % respectively. 

21 

 
 
                                                 
Some  measures  planned  in  the  National  Action  Plan  on  Integration  have  been 
implemented  to  enhance  the  labour  market  participation  of  people  with  a  migration 
background.  A  centralised  coordination  centre  and  contact  points  at  regional  level  for 
information  and  advice  concerning  the  recognition  of  skills  acquired  abroad  are  being 
established, and the recognition procedure for academic diplomas has been shortened from six 
to three months. Furthermore, two internet platforms were created in 2012 to provide easier 
access  to  information.  In  addition,  as  from  2012,  people  with  a  migrant  background  are 
considered  a  target  group  for  active  labour  market  policies.  While  these  measures  have  the 
potential to enhance transparency and to reduce the barriers for third country nationals to get 
their  qualifications  recognised,  their  impact  needs  to  be  closely  monitored,  in  particular 
regarding  effective  recognition  for  the  vocational  qualifications  of  skilled  labour  which  is  a 
more complex issue than the recognition of academic diplomas and often results in the under-
grading of migrants in wage agreements.  

Preventing poverty and social exclusion 

The Austrian approach to preventing poverty as outlined in the NRP focuses on labour 
market  integration,  which  has  been  enhanced  for  people  at  the  margins  of  the  labour 
market  following  the  introduction  of  the  Minimum  Income  Scheme.  But  it  does  not 
convincingly address the issues of quality of work, relatively low net replacement rates within 
unemployment  insurance  in  case  of  preceding  low-wage  employment,  access  to  social 
services  and  inequalities  in  education.  Austria  lacks  a  pro-active  nation-wide  and  evidence-
based plan for improving access to social services is missing. Wage policies and provisions 
regarding working time, stability of employment and precarious work, which have an impact 
on in-work poverty, are not addressed. The fact that minimum pensions are below the poverty 
threshold, which contributes to the in substantial gender inequality in pension outcomes and 
above EU-average and increasing old-age poverty of women, is not tackled at all in the NRP. 

3.4. 

Structural measures promoting growth and competitiveness 

Austria’s external competitiveness has appeared to remain unaffected in 2012. Altough 
economy  wide  unit  labour  costs  have  increased  markedly,  after  stagnating  in  2010-2011,  in 
manufacturing  they  are  still  7 %  below  their  level  of  2009  in  nominal  terms  even  though 
productivity in the sector has consistently been improving. The trade weighted real effective 
exchange rate depreciated further by 1.3 %. However Austria’s global market share has fallen 
from 1.2 % in 2009 to 1 % in 2012. 

In  2012,  the  Council  Recommendations  for  Austria  contained  a  CSR  concerning  barriers  to 
market  entry  in  the  communications,  transport  and  energy  retail  markets,  restrictions  on 
access  to  liberal  professions,  the  powers  of  the  federal  competition  authority  and  the 
implementation of the competition law reform. 

Austria  prides  itself  on  having  a  highly  developed,  technologically  advanced  and 
diversified  economy  sustaining  solid  economic  and  employment  growth.  Nevertheless, 
maintaining these achievements may prove challenging without an on-going improvement of 
incentives  for  entrepreneurship,  innovation  and  sustainable  resource  use.  Faced  with 
increasing competition from low-cost countries in the middle technology segment, non-price 
competitiveness is a key factor to compensate for its fall in market share. An integrated and 
well-coordinated  approach  to  policy  development  and  implementation,  continued  budgetary 
prioritisation, greater private sector involvement, investment in research and innovation will 
be key issues to ensure the success of Austria’s new strategy ’The way to innovation leader’. 
22 

 
 
A  well-functioning  venture  capital  market  would  play  an  important  role  in  diversifying  the 
financing sources of innovative firms, including SME’s. 

Competition and the business environment 

There  are  still  significant  barriers  to  entry  and  effective  competition  in  the  services 
sector.  These  barriers  are  especially  pronounced  in  the  liberal  professions  and  railway 
transport. Although a recent change of the competition law will strengthen the powers of the 
Austrian  Competition  Authority,  the  institution’s  financial  and  human  resources  still  fall 
behind the levels observed in economies of similar or smaller size. This raises concerns as to 
the effectiveness of competition law enforcement. Despite substantial progress in liberalising 
postal services the replacement of mail delivery boxes process has not been finalised by the 
end of 2012 as scheduled and a significant number of delivery boxes are still only accessible 
to the incumbent operator. 

The  value  of  works,  goods  and  services  that  Austrian  authorities  publish  under  EU 
procurement  legislation  is  below  2 %  of  GDP,  well  below  the  EU  average.  As  a  result,  the 
significant economic benefits  of efficient and competitive  public  procurement  are likely  not 
being realised throughout the Austrian public sector. 

Professional services play an important role in the business service markets that account 
for 10 % of GDP and 11 % of total employment. This sector, composed mainly of SME’s, 
faces a high regulatory burden which negatively affects its growth potential. Both restrictions 
on access to and on the conduct of professions in the services sector, e.g. as regards legal form 
and  shareholding  requirements,  persist.  One  example  is  the  restrictions  to  the  setting  up  of 
interdisciplinary  companies  composed  of  notaries,  consultants  and  accountants.  Demand  for 
such  integrated  services  by  enterprises  has  been  indicated  by  surveys16  and  the  government 
plans  to  reduce  restrictions  as  part  of  its  work  programme.  However,  access  to  many 
professional activities remains reserved. There is a strong case for authorities to assess how 
justified  these  restrictions  are  and  whether  the  same  public  interest  objectives  cannot  be 
reached with lighter regulatory regimes. The different regulations in place at Länder level can 
create  artificial  barriers  to  the  mobility  of  professionals  in  response  to  regional  shifts  in 
demand.  Regulation  can  also  have  a  negative  impact  on  the  mobility  of  European 
professionals  wishing  to  establish  and  work  in  Austria  when  in  their  country  of  origin  the 
profession does not impose such regulations. 

The  World  Bank’s  "Doing  business  report",  ranks  Austria  as  23rd  out  of  25  EU 
Member States in the "Starting a business" dimension. In spite of a gradual reduction over 
recent years, the number of administrative procedures (eight, including licensing, registration, 
certification, announcement), minimum capital and time (up to 28 days) required to set up a 
limited  liability  company  appear  unnecessarily  burdensome  and  would  benefit  from  further 
reductions. The long-discussed reform would bring a partial relief through a reduction of the 
required  minimum  capital,  abolition  of  the  requirement  of  a  paper  announcement  and  the 
reduction of the costs of notarial certification. 

