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Austria

31 October 2018

Austria: reform of social security critically received by trade unions and other stakeholders

A planned reform of the institutional frame of the Austrian social security system will turn the structure of the system upside-down. The reform will reduce the influence of the trade union movement and of the regions in the operation of the insurance institutions. The trade union movement has been sharply critical and independent observers have expressed doubts about the expected savings.

The government announced before the summer of 2018 plans come up with a far-reaching reform of the social insurance system. Currently, insurance carriers are dispersed over 21 different organisations (nine for the nine Länder, and the remaining twelve divided along the lines of functions or professional groups). The plan is to amalgamate the existing institutions into only five different organisations, which would diminish the influence of both the Länder and the social partners over the insurance system. The announcement led to very critical reactions from the trade unions and the opposition. Observers said the lack of consultation constituted an evident break with the past.

The details of the planned reform were presented in September 2018. The plan is to start with a transition period in January 2019, with the aim of having an operational new system by January 2020. The government speaks about a reduction with 19,000 functionaries, with a net savings of 10% in three years (one billion euro in 2023), to up to 30% in ten years’ time. Following this presentation the resulting structure of the planned reform has become more clear.

The Chamber of Labour (AK) and the trade union movement have said that the future scenario would lead to a ‘merger-fiasco’. They see the planned reform as a power game that is dictated by interests that stem from party politics. AK formulated its main problems with the reform in an open letter to the members of the national and regional parliaments and the local communities. Centralisation and reduction of staff will lead to a health care system that insufficiently considers regional specificities. Trade union confederation ÖGB said that the government is serving employers’ interests. The union formulated five critical key points: 1) the end of the self-governance of the system by the labour movement; 2) a weakening of the autonomy of the central organisation; 3) centralisation leads to a reduction of financial autonomy; 4) increase of costs; and 5) the end of company controls by the health funds. Fewer controlling tasks at regional level make the move especially difficult to accept.

For the trade union movement, this is the second major attack on workers’ rights after the enlargement of working time. They fear an erosion of the quality of the health care system and an increase in unequal treatment, with some privileged citizens that can afford the best provisions, whilst the overwhelming majority of the working class and pensioners will have to pay more for basic provisions. Many experts have serious doubts about the calculations of the savings on the budget. Moreover, the risk is that in future, employers will explain to their employees ‘what is appropriate for their health’, while they and their families are insured in another first-class insurance.

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