Austria Reaps Success in Wage Subsidy Program
July 22, 2006
A blend of dark and light wood, modern simplicity combined with high ornate ceilings -- Michl's Restaurant in downtown Vienna is a chic location for any business lunch or evening out.
Eierschwammerl, Wiener Kartoffelsuppe and Rindsbraten are just a few of the local specialties on offer at the one-year-old café. But Michl's, named for Vienna's Mayor Michael Häupl, is not just another eatery.
As part of a new social gastronomy project, all of Michl's 35 employees have something in common: they were unemployed for a long time before joining the staff.
"I was unemployed for a few years, and then I was afraid that I wouldn't be able to get back in to the whole thing, but I was surprised how quickly things worked out," said a 53-year-old Michl's employee called Fritz.
Already seeing progress
He has good reason to be in high spirits. Within only a year of operation, 10 formerly unemployed Michl's employees have succeeded in finding positions on the open market.
"I've finally sent a few job applications, some companies haven't responded yet and I've gotten a couple of rejections," continued Fritz, "but I know that something will work out."
The Austrian government has recently gotten involved on the fringes of the job market. For instance, limited subsidies are being offered to employers that hire older, handicapped -- or long-term unemployed workers, like those at Michl's.
Statistics show that the initiatives seem to be working. In comparison to last year, the number of long-term unemployed has dropped by 30 percent. Only some 8,000 people in Austria have been looking for a job for more than one year.
Unemployment in Austria, which EUROSTAT gave as 4.9 percent for May 2006, is significantly lower than in Germany (8.3 percent in May 2006).
Similarities to German proposals
Germany has a much greater problem to tackle, as far as unemployment is concerned, but, recently, a similar solution has been proposed.
Germany's Secretary of Labor Franz Müntefering presented this week to Parliament a combined wage proposal for job seekers over the age of 50. Age can be a disadvantage in the job market, particularly for those looking for a way back into it.
The new 50 plus initiative, meant to take effect on January 1, 2007, is designed to ease this transition back to the work force by encouraging older job seekers to accept lower paying positions. Those who qualify would receive 50 percent of the difference between their last paycheck and their new one for the first year, 30 percent of the difference in the second year.
Employer benefits encourage companies to hire 50-plus job seekers who've been on welfare. The labor secretary is confident that the employment subsidy initiative will create 100,000 new jobs.
Austria's wage subsidies are not age-based. One of the chefs at Michl's, for instance, is in his mid-20s and even completed an apprenticeship before enduring a three-year period of unemployment.
Possible extension of 50 plus to under 25
Münterfering said this week in an interview with "Handelsblatt" that he hopes to discuss a similar subsidy project for the unemployed and underemployed under the age of 25.
Before that, he'll have to convince critics -- both within in own Social Democratic Party and among the opposition -- that the current 50-plus initiative will work. It's been labeled uncreative by the harsher critics.
Demographic differences prevent a one-to-one exchange between Germany and Austria. Nevertheless, perhaps Germany can take a look at the recent success of its smaller eastern neighbor and gather a few tips.