It  is  still  desirable  to  eliminate  outstanding  barriers  to  entry  and  foster  competition  in 
the rail market. Although there is a certain degree of market penetration by non-incumbent 
firms (14.6 % for freight and 5.4 % for passenger transport (2010)), the market share of new 

16 Carried out by WKÖ in 2009. 

23 

 
 
                                                 
entrants  in  rail  freight  was  far  below  that  of  other  relevant  countries  (France  had  20 % 
although it started liberalisation later). In passenger transport there is only one competitor, and 
only  on  the  line  Vienna-Salzburg  (Westbahn).  This  company  has  complained  about 
systematically being discriminated by the incumbent17. Austria has given the incumbent a ten 
year  Public  Service  Obligation  contract  for  the  whole  country  without  a  tender  to  the 
incumbent, which in addition compensates the incumbent for higher track access charges. An 
effective separation of infrastructure management and transport services in the railway sector 
could  provide  incentives  to  operators  and  limit  discrimination  of  new  entrants.  The 
infrastructure manager ÖBB Infrastruktur is however under full control of the railway holding 
ÖBB AG, which also operates passenger and freight rail services.  

R&D, innovation 

R&D intensity (2.74 % of GDP in 2011) is high by European standards, but Austria is 
not  sufficiently  exploiting  and  maintaining  its  innovative  potential.  The  slow  rise  in 
private spending after 2010 is putting at risk the achievement of the ambitious Europe 2020 
target of 3.76 % of GDP for gross expenditure on research and development (GERD). 

Although  business  research  intensity  is  above  the  EU  average,  it  is  concentrated  in  a 
limited number of companies. The start-up and growth dynamics as regards innovative firms 
are relatively low albeit somewhat mitigated by a relatively high survival rate of new firms. 
Austria  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).  The  performance  of  the  Austria's  research  and  innovation 
system  is  not  yet  matching  the  relatively  high  levels  of  public  R&D  funding.  The  tertiary 
educational attainment rate is relatively low, and a complex governance system is 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. The most prominent measure is the simplification of the tax 
regime of innovation activities to a single tax credit raised from 8 % to 10 %, which came into 
force on 1 January 2011. In addition, the cap on the amount that can be subcontracted while 
remaining eligible for tax credit rises from EUR 100 000 to EUR 1 million. These measures 
are expected to encourage subcontracting to research centres or universities. 

Measures to improve the situation need to ensure that public support will not crowd out 
private  supply.  Diversifying  the  sources  of  finance  for  small  innovative  firms  could  boost 
private sector involvement. Access to finance for SMEs in Austria continues to score better 
than the EU average. SMEs do not report a credit crunch and overall continue to be satisfied 
with the supply of bank lending despite some tightening of lending standards (e.g. collateral). 
The  main  area  for  improvement  remains  access  to  venture  capital,  the  supply  of  which  is 
persistently  low  (0.04 %  of  GDP  compared  to  an  EU  average  of  0.35 %  in  2011).  Crowd 
funding has the potential to further complement the spectrum of sources to finance, especially 

17  Westbahn  filed  several  complaints  to  the  railway  regulator  claiming  ÖBB  increased  prices  for  track  access 
massively (while it is itself compensated for price increases in the public service contract with the State). ÖBB 
Infrastructure refused to give information about train movements and delays to its competitors which are needed 
for the information of customers (the European Court of Justice convicted ÖBB to supply this information in its 
preliminary 
http://eur-
2012 
lex.europa.eu/LexUriServ/LexUriServ.do?uri=SWD:2013:0012:FIN:EN:HTML, p. 85, the Commission’s impact 
assessment.  

November 

C-136/11. 

ruling 

Case 

also 

See 

22 

of 

24 

 
 
                                                 
for SMEs, but a reassessment is needed of the balance in the existing regulatory framework 
between investor protection and the need of enterprises of fast  and uncomplicated access to 
small scale finance. The EU Structural Funds can play a small role in this context for example 
by setting up and boosting risk capital funds for innovative start-ups where appropriate. 

Climate, energy and resource-efficiency 

The energy intensity of the Austrian economy fell between 2005 and 2010 by over 6 % 
and  was  among  the  five  lowest  in  the  EU  in  2012.  The  Austrian  Energy  Strategy  2010 
makes energy efficiency and the stabilization of the final energy consumption at the level of 
2005  (1100  PJ)  as  a  priority  for  2020.  Austria’s  second  National  Energy  Efficiency  Action 
Plan  presents  a  strategy  for  energy  efficiency  measures  in  all  sectors  of  the  economy,  but 
relies  primarily  on  energy  savings  in  residential  buildings,  insufficiently  addressing  sectors 
with  a  high  share  in  final  consumption  (industry/SME,  energy  supply,  transport  and  public 
sector).  The  federal  government  has  released  a  draft  Federal  Energy  Efficiency  Act  in  late 
2012,  transposing  the  Energy  Efficiency  Directive  into  national  law.  To  ensure  proper  and 
timely implementation of the planned measures as well as clear and ambitious targets a "task-
sharing"  approach  will  be  key  in  view  of  the  role  of  regions.  Regular  monitoring  of  the 
progress in implementing its national energy efficiency strategy and addressing policy gaps, 
e.g.  in  transport,  is  warranted.  Synergies  with  a  further  uptake  of  renewable  energies, 
especially in the built environment, are worth fostering. The planned policy measures relating 
to  the  labelling  of  the  origin  of  the  electricity  should  be  carefully  designed  in  order  not  to 
restrict competition from electricity supplies from other Member States. 

Austria  revised  its  Green  Electricity  Act  reducing  tariffs  to  reflect  lower  production 
cost. It is making good progress towards its national target on renewable energy sources 
(RES) of 34 %. Data for 2011 suggest a RES share of 30.9 %. Although it has not met the 
national  targets  (31.1 %  for  2011)  are  not  met,  Austria  is  among  the  few  Member  States 
where  current  measures  appear  sufficient  to  reach  the  2020  target.  Still,  Austria  needs  to 
complete transposition of Directive 2009/28/EC on the promotion of the use of energy from 
renewable sources. 

interconnection 

Austria plays an important role in cross-border energy transmission. The need for more 
electricity 
to  Italy,  Slovenia  and  Switzerland  remains  considerable. 
Consequently,  despite  the  steep  differential  between  wholesale  electricity  prices  in  Austria 
and  the  prices  in  neighbouring  countries  to  the  South,  cross  border  trade  remains  rather 
limited. The 380-kV ring in Austria has yet to be completed. Furthermore, integrating wind 
power  and  pump  storage  capacity  requires  a  reinforcement  of  the  internal  electricity  grid. 
Streamlining permission procedures would be helpful in this respect. The continued efforts to 
implement  day-ahead  implicit  flow-based  electricity  transmission  capacity  allocation 
procedures and actively cooperate with its neighbours would be important in order to limit the 
negative impacts of unplanned flows in the CEE region. Being dependent on gas imports, it is 
essential  for  Austria 
the 
implementation  of  reverse-flow  arrangements  on  the  HAG  pipeline  towards  Slovakia  and 
Hungary. 

its  congestion  management  procedures  and 

improve 

to 

Regarding  the  retail  market,  a  cost-benefit  analysis  has  come  out  in  favour  of  smart 
meters for both electricity and gas. A Ministerial Decree is mandating the roll-out of smart 
meters  for  electricity  with  specific  timetable  for  implementation.  Austria  transposed  retail-
market  related  provisions  of  the  Third  Energy  Package  into  federal  and  regional  law, 

25 

 
 
enhancing the position of consumers. Alternative electricity providers managed to attract new 
customers and switching rates increased in the beginning of 2012, albeit from a relatively low 
level.  With  regard  to  gas,  although  the  small  consumer  segment  remained  concentrated, 
switching rates increased and some new providers have entered the market. New rules in force 
since  1  January  2013  have  accelerated  the  switching  procedures  for  electricity  and  gas 
consumers.  The  regulator  E-Control  undertook  important  outreach  activities  to  promote  the 
switching between suppliers. 

