Europe 2020 in Austria

The Country-specific Recommendations are documents prepared by the European Commission for each country, analysing its economic situation and providing recommendations on measures it should adopt over the coming 18 months. They are tailored to the particular issues the Member State is facing and cover a broad range of topics: the state of public finances, reforms of pension systems, measures to create jobs and to fight unemployment, education and innovation challenges, etc. The final adoption of Country-specific Recommendations prepared by the Commission is done at the highest level by national leaders in the European Council.

Country overview

Austria has had a remarkable record in coping with the difficult economic environment. Economic growth has remained low but positive, employment and income growth have remained robust and financing conditions have stayed relatively favourable.

Austria has made some progress on measures taken to address the 2012 CSRs. Austria's public finances are improving. Some measures were taken in 2012 to increase the effective retirement age, to reform tertiary education and to enhance the efficiency of the health care system, however, implementation needs to be closely monitored. Measures to improve the provision of childcare and long-term care, the employment of older workers and people with a migrant background and the quality of the education system are underway.

In the medium to long-term, Austria still faces challenges with age-related costs (pensions and healthcare), the labour market, product and service markets, the business environment and the financial sector.

2013 European Commission's recommendations for Austria in brief
The Commission has issued seven country specific recommendations (CSRs) to Austria to help it improve its economic performance. These are in the areas of:

  1. Sustainable public finances
    Austria is on track to bring its deficit below 3%. It should however continue the efforts to reach a balanced budget in nominal terms by 2016. Austria should further exploit the cost or efficiency savings that could be gained from clarifying and simplifying responsibilities between different layers of government, notably in the health and education sectors.
  2. Pensions
    Austria's overall employment rate is high but the employment rate of older workers is significantly below the EU average. Almost 30% of people spend between 1.5 and three years in unemployment or on sick leave before retiring. Austria needs to address these issues by reducing the relatively widespread use of early retirement and invalidity pensions and by increasing the statutory and effective retirement age.
  3. Labour market participation
    Austria has the third highest gender pay-gap in the EU and a high share of part-time work among women. In order to redress these imbalances Austrian authorities need to ensure appropriate childcare and long-term care. The potential of people with a migrant background should also be fully tapped, notably through improving the recognition of their qualifications.  The tax burden for low income earners continues to be a disincentive to full-time employment of women and to labour market participation of migrants. This should be reduced by shifting taxation towards other sources, considered less detrimental to growth such as recurrent taxes on immovable property.
  4. Health and long-term care
    Rising costs in the Austrian health system need to be contained, while safeguarding high quality and equal access to health services. Reforms have started but there are some risks as to their efficient implementation. More emphasis should be given to prevention and rehabilitation policies.
  5. Education
    At 5.56 % of GDP, Austria's spending on education is above the EU average, but education outcomes are below average for 10 and 15 year olds. Austria must therefore continue its efforts to improve educational outcomes, with a particular focus on young people with a migrant background. In higher education, increasing numbers of students are putting pressure on financial and organisational systems, but the percentage of students completing their studies successfully is low. This needs to be addressed.
  6. Competition in services sector
    Austria needs to promote dynamism in the services sector and effective competition, notably by reducing barriers to entry. Competition in the railway sector should increase. It is also important that Competition authorities are given the necessary means to carry out their tasks properly.
  7. Banking sector
    In recent years, the Austrian banking sector has remained resilient but not free of structural weaknesses. A number of banks depend on public support and face difficult restructuring choices. Authorities must remain vigilant and concerned banks committed.

See how Austria compares with other EU Member States in key areas

European Semester Documents