Oecd Economic Surveys : Austria 1982-1983.

78 Pages·4.909 MB·English

by  OECD

R G A N I S A T I 0 N FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION DE COOPERATION ET OE D E V E L 0 P P E M E N T ECONOMIQUES
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OECD ECONOMIC SURVEYS
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AUSTRIA
FEBRUARY 1983
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
Pursuanttoarticle1 oftheConventionsignedinParison 14thDecember,
1960,andwhichcameintoforceon30thSeptember,1961,theOrganisation
for Economic Co-operation and Development (OECD) shall promote
policies designed:
- toachievethehighestsustainableeconomicgrowthandemployment
andarisingstandardoflivinginMembercountries,whilemaintaining
financial stability, and thus to contribute to the development ofthe
worldeconomy;
- to contribute to sound economic expansion in Member as well as
non-membercountriesin theprocessofeconomicdevelopment; and
- to contribute to the expansion of world trade on a multilateral,
non-discriminatory basis in accordance with international obliga¬
tions.
The SignatoriesoftheConventionon the OECDare Austria, Belgium,
Canada, Denmark, France, the Federal Republic of Germany, Greece,
Iceland, Ireland, Italy, Luxembourg, theNetherlands, Norway, Portugal,
Spain,Sweden,Switzerland,Turkey,theUnited Kingdomand theUnited
States.ThefollowingcountriesaccededsubsequentlytothisConvention(the
datesarethoseonwhichtheinstrumentsofaccessionweredeposited):Japan
(28thApril, 1964), Finland (28thJanuary, 1969), Australia (7thJune,
1971) and New Zealand (29thMay, 1973).
TheSocialistFederalRepublicofYugoslaviatakespartincertainworkof
theOECD (agreement of28thOctober, 1961).
©OECD, 1983
Application forpermission toreproduceortranslate
all orpart ofthispublication should bemadeto:
DirectorofInformation, OECD
2, rueAndré-Pascal, 75775 PARIS CEDEX 16, France.
CONTENTS
Introduction
I. Recent trends 8
Demand and output 11
The labour market 14
Prices, wages and incomes ]7
Balance of payments 20
II. Economic policies 25
Fiscal policy 25
Monetary policy, money and credit 30
Industrial policies 36
III. Short-term prospects 37
IV. Medium-term labour market trends 41
V. Policy considerations 49
Annexes:
I. Calendar ofmain economic events 53
II. The labour market 56
Statistical annex
TABLES
Text
1. Indicators ofrelative economic performance 9
2. Demand and output 12
3. Labour market developments 15
4. Incomes, costs and prices 18
5. Exchange rate developments and international competitiveness 21
6. Balance ofpayments: recent trends 24
7. The Federal Budget 26
8. Fiscal policy indicators 30
9. Monetary developments 33
10. Determinants ofchange in total money (Ml) 35
1 1. Short-term prospects 40
12. Unemployment trends 41
13. Labour supply trends 43
14. Hours worked, employment and labour input 44
15. Income maintenance ofthe unemployed 45
16. Employment trends 46
17. Fiscal policy and the labour market 48
Statistical annex
A. Gross domestic product 64
B. General government income and expenditure 65
C. Output, employment, wages and productivity in industry 66
D. Retail sales and prices 67
E. Money and banking 68
F. The Federal budget 69
G. Balance ofpayments 70
H. Merchandise trade by commodity group and area 72
DIAGRAMS
1. Economic performance indicators 10
2. Economic activity in international comparison 13
3. The labour market 16
4. Price and wage developments ]9
5. Balance ofpayments 23
6. Government revenue, expenditure and deficit 29
7. Interest rates 31
8. Monetary indicators 34
9. Leading indicators 38
10. International comparison of unemployment 42
11. Employment, output and productivity 47
BASIC STATISTICS OF AUSTRIA
THELAND
Area(thousandkm2) 84 Majorcities,
Agriculturalarea(thousandkm2),1980 37 May 1971 census
Exploitedforestarea (thousandsofinhabitants):
(thousandkm1) 32 Vienna 1 S16
Graz 243
Linz 198
Salzburg 138
Innsbruck 116
THEPEOPLE
Population,31.12.S1 (thousands) 7SS5 Netmigration, 1980 9000
perkm1 90 Totalemployment',monthly
Netnaturalincreaseinpopulation, average 1981 2798600
1981 1249 ofwhich:
Naturalincreaserate inindustry2 616165
per1000inhabitants, 1981 0.2
PRODUCTION
GrossDomesticProduct, 1981 IndustrialoriginofGDP
(Sen.billion) 10S8 atmarketprices, 1981
perhead(USS) 8800 (percent):
Grossfixedinvestment, Agriculture 4
average 1979-1981: Industry 27
percentofGDP 25 Construction 8
perhead(US$) 2340 Other 61
THEGOVERNMENT
Publicconsumption, 1981 CompositionofFederalParliament,
(percentofGDP) 18 October1979:
Generalgovernmentcurrent SocialistParty 95
revenue, 1981 AustrianPeople'sParty 77
(percentofGDP) 47 LiberalParty 11
FederalGovernmentdebt,end 1981 Lastelection: 1979
(percentofGDP) 28 Nextelection: 1983
FOREIGNTRADE
Exports: Imports:
Exportsofgoodsandservices, Importsofgoodsandservices,
1979-1981 1979-1981
