Policy Note 56: Meeting the challenges of labor and skills needs

In recent decades, the working-age population in Austria has grown considerably. Together with the increasing participation of women in the labor force, this has been the main driver behind the increase in labor supply and employment. However, this positive development is offset by certain aspects of the Austrian labor market. These include, in particular, the low actual retirement age and the low and sharply declining actual weekly working hours compared to other countries. This decline is due both to the expansion of part-time work and to a fall in the number of hours worked per week by women and men in full-time employment. This contributes to the fact that meeting the demand for labor and skilled workers has been a significant and growing challenge for Austrian companies in recent years.
growing challenge for Austria's companies and the business location.

Austria is also currently facing a trend reversal in the supply of labor: a decline in the working-age population is expected in the coming years. This is due in particular to the fact that the baby boomers are now leaving the labor market and will be replaced by low-birth cohorts in the coming years. A regional analysis also reveals a very heterogeneous picture between the "conurbations" and the "periphery".

In view of these challenges, a bundle of measures should be implemented to strengthen the labor force potential in Austria. Eight starting points are listed below that are suitable for meeting the demand for labor and skilled workers:

i) Reduce the tax burden on income;

ii) counteract the decline in weekly working hours, for example by analyzing incentives
in the tax and transfer system are analyzed and reconsidered;

iii) Increase labor force participation of older people ;

iv) Adapt labor market policy;

v) Expand childcare provision;

vi)Strengthen skilled migration;

vii) Simplify the recognition of foreign educational and professional qualifications;

viii) Improve access to the labor market for asylum seekers.