Austria's competitiveness threatened by high labor costs, says industry leader

Wolfgang Hattmannsdorfer, speaking to Die Presse, expressed strong concerns about Austria's competitiveness, particularly highlighting the impact of high labor costs. He noted that recent wage negotiations in the chemical industry resulted in a 1.8 percent settlement, significantly below the current inflation rate. Hattmannsdorfer stressed the need for both employers and employees to recognize that Austria has priced itself out of the market due to massively increased unit labor costs in recent years.

"We need this collective solidarity so that Austria becomes competitive again," Hattmannsdorfer stated, emphasizing that labor costs, alongside energy prices, are the decisive factors for competitiveness. He pointed out that Austria has the fifth-highest ancillary labor costs in the EU, accounting for 27.2 percent of total labor costs, compared to 23.3 percent in Germany. Furthermore, unit labor costs in Austria have risen by 40 percent since 2015, significantly more than in Germany (32 percent) and the EU average (26 percent), indicating a "massive pressure to act."

Hattmannsdorfer outlined two key requirements: the federal government must reduce ancillary labor costs, and employers and employees must collaborate to retain jobs in Austria. He also identified productivity as a critical area for improvement, noting a decline in recent years. "Our goal must be to increase the number of hours worked again," he asserted, advocating for incentives for overtime and the removal of disincentives to performance, such as educational leave and the abolition of marginal employment benefits within the unemployment insurance system.

He further proposed measures like the "aktiv-pension" with a tax-free allowance for working pensioners and the harmonization of unemployment contributions. Hattmannsdorfer concluded by reiterating that energy costs are also a significant competitive issue, mentioning that companies are complaining about the industrial electricity price. The article implies that the high cost of labor and energy are major challenges for Austrian industry.