Policy Note 15: Need for reform despite economic recovery

Economic forecasts currently attest to an economic upturn in Austria. However, this development should not obscure the fact that Austria has fallen behind economically in recent years. Although the number of unemployed has recently fallen slightly, the trend reversal is taking place at a historic high: 318,022 people were out of work in May 2017. Excluding training participants, this is 16,367 fewer people than in May 2016, but 90,933 more than in May 2010. Unemployment has increased more than tenfold since the mid-1970s. "Even if growth picks up again now, the losses of recent years are far from being made up. If the Austrian economy had grown as strongly as the German economy in recent years, around EUR 34 billion more gross domestic product would have been generated since 2011," says Nikolaus Graf, Head of Competitiveness Research at EcoAustria. "Austria's weak growth is even more evident in per capita GDP. Adjusted for inflation, this is still at the same level as in 2008 - so Austria has hardly made any progress in a 10-year comparison," explains Graf.

Austria will only be able to maintain its high wage level by international standards if Austrian employees have above-average qualifications and productivity. However, Austria only achieves mediocre results in international education tests. Despite the economic recovery, structural reforms are still necessary to increase competitiveness. International location rankings provide indications of the need for reform: a lower tax ratio, less strict regulations on working hours, less bureaucracy for citizens and companies and structural reforms for better education are important starting points for greater competitiveness and sustainable prosperity in Austria, according to the conclusion of an EcoAustria policy note published today.