Austria 2025 – An Agenda for Higher Dynamics, Social Balance and Environmental Sustainability. Progress Report

Today, the Austrian economy is at a crossroad: after an impressive performance moving towards a top-position in per-capita income in the past decades, recent years record weak economic growth, shrinking wages in real terms, increasing unemployment and falling export market shares. Without a sharp realignment, the Austrian economy threatens to fall back to a middle position. Such a shift will require a new strategy which is being explored in the research programme "Austria 2025" and its intermediate report which we present here. Instead of using GDP as the only target the new strategy aims more at improving wellbeing as a performance benchmark. Wellbeing is defined as combination of economic dynamics (increasing income, structural change, mobility and openness), social balance (lower unemployment and income spread) and environmental sustainability (respecting climate targets, reduction of emissions, front-runner in the area of sustainability technique). As a strategy to reach these goals, WIFO's "Austria 2025" covers five policy fields: the boosting of innovation, specifically focusing on energy and resource productivity – the raising of economic dynamics by investing in a new type of infrastructure, reducing income differences in order to stimulate consumption as well as reducing the regulatory burden in order to encourage the creation and growth of new firms – the reduction of unemployment by upgrading skills and increasing the symmetric flexibility of work time (respecting the needs of firms as well as the work life balance of employees) and particularly by reducing the tax burden on labour – the decoupling of energy and material consumption from economic growth – the reorientation of the public sector to act as a motor of reforms by restructuring the tax system as well as shifting expenditure towards future investment and environmental and social innovations.