The largest proportion of current greenhouse gas emissions is generated by energy use 
and  transport.  Under  the  Europe  2020  Strategy  Austria  has  committed  to  reducing 
greenhouse  gas  (GHG)  emissions  in  sectors  not  covered  by  the  Emissions  Trading  System 
(ETS) by 16 % compared to 2005. Assuming no additional measures, recent projections (from 
2011) indicate a reduction by just 10 % by  2020. At present, the 2011 Climate Change Bill 
serves  as  the  country’s  legal  framework  on  climate  issues.  An  amendment  to  the  bill  was 
proposed in December 2012, setting a new ceiling for GHG emissions for 2013. In October 
2012, the government adopted the National Climate Change Adaptation Strategy, including an 
action  plan  and  measures  for  14  different  sectors.  In  2012,  progress  towards  more  climate-
friendly legislation was also made with the amendment of the Bill on Green Electricity that is 
expected to eliminate a queue of proposals for photovoltaic installations waiting for approval. 

Austria is also struggling to meet EU air quality targets. The main sources of pollution are 
road  traffic,  and  to  some  extent  also  energy  production.  The  World  Health  Organisation 
(WHO)  calculates  the  number  of  additional  deaths  related  to  air  pollution  to  be  more  than 
1200 per year. 

The introduction of a Transport Master Plan was another important step in 2012. The 
plan sets ambitious emissions reduction targets for the sector where between 1990 and 2010, 
emissions  increased  by  60 %.  Implementation  will  require  measures  that  go  beyond  the 
current focus on electro-mobility and CO2-based registration tax. An important first step was 
to  tighten  the  CO2-based  bonus/malus-system  in  2012.  The  2012  government  proposal  to 
adjust  the  commuting  allowance  system  (expected  for  2013),  however,  sets  incentives  that 
favour private over public transport. Compared to other EU-15 Member States and despite a 
raise in 2011, excise duties on petrol and diesel are also relatively low. 

Austria has comprehensive waste collection systems and landfills less than 1 % of its waste 
meeting the EU waste targets with little problem. Increasing consumption by the population 
will contribute to increased waste production and will remain a challenge in future years. 

3.5.  Modernisation of public administration  

Overall,  the  quality  of  Austria’s  public  administration  has  been  found  to  be  above  the 
EU  average  according  to  the  World  Bank’s  indicator  of  government  effectiveness.  The 
programme  to  reduce  administrative  burden  for  enterprises  (2007-2012)  has  achieved  its 
target  if  impacts  of  the  Business  Service  Portal  are  included  that  will  materialise  in  the 
coming years. A complementary programme now focuses on the burden for citizens. Based on 
the  most  burdensome  administrative  procedures,  150 
a  baseline  measurement  of 
simplification measures have been identified and partly implemented.  

In order to further reduce administrative costs for enterprises by about EUR 200 million 
an  online  Business  Service  Portal  (USP)  is  being  implemented  in  stages.  That  should 
create  a  single-point-of-contact  for  established  companies  and  covering  a  wide  range  of 
26 

 
 
services (e.g. tax declarations, social security contributions, public procurement procedures). 
The second stage has started in 2013 with full implementation expected by 2015. In parallel, 
Austria  has  created  a  network  of  separate  points  of  single  contact  aimed  at  helping  service 
providers  seeking  to  establish  in  Austria  or  to  provide  cross-border  services  into  Austria. 
Despite good progress, more could be done to offer information and complete procedures in 
foreign  languages.  Further  examples  of  administrative  modernisation  are  the  comprehensive 
reform  of  the  organisation  of  administrative  courts  entering  into  force  from  2014  and  the 
introduction of legal provisions for e-invoicing.  

Since  January  2013  an  impact  assessment  system  has  been  introduced  that  integrates 
nine  different  tests  for  different  types  of  impacts.  Implementation  will  show  whether  the 
resulting analysis is sufficiently deep and integrated to assess net societal costs and benefits. 
Austria  needs  to  reduce  fragmentation  and  inefficiencies  stemming  from  the  division  of 
competences  among  federal,  state  and  local  government.  In  many  areas  there  are  nine 
different  laws  in  place  (e.g.  construction  law).  This  leads  to  unnecessary  burdens  for 
enterprises  and  market  fragmentation.  It  also  renders  transposition  of  EU  directives  lengthy 
and  inefficient  due  to  the  need  for  one  transposition  at  federal  level  and  nine  at  state  level 
(known as the ‘factor 10’). A complex governance structure also affects the performance of 
Austria’s innovation system. 

27 

 
 
4.  OVERVIEW TABLE  

2012 commitments 

Summary assessment 

Country-specific recommendations (CSRs) 

implement 

CSR  1:  Implement  the  2012  budget  as  envisaged  and 
reinforce  and  rigorously 
the  budgetary 
strategy  for  the  year  2013  and  beyond;  sufficiently 
specify measures (in particular at the sub-national level), 
to ensure a timely correction of the excessive deficit and 
the  average  annual  structural 
the  achievement  of 
the  Council 
specified 
adjustment 
Recommendations under the EDP. Thereafter, ensure an 
adequate  structural  adjustment  effort  to  make  sufficient 
progress  towards  the  MTO,  including  meeting  the 
expenditure benchmark. 

effort 

in 

CSR 2: Take further steps to strengthen the national 
budgetary framework by aligning responsibilities across 
the federal, regional and local levels of government, in 
particular by implementing concrete reforms aimed at 
improving the organisation, financing and efficiency of 
healthcare and education. 

CSR 3: Bring forward the harmonisation of the statutory 
retirement age between men and women; enhance older 
workers’ employability and monitor closely the 
implementation of the recent reforms restricting access 
to early exit channels in order to ensure that the effective 
retirement age is rising including through linking the 
statutory retirement age to life expectancy.” 

28 

Substantial progress 

Austria made substantial progress in reducing the 
deficit below 3 % this year.  

- Revenue raising measures in place. 
- The planned savings have been achieved in 2012. 

