Business Location, Innovation and International Policy

General Economic Policy

The goal of economic policy is to increase prosperity and sustainably improve the quality of life of citizens by securing jobs as well as ensuring income growth and a fair distribution of income with due regard to appropriate social and environmental standards. Within this context, the Federal Ministry for Digital and Economic Affairs primarily addresses aspects of structural policy and seeks long-term, tenable solutions.

Europe 2020

Based on a proposal by the European Commission of March 2010 for a New European Strategy for growth and jobs, the European Council of 17 June 2010 adopted the 'Europe 2020 Strategy' as a follow-up on the Lisbon Strategy.

Europe 2020 uses a partnership approach extending to all EU institutions, to national parliaments and national, local and regional authorities, to social partners and to stakeholders, NGOs and civil society so that everyone is involved in delivering on the vision. As a strategy for smart, sustainable and inclusive growth, Europe 2020 defines five measurable headline targets to be implemented by 2020 and transposed into national targets:

  1. The employment rate of the population aged 20-64 should increase to at least 75 per cent
  2. Investing 3 per cent of GDP in research & development
  3. 20-20-20 climate protection and energy targets: reduce greenhouse gas emissions by 20 per cent compared to 1990; increase the share of renewable energy sources in energy consumption to 20 per cent; and a 20 per cent increase in energy efficiency (final energy consumption in 2020 should be 1,086 Megatons of oil equivalent – Mtoe)
  4. Reducing the drop-out rate to 10 per cent, whilst increasing the share of the population aged 30-34 having completed tertiary or equivalent education to at least 40 per cent
  5. The number of Europeans living below the national poverty lines should be reduced by 20 million

In order to achieve these EU-wide targets, the Member States have introduced national targets taking into account national circumstances and differing starting points. {0><}0{>The Austrian Council of Ministers adopted the national targets 2020 on 5 October 2010:

  1. Employment rate 77-78 per cent
  2. 3.76 per cent of GDP to be spent on research & development
  3. 16-34-25.1: reduction of greenhouse gas emissions by 16 per cent; share of renewable energy sources increased to 34 per cent; and final energy consumption in 2020 25.1 Mtoe
  4. Reducing the drop-out rate to 9.5 per cent, whilst increasing the share of the population aged 30-34 having completed tertiary education to at least 38 per cent
  5. Austria's contribution to the EU poverty reduction target is to reduce the number of people at risk of poverty by 235,000

Periodic reporting on the state of implementation and progress towards the targets is carried out through the so-called 'national reform programme' to be submitted, together with the stability and convergence programmes, by each Member State by the end of April at the latest.  Both programmes (legal basis: Integrated Guidelines: Art. 121 and Art. 148 TFEU) are key elements of the European Semester, aimed at coordinating the EU's economic and fiscal policies throughout the year.

National reform programme 2019

(adopted by the Austrian Council of Ministers on 24 April 2019)

Annex 1.1: Table on recommendations 2017

Annex 1.2: Measures to implement the EU 2020 targets

Annex 1.3: Table on planned measures

Based on (a) the country reports published in February, (b) an in-depth assessment of the Member States' plans to consolidate public finances (stability and convergence programmes) and their policy measures to promote growth and jobs (national reform programmes) and (c) the outcomes of the dialogue with Member States and other major stakeholders, the European Commission proposes country-specific recommendations for each Member State. The European Semester 2018 ended with the adoption of the country-specific recommendations by the European Council on 28/29 June 2018 and their adoption by the Council of the European Union on 13 July 2018.

The Council of the European Union recommends that Austria takes action in 2018 and 2019 to:  

Achieve the medium-term budgetary objective in 2019, taking into account the allowance linked to unusual events for which a temporary deviation is granted; ensure the sustainability of the health and long-term care and the pension systems, including by increasing the statutory retirement age and by restricting early retirement; make public services more efficient, including through aligning financing and spending responsibilities.

