Agenda advises radical reforms for Austria as a business location

Austria is also slipping further in rankings such as the World Competitiveness Report from the Swiss institute IMD – from 19th place in 2021 to 26th place out of 69 countries. If one were to only use the category “Economic Performance and Government Efficiency”, Austria would end up in 40th place. That’s where Indonesia is.

Findings like these have led to a broad debate about Austria as a business location this year. The KURIER has been devoting a series of interviews to the topic since autumn. The economically liberal Agenda Austria is now following up with a location study and relatively radical reform proposals. The authors’ thrust is: In order for the economy to grow again, a change in mentality is necessary. Following the economist Josef Schumpeter (1883 to 1950), the agenda advises “creative destruction” and a real new start instead of the traditional small-scale reforms. Agenda economist Jan Kluge says: “We are not keeping up with comparable countries such as Denmark, the Netherlands or Sweden. We must allow the necessary structural change in Austria.” Kluge sees four fields of action:

National budget Austria has one of the highest new debts in Europe despite one of the highest tax rates in Europe. In the “Tax Policy” subcategory of the IMD ranking, Austria only comes in 64th place (out of 69). The savings proposals here range from a higher retirement age (working two months longer every year), to reducing subsidies to the 2019 level (brings five billion) to a spending brake based on the Swedish or Swiss model.

Bureaucracy “Austria is threatened with bureaucratic infarction,” says Kluge. The government’s de-bureaucratization package also contains only a few concrete points. The approval process continued to take far too long. Above all, relief is needed for start-ups. Austria should also impose a ban on gold plating so as not to continue to overfulfill EU rules. The agenda also recommends a reduction in personnel in public administration; this is the only way to actually reduce bureaucracy.

Wages The labor market is rigid, annual working hours have fallen since Corona, labor costs are too high compared to the EU, and competitiveness is suffering as a result. Despite the recent lower number of qualifications, Austria’s wages continue to drift away compared to the EU, says Kluge, for whom the Benya formula has had its day. A change in mentality is also needed in the KV negotiations. “Those who have to place their products on the world market should negotiate wages first.” The think tank has in mind wage negotiations at company level instead of between “unions and chambers as guardians of the status quo”.

Energy Agenda Austria would tackle the problem of expensive energy through “extensive privatization” of energy suppliers and the resulting competition. In addition, network costs would fall if network operators were no longer guaranteed a return on capital of eight percent, but rather only five percent, as in Germany.