The Austrian Labor Market and the Great Recession: Developments and Measures Taken

As the international financial and economic crisis unfolded, labor market conditions in Austria started to deteriorate in mid-2008, marking the onset of one of the severest crisis episodes in the Austrian labor market since World War II. Its effects have been surprisingly small, however, considering the scale of the decline in real economic activity. The reason for this moderate impact was that total hours worked declined more sharply than headcount employment. The working hour reductions were much more substantial than can be explained by short-time work alone, though. An international comparison shows country differences in the extent to which the decline in employment was based on reductions in headcount or hours worked per employee. Austria and Germany are among those countries in which hours worked declined most sharply, which made it possible to keep more people in employment. Even though labor market conditions in Austria have been improving over the past few months, unemployment figures and the number of participants in training programs by the Austrian Public Employment Service are still higher than they were before the crisis. Employment figures, too, have not yet returned to precrisis levels..