Some progress 

The recent agreement on a cost containment path 
and a common target system for the healthcare 
system is an important step towards more efficient 
use of resources. However, implementation will rely 
on a complex mechanism of continuous agreements 
between the main players, which constitutes a risk 
to implementation. Important issues such as more 
focus on disease prevention have not been 
sufficiently tackled, and the evidence base on 
potential links between material and health 
inequality has not been improved. Competencies 
will still be shared among the different layers of 
government and social insurance providers, and the 
same is true with accountability. 
No major reforms to the governance of the 
education system have been implemented either. 
In order to achieve progress in this area a change of 
the constitution is required. 

Partial implementation 
No action has been taken to bring forward the 
harmonisation of the statutory retirement age 
between men and women and to link the statutory 
retirement age to life expectancy. The reforms 
targeting early retirement and invalidity pension 
schemes have the potential to reduce early 
retirement over the medium term, although with an 
initially rather limited impact, as they will only 
gradually be implemented as of 2014 or later. The 
success will depend on effective implementation, in 
particular of the measures to improve the 
employability including ‘professional 
rehabilitation’/re-skilling measures, for which 
substantial new funds have been allocated. 
The CSR has therefore been partly implemented. 

 
 
 
 
 
 
 
Partial implementation 
No measures have been taken in order to shift 
taxation from labour towards tax bases less 
detrimental to GDP growth such as consumption, 
environmental or property taxation.  
The social contribution rates for some groups have 
been increased as well as the maximum assessment 
basis for social insurance contributions, whereas 
exemptions from unemployment contributions for 
older workers have been abolished. All these 
measures lead to an increase of non-wage labour 
costs, but they particularly affect higher incomes. 
Almost no measures have been taken to increase 
recurrent property taxation. 
In the area of environmental taxation, the CO2-
based bonus/malus system for car registration tax 
was tightened and reimbursement to farms and 
regional bus operators for part of the mineral tax 
was abolished. In addition the exemption from the 
tax for railway was terminated as of tax year 2013 
and tax exemptions to service industry on the 
energy levy have been phased out.  
No new measures have been taken to reduce the 
gender pay gap, nor to further expand long-term 
care services beyond the Long-Term Care Fund. 
Some additional funds have been made available for 
childcare. 

Partial implementation 
Austria has taken some measures, which have the 
potential to enhance education outcomes, but 
progress is slow and for the time being there is little 
evidence that the reforms have already turned out to 
be successful. Evaluations and potential further 
adjustments are needed.   
Some measures have been taken to reduce drop-outs 
from higher education, but a more comprehensive 
and strategic approach is still needed. 

Partial implementation 
Austria has transposed the consumer-related 
provisions of the third internal energy market 
package into (federal and regional) law. Also, 
although market concentration at retail level 
remains rather high, switching rates increased both 
in the electricity and gas markets. New rules have 
simplified the switching procedures for electricity 
and gas consumers. 
Postal services: substantial progress with the 
replacement of mail delivery has been made, but the 
process has not been finalised as planned by the end 
of 2012. 
Austria has not taken any particular steps to foster 
competition in the rail markets. 

Restrictions on access to and exercise of the 
professions in the services sector persist in Austria, 
no changes were observed in the course of 2012. 

CSR 4: Take steps to reduce the effective tax and social 
security burden on labour especially for low income 
earners with a view to increasing employment rates for 
older persons and women given the need to counteract 
the impact of demographic change on the working 
population. Shift the tax burden in a budgetary neutral 
way, towards real estate taxes, and environmental taxes. 
Reduce the high gender pay gap and enhance full-time 
employment opportunities for women, in particular 
through the provision of additional care services for 
dependants. 

CSR 5: Take further measures to improve educational 
outcomes, especially of disadvantaged young people. 
Take measures to reduce drop-outs from higher 
education. 

CSR 6: Take further steps to foster competition, in the 
services sectors, by removing barriers to market entry in 
the communications, transport and energy retail markets. 
Where unjustified restrictions on access to liberal 
professions exist, they should be removed. Enhance the 
powers of the federal competition authority and speed up 
the implementation of the competition law reform. 

29 

 
 
 
 
A change of the competition law was recently 
adopted that will strengthen the powers of the 
Austrian Competition Authority. However, the 
institution’s financial and human resources still fall 
behind the levels observed in economies of similar 
size, which raises concerns as to the effectiveness of 
competition law enforcement. 

CSR 7: Further restructure and continue to monitor 
those banks that benefited from public support, while 
avoiding excessive deleveraging. Further improve the 
cooperation and coordination of national policy 
decisions with financial sector supervisors in other 
countries. 

Some progress 
Progress has been made as regards the restructuring 
of (partially) nationalised banks (Volksbanken and 
Hypo Alpe Adria). Home-host supervisory 
coordination has been enhanced. Nevertheless, not 
all vulnerabilities have been reduced. 

Europe 2020 (national targets and progress) 

Employment rate target:  

R&D target: 

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

In  2012  the  overall  employment  rate  in  Austria 
amounted  to  75.6 %  of  all  20  to  64  years-old  and 
was  more  than  7  percentage  points  above  the  EU 
average  (68.5 %).  To  reach  the  target  of  an 
employment  rate  between  77 %  and  78 %  by  2020 
the current employment rate should rise by between 
1.4  p.p.  and  2.4  p.p.  To  reach  the  proposed  target 
the growth of the employment rate of Austria has to 
be between  0.2 pp. and  or 0.3pp. 

Austria  is  among  the  EU  countries  with  the  fastest 
progress in R&D intensity in the period 2000-2010 
(increase  from  1.93 %  to  2.79 %  or  by  0.86 % 
percentage  points).  However,  in  2011  research 
intensity fell to 2.74 %, as a result of real spending 
growth  below  GDP  growth.  Research  intensity  is 
estimated to have recovered in 2012 to reach 2.8 % 
and this level will probably also be reached in 2013. 
Progress  of  0.1  percentage  points  is  needed  each 
year to reach the national R&D intensity target, but 
research  intensity  in  the  period  2010-2012  did  not 
increase and Austria is hence currently not on track 
to reach its ambitious national target of 3.76 %. 

Change  in  non-ETS  greenhouse  gas  emissions 
between  2005  and  2011:  -12%.  According  to  the 
the 
latest  national  projections 
Commission and when existing measures are taken 
into  account,  the  target  is  expected  to  be  missed:  -
10% in 2020 compared to 2005 (with a margin of 6 
percentage points). 

submitted 

to 

Renewable energy target: 34 % 
Share of renewable energy in all modes of transport: 
10 % 

In 2011, the proportion of total renewable energy in 
gross  final  energy  consumption  was  30.9 %  and 
7.6 %  in  the  transport  sector.  (Source:  Eurostat. 
April  2013.  For  2011,  only  formally  reported 
biofuels compliant with Art. 17 and 18 of Directive 
2009/28/EC are included). 

