Special Factors Delay the Economic Upswing. The Labor Market in the Provinces in the First Half of 1996

Austria's labor market recovered remarkably fast from the dramatic plunge in employment and from the record unemployment in the first quarter of 1996. This development supports the view that the economic slowdown in the fourth quarter of 1995 and the first quarter of 1996 is due rather to short-term disturbances than to a premature end to the business cycle. At the international level, such disturbances were mainly caused by synchronous fiscal austerity policies, and at the national level, the propensity of the construction industry to concentrate all of the idle time in the winter months. As the economy emerges from this seasonal trough, a regional analysis of the labor market reveals a repetition of last year's cyclical pattern, though transformed by the cyclical transition from a boom in intermediary products (inventory cycle) to a boom in investment goods. The traditional locational advantages of the close linkage of western Austria's final goods producing sector to neighboring countries are now complemented by new growth factors: the growing functional independence of the peripheral zones of the eastern region (Lower Austria, Burgenland), the categorization of Burgenland as an Objective 1 area, and the bare beginnings of successful restructuring in Styria. Employment losses in tourism, labor shedding in many traditional service industries, as well as restructuring in consumer goods industries, however, continue to depress the Austrian labor market.