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From civil war to social partnership: Austrian Trajectories between Conflict and Consensus

Presentation at Seminar 3: Path Dependency and Historical Legacies

ESRC-Seminar Series: Coping with Uncertainty: European labour markets and the politics of social reform in comparative perspective

February 13th, 2009

Roland Atzmueller (FORBA, Working Live Research Centre, Vienna)

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Austria 2008 – the reemergence of consensus politics?

Austria 2008 - The comeback of the social partners?▫ Grand Coalition of SPOE und OEVP: leader of OEGB

minister of social policy, former trade unions minister for health, top representative of Federation of Industrialists minister of the economy

▫ Consensual style replaces confrontational style: from conflict back to consensus?

Austria 2008 – prolonged stalemate between main political actors▫ OEGB (Austrian trade union federation) weakened after

banking crises

▫ Share of SPOE and OEVP: 56% of electorate (95% in 1970s)

▫ Total share of far-right parties: 28%

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Premature diagnoses - the end of consensus after 2000?

▫ 2000: Coalition government between conservative OEVP and far-right FPOE (Federation of industrialists: fervent advocates)

▫ Massive wave of protests

- 2000: social movements, Civil Society

- 2003: trade unions (against pension reforms)

▫ Social partners excluded from policy making: employee organisations lose channels of influence/employer side uses informal channels

▫ Parliamentary options used to reduce opportunities of social actors to pass expert opinions about draft laws

▫ Round tables, Austrian Colloquies as simulation of participation: exchange of views but hardly any negotiation, Social partners reduced to experts

▫ Government plans to reduce financial contribution (paid out of gros wage) to Workers Chamber

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Premature diagnoses - The end of consensus after 2000?

▫ Coalition government tries „Wende“ (turn-around) Austrian style (welfare cuts, pension reform etc)

Countertendencies:

▫ commitment of business chamber to negotiations and social partnership

▫ Social partner agreement: Reform of Severance Pay

▫ Strikes and protests against government do not undermine the acceptance of social partnership among majority of businesses

▫ Continuous high level of support for social partnership among population/constituencies of all parties (low support among political elites of Freedom Party and Greens)

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Origins and prospects of the current situation?

▫ Historical causes of the current crises?

▫ What are the historical roots of changing power relations and the re-emergence of confrontational politics in Austria over the last decade?

▫ Is it possible to identify self-weakening processes?

▫ Does the crisis of social partnership create the space for political entrepreneurs?

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Historical roots: (Prehi)stories of social partnership?“Second Republic”

▫ Social partnership is presented a result of political learning after prolonged period of conflict, civil war and the “catastrophe” of Fascism.

▫ Social partnership is presented as result of the „spirit of the street of the concentration camp“ (Cooperation and solidarity among different political groups)

Interwar period:

▫ Political and ideological confrontation between political „camps“ (main political parties have paramilitary wings) leads to civil war in 1934

▫ Authoritarian regime replaces First Republic in 1933/4 – Austro-fascism

▫ Annexation by Nazi-Germany in 1938 because of disunity

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(Prehi)stories of social partnership?

▫ First forms of cooperation emerge during WWI – demanded by Social democrats („paritätische Industriekommission“ – debates labour market issues)

▫ Industrial conferences in first half of 1920s discuss labour market and economic issues – no results, opposition from employers

▫ Joint boards and commissions concerning working time, unemployment insurance, industrial district commissions traffic, tariffs: expert opinion about draft bills etc

▫ Debates about implementation of an “economic parliament” – complementary to elected parliament (opposed by labour movement)

▫ At the end of 1920s/early 1930s: last attempts to secure cooperation between political forces („Economic conference“)

▫ Cooperation mainly in phases of crisis

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(Prehi)stories of social partnership

▫ Coalition government after the WWI (1918-1920) implements a range of social policy reforms (unemployment insurance, 8hs-day, implementation of Workers Chamber, Works Councils etc)

▫ Lack of consensus among main political actors becomes determinant after stabilisation of First Republic (end of revolutionary phase)

▫ Fragmentation of trade union movement: organised according to political affiliation and sectors; Workers Chamber after 1918

▫ Fragmentation of employer side (850 organisations in 1914) (Chamber of commerce since 1848)

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(Prehi)stories of social partnership

▫ Trend within conservative and far-right parties to opt for an authoritarian solution of crisis and/or annexation by Germany

▫ Christian social and German-nationalist forces propagate concepts of harmony, social balance and cooperation

▫ Against “Class Struggle” and Socialism

▫ Against liberal democracy (pluarlism) and parliamentarism

▫ Organisational integration of employer and worker interests

▫ Attempts of implementation under the Austro-fascist “Staendestaat” – “authoritarian corporatism”

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Phases of neo-corporatism in Austria

1945-1957: democracy implemented through external intervention. Defeat of radical political options, reorientation of political forces (labour movement activists)

5 Agreements on Wages and Prices to combat inflation and moderate wage growth. Consensus about economic growth. Unions moderate “particularistic” interests for the common good. (rudimentary social partnership)

strike wave 1950 broken

1957-1962: Tension within coalition government; small strike wave in early 1960s (!)