Indicative national energy efficiency target for 2020: 
Final energy consumption of 1100 PJ 

Austria  has  set  an  indicative  national  energy 
efficiency  target  in  accordance  with  Articles  3  and 

30 

 
 
 
This implies reaching a 2020 level of 31.5 Mtoe primary 
consumption and 26.3 Mtoe final energy consumption. 

of 

24 
the  Energy  Efficiency  Directive 
(2012/27/EU).  It  has  also  expressed  it,  as  required, 
in  terms  of  an  absolute  level  of  primary  and  final 
energy  consumption  in  2020  and  has  provided 
information on the basis on which data this has been 
calculated. 

Early school leaving target: 9.5 % 

Tertiary education target: 38 % 

Risk of poverty or social exclusion target: 

regard 

With 
already 
to  ESL,  Austria 
outperforming  Europe  2020  and  its  national  target, 
but efforts have to be continued to reduce the ESL 
rate of persons with a migrant background. 
2006: 9.8 %, 2012: 7.6 % (See Table VIII) 

is 

Austria  makes  progress  and  increasing  general 
tertiary graduation rates remains a challenge.  

2006: 21.2 %, 2011: 23.8 %, 2012: 26.3 %18 
Including ISCED 4a Levels the graduation rate is in 
2012 already at 36.6 %. 

The Austrian NRP 2013 gives precise data on the 
developments towards the poverty target: the 
number of people at risk of poverty or social 
exclusion has fallen by 125 000 (EU SILC 2011), 
which implies that Austria has already reached just 
over half of the targeted reduction of 235 000 by 
2020. 

18 These figures are Eurostat figures not counting ISCED 4a as it is done by national data. 

31 

 
 
 
 
                                                 
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-
2009

2010

2011

2012

2013

2014

3.0
-0.3
1.2
2.2
4.2
24.1
22.8

-3.2
66.3
-37.5
51.2
54.4
3.7

1.9
0.1
1.8
1.2
4.1
23.0
24.4

-1.7
65.8
-36.3
50.0
51.6
3.1

1.5
0.2
1.9
1.0
4.6
21.4
25.8

-1.8
63.9
-35.7
48.0
49.8
2.7

2.1
-1.7
1.7
1.8
4.4
20.5
24.7

-4.5
72.0
-44.1
48.1
52.6
2.7

2.7
0.0
3.6
2.6
4.2
21.4
25.6

-2.5
72.5
-46.0
48.0
50.5
2.6

0.8
-0.3
2.6
0.1
4.3
21.5
25.9

-2.5
73.4
n.a
48.7
51.2
2.6

0.6
-0.9
2.0
0.2
4.7
21.6
25.6

-2.2
73.8
n.a
49.0
51.3
2.6

1.8
-0.5
1.8
1.5
4.7
21.8
26.1

-1.8
73.7
n.a
49.0
50.8
2.6

-2.9

-1.2

0.0

4.1

1.2

2.2

2.1

1.7

n.a
n.a
16.4
23.6

n.a
n.a
16.0
23.2

n.a
n.a
16.1
23.2

-79.2
-1.6
16.7
22.8

-89.6
3.4
16.0
24.1

-68.8
-3.6
16.6
20.6

-81.6
10.9
16.5
23.6

-92.2
6.3
14.9
23.0

3.2
n.a
40.3
6.5
22.7
8.4

4.0
95.7
42.1
6.6
23.8
9.4

3.9
99.2
40.7
6.4
23.8
8.5

2.4
112.4
39.9
5.6
22.6
7.8

3.9
119.2
40.6
6.0
23.4
9.0

5.2
110.4
39.7
7.9
22.5
10.0

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 2005 market prices.
2 The indicator on 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.

2.0
8.6
3.3
-0.3
-0.1
45.0
45.7
6.2
100.7
95.7
94.2

2.9
n.a
3.8
-0.1
-0.1
44.8
45.8
6.3
100.5
95.7
95.6

3.1
14.8
4.2
-0.2
0.1
44.4
46.0
6.1
100.9
97.7
92.7

-2.3
15.8
-0.3
-1.3
-0.1
46.4
43.5
7.3
111.2
101.5
94.0

0.9
19.5
3.2
-1.4
-0.2
46.6
43.7
6.7
99.9
100.3
98.0

3.1
n.a
4.1
-0.1
-0.1
n.a
n.a
n.a
102.4
95.6
96.9

3.3
13.6
5.0
-0.9
0.0
45.3
45.2
6.4
101.0
98.8
98.2

3.1
n.a
4.1
-0.1
-0.1
n.a
n.a
n.a
102.1
95.3
97.1

3.2
n.a
40.3
6.4
22.9
8.3

3.3
n.a
40.0
6.6
22.8
8.4

Source :
Commission services’ 2013 spring forecasts (COM); Stability programme (SP).

32 

 
 
 
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)

2012

2013

2014

2015

2016

2017

COM SP

COM SP

COM SP

0.8

0.4
1.3
1.7
0.8

0.5

-0.4

0.6

-0.3
1.1

4.3

-0.3

2.6

2.2

3.0

2.9

0.8

0.4
1.3
1.7
0.8

0.5

-0.2

0.6

-0.6
1.4

4.4

-0.6

2.6

2.2

2.9

1.8

0.6

0.4
1.1
2.8
2.2

0.6

-0.4

0.4

-0.9
0.7

4.7

-0.1

2.0

2.0

2.1

3.1

1.0

0.6
1.5
3.3
3.6

0.8

0.2

0.0

-1.0
0.7

4.8

0.3

2.3

2.0

2.5

2.3

1.8

1.0
2.5
5.6
5.4

1.3

0.2

0.3

-0.5
1.0

4.7

0.8

1.8

1.7

1.9

3.1

1.8

0.9
2.0
5.8
5.4

1.1

0.3

0.4

-0.9
1.0

4.8

0.8

2.0

1.8

2.7

2.6

SP

2.0

1.1
3.3
5.8
5.4

1.4

0.1

0.5

-0.3
1.0

4.7

1.0

2.3

1.8

3.1

2.4

SP

1.8

1.0
2.5
5.6
5.2

1.2

0.1

0.5

0.0
1.0

4.5

0.8

2.0

1.7

2.8

2.6

SP

1.9

1.2
2.8
5.8
5.4

1.4

0.0

0.5

0.1
1.0

4.4

0.9

1.9

1.6

2.7

2.7

Note:
1In percent of potential GDP, with potential GDP growth recalculated by Commission services on the basis of the programme scenario 
using the commonly agreed methodology.

Source :

Commission services’ 2013 spring forecasts (COM); Stability programme (SP).

