18 May 1999 Determinants of the Rise of Unemployment in Austria Markus Marterbauer, Ewald WalterskirchenThe unfavourable development of the Austrian labour market in the 1990s is attributable to a number of macroeconomic factors. The rise of unemployment is a reflection of the relatively low average rate of economic growth and the 1993 recession. The productivity of labour increased at an accelerated pace in the course of Austria's growing integration with the economies of Western and Eastern Europe. Unemployment failed to decline even during the period of relative boom in 1997-98. This development is due, above all, to the following causes:
The rise of unemployment between 1996 and 1998 was most pronounced in three areas: higher age groups, women, and Vienna. It should not, however, be taken as an indication of a general deterioration of the labour-market situation: finding a job was certainly easier in 1998 than before, as is indicated not only by the development of employment, but also by the number of vacant jobs. The rise of unemployment was due, above all, to institutional factors. Cuts of special support measures and a more restrictive policy with regard to early retirement meant that older job-seekers remained on record as unemployed, instead of retiring from working life. At the same time, the shortened period of entitlement to parental leave allowance resulted in a strong increase in the number of women wanting to re-enter the labour market. Hence, the rise of unemployment in 1997 and 1998 is primarily attributable to the fact that beneficiaries of social services, whose availability to the labour market is very limited or non-existent, have become more highly dependent on unemployment benefits for their subsistence since the adoption of the "austerity package". The impact on unemployment figures has been largely statistical in nature and can therefore be qualified as a form of "re-labelling". Vienna, 18 May 1999. For further information, please refer to Mr. Markus Marterbauer or Mr. Ewald Walterskirchen, phone (1) 798 26 01, ext. 303 or 257. This article will be published in WIFO's Austrian Economic Quarterly, 2/1999. |