Institutionalisation of social partnership in Austria (Advisory Board on Wages and Prices),

1962-1986: Heyday of social partnership in Austria

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Social partnership in Austria – the „role-model“ of neo-corporatism?

The Austrian model:

▫ Conservative-corporatist welfare model (welfare system based on Bismarckian social insurance system, high level of status differences, in particular between men/women)

▫ Coordinated capitalism: nationalised industries, high level collective bargaining coverage

▫ Consensus about economic policy (economic growth, full employment), high degree of concertation among social partners and political actors

▫ Consensual politics: Grand Coalition between 1945-1966 and from 1986-1999, in period of majority governments between 1966-1986, overwhelming number of laws is passed unanimously

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Social partnership in Austria – the „role-model“ of neo-corporatism?

Main traits of Social Partnership in Austria:▫ High level of concentration of interest organisations

▫ High level of centralisation of interest organisations- Employees: OEGB (Austrian Trade Union Federation),

Workers Chamber (statutory body for employees)- Employers: WKO (Business Chamber Austria, statutory

body for employers), VOEI (Federation of Industrialists)

▫ Dense vertical links to main political parties (SPOE, OEVP): top-level representatives of interest organisations have a seat on party leadership boards/are represented in parliament

▫ Dense horizontal links between „Social partners“, high level of informality

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Social partnership in Austria – the „role-model“ of neo-corporatism?Main traits of Social Partnership in Austria

▫ Coverage of Collective Bargaining: 98,5%, „coordinated decentralisation“ over the last two decades to negotiate flexibility

▫ Participation in policy making: in social-, labour market and economic policy (wages, prices) through a number of advisory boards

▫ Co-management/self-management of number of public bodies such as: social insurance system, since 1994 Public Employment Service, Austrian National Bank, WIFO (economic research institute)

▫ Traditionally many policy initiatives originated from an agreement between the social partners

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Moments of crisis of social partnership in Austria since the 1980s

▫ Economic crisis hit Austria in early 1980s, rise of unemployment – end of consensus about full employment

▫ Grand Coalition between 1986 and 1999

▫ Crisis of nationalised industries in 1980s

▫ Increasing regional economic disparities

▫ Abandonment of Austro-keynesianism (“deficit spending”, public investment) in second half of 1980s

▫ Budget consolidation, privatisation and liberalisation, welfare retrenchment (pension reforms, Workfare) – “Sparpakete”

▫ Social Partners lose influence over policy making, depend increasingly on willingness of government (tension within SPOE) since the 1990s

▫ European Integration in 1995 – internationalisation of economy (fall of iron curtain) – changing institutional embedding

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Austrian growth rates and delopment of unemployment

-2%

0%

2%

4%

6%

8%

10%

12%

14%

GDP growth Unemployment

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Development of inflation and unemployment

0

1

2

3

4

5

6

7

8

9

10

Inflation Unemployment

%

17

Development of labour costs (manufacturing)

-5

0

5

10

15

20

increase Labour cost Unemployment

%

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Evolution of wage share of GDP in relation to unemployment

30

35

40

45

50

55

60

65

70

75

80

0

1

2

3

4

5

6

7

8

wage share adj. wage share unemployment

% %

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Moments of crisis of social partnership in Austria

▫ Social Changes: migration, educational expansion, expansion of female employment, regional disparities

▫ Erosion of standard employment relation: increase of atypical employment, working poor etc – social polarisation

▫ Restructuring of actors: increasing importance of Federation of Industrialists (increasingly internationalised)

▫ Decline of union membership, fusions of unions

▫ Erosion of “dual system” of interest representation: decline of works councils, no affiliation to unions

▫ Increasingly defensive role of unions, concession bargaining, wages increases well below productivity development

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Moments of crisis of social partnership in Austria

Emergence of new actors▫ Greens: party of urban middle classes, Service

Sector/public sector, no representation in Social Partnership. Critical of elite cooperation, links to Civil Society

▫ Freedom Party: Party of former so-called Third Camp (German-nationalists), traditionally excluded from policy making under social partnership; - massive growth since 1986, crisis and split in 2003,

massive growth at last election: opposes social partnership, campaigns against chambers

- Authoritarian populism, xenophobic and racist campaigns▫ Federation of Industrialists gains power; increasingly

internationalised constituency; strong tendencies against Social Partnership (at the end of the 1990s)

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Perspectives – self-weakening processes

▫ Social partnership yields decreasing returns: in particular for constituencies of employee organisations

▫ Elite cooperation between social partners undermine democratic legitimacy (clientelism, informal networks etc)

▫ Success of Freedom Party, Coalition Government between 2000-2006: “political entrepreneurialism” replaces policy style à la social partnership

▫ Supply-side corporatism? Active labour market policies, VET, working time, minimum wage

▫ Attempts at regional level to rejuvenate social partnership (Vienna)

▫ Alternatives?