33 

 
 
 
 
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

of which:

Compensation of employees

Intermediate consumption

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 gap

2

Cyclically-adjusted balance

2

3
Structural balance (SB)
Change in SB

Two year average change in SB 

Structural primary balance
Change in structural primary balance

3

Expenditure benchmark

Applicable reference rate

4

5

Deviation
Two-year average deviation (% GDP)

 (% GDP)

2012

2013

2014

2015

2016

2017

COM COM SP

1
COM

SP

SP

SP

SP

Change: 
2012-2017
SP

48.7

49.0

48.9

49.0

48.8

48.8

48.8

48.8

0.1

14.5

13.3

16.4

4.5

14.5

13.5

16.5

4.5

51.2

51.3

14.5

13.6

16.4

4.5

51.3

14.5

13.6

16.4

4.5

50.8

14.4

13.6

16.4

4.4

50.4

14.4

13.7

16.4

4.3

49.4

14.4

13.8

16.5

4.2

48.9

14.4

13.8

16.5

4.1

48.6

-0.1

0.6

0.0

-0.4

-2.6

48.6

48.6

48.7

48.2

47.8

46.9

46.4

46.1

-2.4

9.4

4.3

9.3

4.3

9.3

4.3

9.1

4.3

9.1

4.2

9.0

4.1

8.9

4.1

8.9

4.0

24.8

24.9

25.0

24.8

24.8

24.6

24.4

24.3

3.5

1.0

5.7

2.6

-2.5

0.1

-0.8

-1.7

-0.3

-2.3

-1.5

0.7

0.9

1.1

0.46

0.5

-0.1

3.6

1.0

5.6

2.6

-2.2

0.4

-0.2

-2.0

-0.9

-1.8

-1.6

-0.1

0.3

1.0

-0.1

0.46

-0.2

0.2

3.5

1.0

5.6

2.6

-2.3

0.3

0.0

-2.3

-1.0

-1.8

-1.8

-0.3

0.2

0.8

-0.3

0.46

-0.4

-0.8

3.6

1.0

5.3

2.6

-1.8

0.8

0.1

-1.9

-0.5

-1.6

-1.7

-0.1

-0.1

0.9

-0.1

0.08

0.4

0.1

3.5

1.0

5.2

2.6

-1.5

1.1

0.0

-1.5

-0.9

-1.1

-1.1

0.7

0.2

1.5

0.7

0.08

-0.8

-0.6

3.4

0.9

4.8

2.5

-0.6

1.9

0.0

-0.6

-0.3

-0.5

-0.5

0.6

0.7

2.0

0.5

0.08

-0.6

-0.7

3.3

0.9

4.7

2.5

0.0

2.4

0.0

0.0

0.0

0.0

0.0

0.5

0.5

2.5

0.4

1.12

-0.9

-0.8

3.2

0.9

4.8

2.4

0.2

2.7

0.0

0.2

0.1

0.2

0.2

0.2

0.3

2.6

0.1

n.a.

n.a.

n.a.

-0.5

-0.2

-0.5

-0.3

-0.1

-0.8

-0.2

2.7

2.5

0.8

1.9

0.4

2.5

1.7

-

-

1.5

-

-

-

-

Notes:

1On a no-policy-change basis.
2Output gap (in % of potential GDP) and cyclically-adjusted balance according to the programme as recalculated by Commission services on 
the basis of the programme scenario using the commonly agreed methodology.
3Structural (primary) balance = cyclically-adjusted (primary) balance excluding one-off and other temporary measures.

4 Reference medium-term rate of potential GDP growth. The (standard) reference rate applies from year t+1, if the country has reached its 
M TO in year t. A lower  rate applies as long as the country is adjusting towards its M TO, including in year t.The reference rates applicable 
to 2014 onwards have been updated in 2013. 
5 Deviation of the growth rate of public expenditure net of discretionary revenue measures and revenue increases mandated by law from the 
applicable reference rate. The expenditure aggregate used for the expenditure benchmark is obtained following the commonly agreed 
methodology. A positive sign implies that expenditure growth exceeds the applicable reference rate. 

Source :

Stability programme (SP); Commission services’ 2013 spring forecasts (COM); Commission services’ calculations.

34 

 
 
 
Table IV. Debt dynamics 

(% of GDP)

1
Gross debt ratio
Change in the ratio
Contributions 2 :

1. Primary balance

2. “Snow-ball” effect

Of which:

Interest expenditure

Growth effect

Inflation effect

3. Stock-flow adjustment

Of which:

Cash/accruals diff.

Acc. financial assets

Privatisation

Val. effect & residual

Gap to the debt benchmark5,6
Structural adjustment7
To be compared to:
Required adjustment8
Notes:

Average
2007-2011

67.5

2.0

-0.1

0.8

2.7

-0.8

-1.2

1.4

2012

73.4

0.9

-0.1

0.5

2.6

-0.6

-1.6

0.6

2013

2014

COM

73.8

0.4

-0.4

0.8

2.6

-0.4

-1.4

0.0

SP

73.6

0.2

-0.3

0.5

2.6

-0.7

-1.4

0.0

COM

73.7

-0.1

-0.8

0.2

2.6

-1.3

-1.2

0.5

SP

73.0

-0.6

-1.1

0.0

2.6

-1.3

-1.3

0.5

2015
SP

71.3

-1.8

2016
SP

69.3

-1.9

2017
SP

67.0

-2.3

-1.9

-0.1

2.5

-1.4

-1.2

0.3

-2.4

0.1

2.5

-1.2

-1.1

0.4

-2.7

0.1

2.4

-1.3

-1.1

0.3

2013

2014

2015

2016

2017

2012

n.r.

n.r.

n.r.

COM / 
SP3
n.r.

n.r.

n.r.

4

SP

n.r.

n.r.

n.r.

COM / 
SP3
n.r.

0.7

0.1

4

SP

n.r.

0.7

SP

n.r.

0.6

SP

n.r.

0.5

SP

-3.9

n.r.

0.0

-0.3

-1.6

n.r.

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 (through the denominator). The stock-flow adjustment includes differences in cash and accrual accounting, 
accumulation of financial assets and valuation and other residual effects. 

3 Assessment of the consolidation path set in SP assuming growth follows the COM  forecasts.
4Assessment of the consolidation path set in the SP assuming growth follows the SP projections.
5Not relevant for M ember Sates that were subject to an EDP procedure in November 2011 and for a period of 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 for the 
previous years are achieved.

Source :

Stability programme (SP); Commission services’ spring 2013 forecasts (COM); Commission services’ calculations.

35 

 
 
 
 
Table V. Sustainability indicators 

S2

of which:

Initial budgetary position (IBP)

Long-term cost of ageing (CoA)

of which:

Pensions

Health care

Long-term care

Others

S1 (required adjustment)*

of which:

Initial budgetary position (IBP)

Debt requirement (DR)

Long-term cost of ageing (CoA)

S0 (risk for fiscal stress)**

Debt,  % of GDP (2012)

Age-related expenditure, % of GDP (2012)

AT

EU27

No-policy 
change 
scenario 

Programme 
(SCP) 
scenario

No-policy 
change 
scenario 

Programme 
(SCP) 
scenario

4.0

0.4

3.6

1.7

1.1

0.8

-0.1

2.4

0.0

0.8

1.6

2.4

-1.0

3.4

1.5

1.0

0.8

0.1

0.3

-2.2

0.5

1.9

3.0

0.8

2.2

1.0

0.9

0.6

-0.4

2.2

0.0

1.9

0.3

1.3

-0.9

2.2

1.1

0.8

0.6

-0.3

0.5

-1.8

1.9

0.4

0.07

73.4

28.8

:

87.0

25.8

Note: 
The 'No-policy change' scenario depicts the sustainability gap under the assumption that the budgetary position evolves 
according to the Commissions' spring 2013 forecast until 2014. The 'Programme (SCP)' 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.              
** The critical threshold for the S0 indicator is 0.44. 