Reduce the tax wedge, especially for low-income earners, by shifting the tax burden to sources of revenue less detrimental to growth; improve labour market outcomes of women; improve basic skills for disadvantaged young people and people with a migrant background; support productivity growth by stimulating digitalisation of businesses and company growth and by reducing regulatory barriers in the service sector.

European Semester 2019

The 'autumn package' (normally published in November) by the European Commission represents the beginning of the new European Semester cycle.  It includes the Annual Growth Survey, which sets out the general economic and social priorities for the EU and offers policy guidance for the following year. The Member States are called upon to take these priorities into account when defining their economic policies.

On 21 November 2018, the European Commission submitted the Annual Growth Survey 2019. As in previous years, the focus is on i) promoting investment, ii) accelerating structural reforms and iii) ensuring responsible fiscal policies. This year the survey bears the motto: 'For a stronger Europe in the face of global uncertainty'. It underscores the need to upgrade strategic infrastructure, strengthen human capital for tomorrow's competitiveness, improve working and living conditions and enhance environmental sustainability.  A forward-looking approach to growth calls for renewing the focus of national reform efforts on productivity growth, inclusiveness and institutional quality. Responsible fiscal policies require further reductions in high private and public debt to build capacity to deal with future crises. Improving the quality and composition of public finances is a crucial element of Member States' fiscal policy.

Link to economic and fiscal policy coordination:
https://ec.europa.eu/info/business-economy-euro/economic-and-fiscal-policy-coordination_en

 

OECD Country Reports

In addition to the OECD Economic Outlook and the OECD Growth Strategy (Going-for-Growth), the OECD Country Reports (Economic Surveys) are the key publications on economic and growth policies at OECD level.

For the purpose of preparing the individual country reports, the Economic and Development Review Committee (EDRC) carries out a review every 18-24 months for each OECD Member as well as accession candidates and non-Members which closely cooperate with the OECD. The country reports focus on long-term macro-economic developments, identify the main structural challenges of a country and suggest possible options for policy design. The focus of 2017 was on digitalisation (previous focuses: 2009 Education, 2011 Health, 2013 Well-Being, 2015 Gender Balance).

Most important results of the Economic Survey for Austria:

Macroeconomic environment: Austria is seen as a stable and wealthy economy, with growth having picked up following the 2016 tax reform and the recovery of export demand. As in most OECD countries, trend output growth has declined since the 1990s. Labour supply has expanded (driven by rising participation of women and elderly and an increase in immigration), but the hours worked per worker have declined. Productivity has slowed and Austria has lost market shares within regional value chains. Investment has recently accelerated, yet enterprise churn, start-up rates and the renewal of business models are weaker than in comparable countries. Reinvigorating business dynamism would improve competitiveness and labour demand, and spur both growth and social cohesion.

Digitalisation: the business sector is adapting to the global digital revolution, albeit at a slower pace than in the most advanced countries, especially among smaller firms. The adoption of information and communication technology (ICT) applications by households is also uneven: while the young and highly educated align swiftly with global trends, older generations and those with a lower educational level and immigrants are lagging behind. Fostering broad-based diffusion of state of-the-art technologies and digital innovations would help renew business models, work practices and lifestyles throughout Austria, and foster productivity growth, welfare and social cohesion.

The digital transformation is redesigning production processes and altering the relationships between work and leisure, capital and labour, skilled and unskilled, wealthy and less-wealthy. To preserve social cohesion, a comprehensive policy approach is needed for ensuring equality of opportunity and appropriate redistribution of the gains stemming from digitalisation. Schools need to provide digital skills in addition to the traditional ones. Having left school, workers will need to catch up via life-long learning solutions. Co-ordination across the many stakeholders of the education system needs to improve so that learning tracks better fit changing labour market requirements.

Therefore, the OECD proposes a number of recommendations to meet these challenges.


Contact

National Economic Policy Issues and Analysis: post.II10_19@bmdw.gv.at

Last Modified: 16.05.2019 15:25