Within the scope of the so-called European Semester, the Commission this week has for the second time provided country-specific recommendations for all Member States and the Eurozone as a whole. In respect of Austria, the Commission suggests amongst others measures to reduce inefficiencies between federal, provincial and municipal authorities, to lower the tax burden on labour and to increase the employment of women and migrants.
Even though EU Member States are generally taking the measures required to increase the sustainability of public households, in several cases the consolidation should nevertheless be more growth-friendly, stated one of the key messages of the country-specific recommendations. The Commission also acknowledges that the high level of unemployment, in particular among young people, presents a serious problem which demands immediate action.

As the Commission points out in its Working Paper, Austria has only in parts implemented the recommendations made by the EU in the previous year. This year’s recommendations include the request among others to specify measures to speedily bring the budget deficit below the Maastricht limit of 3 percent of GDP. According to Austria’s Stability Programme, this should not be a problem as the budget deficit is supposed to fall to 2.1 percent of GDP in 2013. The country should subsequently make progress in achieving the mid-term budgetary objective, states the Commission. This has been defined by the Austrian government as a structural (cyclically-adjusted) budget deficit of 0.45 percent of GDP.

The EU Commission is concerned about the financial relationships between federal, provincial and municipal authorities in Austria, which have been described as “complex and lacking in transparency”. Here, the Commission recommends making the areas of responsibility more efficiently, in particular within the healthcare and education sector.

Commission recommends that Austria reduces the tax burden on labour

In addition, the reduction of the effective tax and social security burden on labour, in particular for low-wage earners, is part of the “homework” given to Austria by the Commission. It would be preferable to shift the tax burden to real estate and environmental taxes. The recommendation to reduce the high gender wage gap and to increase the number of childcare facilities to enable more full-time employment for women is also to be welcomed. In respect of necessary improvements in education, additional focus should be placed on young people from disadvantaged backgrounds. A further recommendation of the Commission is aimed at reducing the rate of young people leaving higher education prematurely.

With regard to pensions, the EU Commission recommends that Austria brings forward the harmonisation of the statutory pension age for women and men and to improve the employability of older employees.

Apart from that, the list of recommendations for Austria also includes the request to speedily restructure those banks which were given government aid.

The country-specific recommendations shall be confirmed at the summit of the EU Heads of State and Government at the end of June and formally approved by the EU Council in July.

Additional information:

Recommendation for a Council Recommendation on Austria’s 2012 national reform programme

Working Document of the Commission on a recommendation for Austria

Communication of the European Commission “Measures for Stability, Growth and Employment”