Source : 
Commission services; 2013 stability programme.                                                                                                                               

36 

 
 
 
 
(% of GDP)

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

120

100

80

60

40

20

0

0
9
9
1

2
9
9
1

4
9
9
1

6
9
9
1

8
9
9
1

0
0
0
2

2
0
0
2

4
0
0
2

6
0
0
2

8
0
0
2

0
1
0
2

2
1
0
2

4
1
0
2

6
1
0
2

8
1
0
2

0
2
0
2

2
2
0
2

4
2
0
2

6
2
0
2

8
2
0
2

0
3
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 2015)

COM + Shock (+1p.p. in the short-term/long-term interest rate on maturing and new debt from 2015)

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

SCP scenario

Source: Commission, 2013 Stability Programme 

37 

 
 
 
 
Table VI. Taxation indicators 

Total tax revenues (incl. actual compulsory social contributions, % of GDP)

43.6

41.5

42.7

42.4

41.9

42.0

2002

2006

2008

2009

2010

2011

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

12.4

11.6

11.6

12.0

11.8

11.7

8.1

0.7

1.7

1.8

7.6

0.7

1.6

1.7

7.8

0.6

1.6

1.6

8.0

0.6

1.6

1.7

7.9

0.6

1.6

1.6

7.8

0.6

1.7

1.6

21.5

20.8

21.3

21.5

21.3

21.2

2.5

6.1

1.1

2.7

2.4

5.7

1.0

2.5

2.5

6.3

1.0

2.4

2.5

5.5

1.0

2.4

2.6

5.4

1.0

2.4

2.6

5.7

0.9

2.4

63.0

58.8

60.9

60.9

60.2

59.6

Note: 
1 Tax revenues are broken down by economic function, i.e. according to whether taxes are raised on consumption, labour or capital. See European Commission 
(2013) Taxation trends in the European Union, for a more detailed explanation.

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

3 The VAT efficiency is measured via the VAT revenue ratio. The 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 (2012), Tax reforms in EU M ember States, European Economy 6/2012 and Taxation Papers 34/2012 for a more detailed 
explanation.

Source: Commission

38 

 
 
 
 
Table VII. Financial market indicators 

Total assets of the banking sector (% of GDP)

375.0

373.1

341.8

335.9

314.4

2008

2009

2010

2011

2012

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), 2)
              - capital adequacy ratio (%) 1), 2)
              - return on equity (%) 1), 2), 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)
Gross external debt (% of GDP)5)
            - Public
            - Private

Long term interest rates spread versus Bund (basis points)*

Credit default swap spreads for sovereign securities (5-year)*
Notes: 

1) Latest data (September 2012).
2) Does not include subsidiaries and branches abroad of foreign controlled deposit takers.
3) After extraordinary items and taxes. Tier 1 capital.
4) Covered countries are CY, EL, ES, LV, HU, IE, PT and RO.
5) Latest data 2012Q3.
* M easured in basis points.
Source :

39.0

23.4

1.9
12.9

2.6

8.3

4.9

37.2

19.4

2.3
15.0

1.5

-0.8

2.2

35.9

…

2.8
15.4

7.9

0.3

2.6

38.4

…

2.7
15.8

1.4

2.0

3.8

…

…

2.7
16.1

7.6

0.8

2.5

110.6

107.9

109.6

108.8

107.4

4.1

26.1

2.3

27.1

1.0

23.9

1.8

20.6

2.1

2.0

129.2

133.6

133.0

131.7

130.0

53.6
36.2

0.4

99.4

55.7
42.4

0.7

108.4

58.4
42.0

0.5

78.7

58.8
38.5

0.7

61.4
39.8

0.9

109.4

125.8

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).

39 

 
 
 
 
Table VIII. Labour market and social indicators 

2007

2008

2009

2010

2011

2012

74.4

75.1

74.7

74.9

75.2

75.6

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, 
15 years and more)
Part-time employment of women  (% of women employment, 15 
years and more)
Part-time employment of men  (% of men employment, 15 years 
and more)
Fixed term employment (% of employees with a fixed term 
contract, 15 years and more)
Transitions from temporary 
to permanent employment
Unemployment rate1 (% of labour force, 
age group 15-74)
Long-term unemployment rate2 (% of labour force)
Youth unemployment rate 
(% of youth labour force aged 15-24)
Youth NEET rate (% of population aged 15-24)

1.8

67.2

81.6

38.6

22.6

41.2

7.2

8.9

4.0

4.4

1.2

8.7

7.0

2.0

68.6

81.7

41.0

23.3

41.5

8.1

9.0

2.6

3.8

0.9

8.0

7.1

-0.7

69.4

80.1

41.1

24.6

42.9

8.7

9.1

3.5

4.8

1.0

10.0

7.8

8.7

0.8

69.6

80.2

42.4

25.2

43.8

9.0

9.3

3.6

4.4

1.1

8.8

7.1

8.3

Early leavers from education and training (% of pop. 18-24 with at 
most lower sec. educ. and not in further education or training)

10.7

10.1

Tertiary educational attainment (% of population 30-34 having 
successfully completed tertiary education)
Formal childcare (from 1 to 29 hours; % over the population less 
than 3 years)
Formal childcare (30 hours or over; % over the population less 
than 3 year)
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)

Real unit labour cost growth (annual % change)

21.1

22.2

23.5

23.5

7.0

1.0

1.9

-0.3

2.2

0.6

1.2

-0.8

4.0

2.0

-0.4

-1.0

0.5

1.4

3.7

2.0

7.0

2.0

-2.3

-2.9

-0.2

1.0

5.0

3.4

6.0

3.0

1.5

-0.9

2.2

-0.4

0.0

-1.6

Notes:
1 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.
2 Long-term unemployed are unemployed persons for at least 12 months.
Sources: 
Commission (EU Labour Force Survey and European National Accounts) 

40 

1.7

69.6

80.8

41.5

25.2

44.0

8.9

9.6

3.2

4.2

1.1

8.3

6.9

8.3

23.8

11.0

3.0

1.3

0.5

0.4

0.1

0.9

-1.3

1.2

70.3

80.9

43.1

25.7

44.9

9.0

9.3

:

4.3

1.1

8.7

6.5

7.6

26.3

:

