Internal and External Labour Markets in Austria

A representative survey of Austrian firms and several case studies reveal that the Austrian labour market is severely segmented. Qualifications and wages differ markedly by firm size. Large firms have well developed internal labour markets, which facilitate the adjustment of the labour force to new requirements regarding skills and organizational forms; these firms are better able than small firms to form strong ties to their labour force by way of high wages, internal career opportunities, and job security. But accelerated structural changes now also expose large firms to serious problems and more and more workers formerly employed by these firms are losing their jobs and are being forced into the external labour market. These unemployed workers most of which are highly qualified and in the upper age bracket, have great difficulty in finding new jobs.