:

-0.5

-0.1

-0.2

0.7

3.4

1.1

 
 
 
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
At-risk-of-poverty or social exclusion1 
(% of total population)
At-risk-of-poverty or social exclusion of children 
(% of people aged 0-17)
At-risk-of-poverty or social exclusion of elderly 
(% of people aged 65+)
At-Risk-of-Poverty rate2 (% of total population)
Severe Material Deprivation3  (% of total population)
Share of people living in low work intensity households 4 (% of 
people aged 0-59)
In-work at-risk-of poverty rate (% of persons employed)
Impact of social transfers (excluding pensions) on reducing 
poverty
Poverty thresholds, expressed in national currency at constant 
prices5
Gross disposable income (households)
Relative median poverty risk gap (60% of median equivalised 
income, age: total)

2006

2007

2008

2009

2010

6.95

2.29

13.32

2.85

1.60

0.12

27.41

1.86

6.98

2.16

13.21

2.73

1.43

0.11

26.92

1.81

7.23

2.13

13.57

2.83

1.37

0.11

27.56

1.91

7.60

2.27

14.62

3.06

1.72

0.12

29.72

2.11

7.44

2.25

14.64

3.07

1.67

0.12

29.51

2.13

2007

2008

2009

2010

2011

16.7

18.5

15.1

12.0

3.3

8.1

6.1

18.6

20.4

17.3

12.4

6.4

7.8

6.4

17.0

17.5

16.4

12.0

4.8

7.2

5.9

16.6

18.8

15.8

12.1

4.3

7.7

4.9

16.9

19.2

17.1

12.6

3.9

8.0

5.4

51.4

49.4

50.2

49.8

49.4

10893

11160

11309

11680

11875

172650

178056

179332

181738

186665

17.0

15.3

17.2

17.2

19.0

Notes:
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 household with zero or very low work intensity (LWI).
2 At-risk-of poverty rate (AROP): 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 (excluding 
dependent children) work less than 20% of their total work-time potential during the previous 12 months.
5 For EE, CY, M T, SI, SK, thresholds in nominal values in Euros; HICP -  index 100 in 2006 (2007 survey refers to 2006 incomes)
Sources: 
For expenditure for social protection benefits ESSPROS; for social inclusion EU-SILC.

41 

 
 
 
Table IX. Product market performance and policy indicators 

Performance indicators

Labour productivity1 total economy (annual 
growth in %)
Labour productivity1 in manufacturing (annual 
growth in %)
Labour productivity1 in electricity, gas, steam and 
air conditioning supply (annual growth in %)
Labour productivity1 in the construction sector 
(annual growth in %)
Total number of patent2 applications per million of 
labour force

Policy indicators

Enforcing contracts 3 (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)

2008

2009

2010

2011

2012

2003-
2007

1.8

5.5

-0.5

-3.1

-0.5

-9.5

-2.4

-4.0

0.1

6.9

9.2

2.9

1.2

8.6

-6.1

1.0

7.3

9.8

-0.3

0.4

n.a.

9.0

13.2

n.a.

382.8

374.6

378.0

369.0

n.a.

n.a.

2003-
2007
397

25

2.4

2008

2009

2010

2011

2012

397

28

2.7

397

28

2.7

397

28

2.8

397

28

2.8

397

25

n.a.

21.0

22.2

23.5

23.5

23.8

26.1

5.44

5.47

5.98

5.89

n.a.

n.a.

2007

2008

2009

2010

2011

2012

n.a.

n.a.

0.8

2.0

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

0.9

n.a.

n.a.

n.a.

n.a.

n.a.

Notes:
1 Labour productivity is defined as gross value added (in constant prices) divided by the number of persons employed.
2 Total number of patent applications to the European Patent Office (EPO) per million of labour force
3 The methodologies, including the assumptions, for this indicator are presented in detail on the website 
http://www.doingbusiness.org/methodology. 

4 The methodologies of 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 Energy, Transport and Communications Regulation (ETCR).
*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). 

42 

 
 
 
 
Table X. Green Growth 

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 change energy price 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**
Gas 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
Security of energy supply
Energy import dependency
Diversification of oil import sources 
Diversification of energy mix
Share renewable energy in energy mix

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

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

%
HHI
HHI
%

2002-
2006

0.15
0.41
0.88
n.a.
-2.5%
n.a.
n.a.
11.1%
6.2%

0.17

10.4
n.a.
n.a.
n.a.
n.a.
86.1%
n.a.
n.a.
n.a.

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

2007

2008

2009

2010

2011

0.14
0.36
0.84
n.a.
-2.9%
8
3.8
10.4%
5.8%

0.16

10.9
0.09
n.a.
0.01%
0.01%
96.7%
36.4%
0.58
1.52

68.9%
0.13
0.28
23.6%

0.14
0.35
0.82
0.23
-3.6%
9
2.5
10.1%
5.6%

0.16

11.0
0.11
n.a.
0.01%
0.01%
96.8%
36.9%
0.57
1.46

68.9%
0.12
0.28
24.7%

0.14
0.34
0.78
n.a.
-2.5%
8
-2.8
9.9%
5.6%

0.17

10.3
0.12
0.03
0.01%
0.01%
99.3%
34.2%
0.61
1.55

65.0%
0.13
0.29
27.3%

0.14
0.35
n.a.
0.14
-3.0%
8
1.4
10.1%
5.7%

0.16
n.a.
0.11
0.04
0.01%
0.01%
99.3%
36.4%
n.a.
n.a.

62.1%
0.13
0.28
26.6%

0.14
n.a.
n.a.
n.a.
-3.8%
9
2.2
n.a.
n.a.

n.a.

n.a.
0.11
0.04
0.01%
0.02%
n.a.
36.9%
n.a.
n.a.

69.3%
n.a.
0.26
25.8%

Country-specific notes: 
The year 2012 is not included in the table due to lack of data.
General explanation of the table items:
Source: Eurostat unless indicated otherwise; ECFIN elaborations indicated 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 DG TAXUD'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 2005 EUR) 
Share of energy-intensive industries in the economy: share of gross value added of the energy-intensive industries in GDP
Electricity and gas prices medium industrial users: consumption band 500  - 2000M Wh and 10000 - 100000 GJ;  figures excl. VAT.
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 activity (kgoe) divided by transp industry gross value added (2005 EUR)
Transport carbon intensity:  greenhouse gas emissions in transport activity divided by gross value added of the transport sector
Energy import dependency: net energy imports divided by gross inland energy consumption incl. energy consumption 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 renewable energy in energy mix: %-share in  gross inland energy consumption, expressed in tonne oil equivalents
*Provisional data (15 April 213). Commission Services and EEA.
** For 2007 average of S1 & S2 for DE, LU, NL, FI, SE & UK. Other countries only have S2.
*** For 2007 average of S1 & S2 for IT, NL, FI, SE & UK. Other countries only have S2.

43