(percentofGDP)average 39 (percentofGDP)average 40
Exports, I98J (percentoftotal Imports, 1981 (percentoftotal
merchandiseexports): merchandiseimports):
Food,tobacco,beverages 4 Food,tobacco,beverages 6
Rawmaterialsandenergy 10 Rawmaterialsandenergy 26
Chemicals 9 Chemicals 9
Machineryand Machineryand
transportequipment 27 transportequipment 27
Otherfinishedand Otherfinishedand
semi-manufacturedproducts 50 semi-manufacturedproducts 32
THECURRENCY
Monetaryunit:Schilling CurrencyunitsperUSdollar,
averageofdailyfigures:
Year 1981 15.92
November 1982 17.94
1. Wageandsalaryearners.
2. Includingadministrativepersonnel.
Note: Aninternationalcomparisonofcertainbasicstatisticsisgiveninanannextable.
ThisSurveyisbasedontheSecretariatsstudypreparedfor
the annualreview ofAustria by theEconomicandDevelopment
Review Committeeon 18thJanuary 1983.
Afterrevisionsin thelightofdiscussionsduringthereview,
final approval ofthe Surveyfor publication was given by the
Committeeon 3rdFebruary 1983,
INTRODUCTION
Austria's economic performance has continued to compare favourably with the
situation in most other Member countries. Although the growth of real GDP has
weakenedduringthepresentrecessionandunemploymenthasmarkedlyincreased,the
rate ofeconomic growth in recent years has been above the OECD average and the
unemploymentrateremainsamongthelowestintheOECDarea.Therateofinflationis
also below that in most OECD countries. The comparatively good cost and price
performance -to a considerable extent reflecting the incomes policy within the
framework of the social partnership- has contributed to competitiveness and the
current external balance does not represent an important constraint on domestic
policies.
RealGDP,aboutflatin 1981,pickedupsomewhatinthefirsthalfof1982,growing
atan annualrateof 1Va percent. Butsincemid-1982,thelimitedrecoveryhas faltered
and activity seems to have declined in the second halfofthe year; 1982 as a whole is
estimatedtohaveshownariseof% percent,considerablylessthanprojectedinthelast
OECD EconomicSurveyofAustria. Privateconsumptionseemstohavebeenstronger
than expected,butthiswasmorethanoutweighed bylowerinvestmentand weakening
export demand. Despite the unexpected downturn in exports, the current external
account moved into balance as weak activity and energy saving curtailed import
demand and the terms of trade have moved favourably. The fall in import prices
contributedtothemarkeddeclineininflation;inlate 1982,theyear-on-yearincreaseof
consumerpriceswasdown to4]A percent,thelowestrateforfouryears. Reflectingthe
protracted weakness of the economy, the unemployment rate has markedly risen,
reaching 4per cent for the first time since the late 1950s.
Inviewoftheprolongedrecession, thestanceofeconomicpolicieshasbeen eased.
Therelaxationofmonetarypolicy,whichhasalreadyledtoamarkeddeclineininterest
rates,isassumedtocontinue,andthetwoemploymentpackagesadoptedbytheFederal
Government in 1982 should increasingly support capital spending in 1983. The
Secretariat's projections assume that export markets will resume a moderate rate of
growth in 1983 and into 1984 as world tradepicks up. Given the past improvement in
competitiveness,exportdemandisprojectedinlinewithmarketgrowth.Onthisbasis,a
moderaterecoveryofactivityisforecastupto 1984,butatarateinsufficienttohaltthe
increasein unemployment. With imports likely togrow and no further terms oftrade
improvement, a small current external deficit may be recorded in 1984. Helped by
moderate wage settlements and renewed productivity growth, the inflation rate is
projected to be reduced further.
Recent economicdevelopmentsand economic policies arereviewed in Parts I and
IIofthisSurvey.PartIIIcontainsanassessmentofshort-termprospects. Inviewofthe
recent deterioration oflabour market conditions, medium-term labour market trends
and problems are analysed in PartIV. The Survey concludes with a summary of the
main economic policy considerations (PartV).
I. RECENT TRENDS
Inrecentyears,economicgrowthinAustriahasexceededthatoftheOECDareaas
a wholeand alsoofmanycomparablesmallereconomies (Table 1). Between 1978 and
1981,realGDProseby2.6percentperyearcomparedwith 1.9percentontheaverage
ofOECDcountriesandin 1982thepositivegrowthdifferentialisestimatedtohavebeen
about 1 percentage point. The rate ofunemployment has remained about Vh percen¬
tage points below the OECD average. Together with other European countries which
haveoriented theirexchange ratetoward the Deutschemark, Austria hascontinued to
have one of the lowest inflation rates in the OECD area. The positive inflation
differential against theOECD average (6percentagepoints in 1978-81) hasnarrowed
recently, reflectingthemarkeddecelerationofpriceincreasesintheUnitedStates, but
it has remained large against European OECD countries. Austria's current external
deficit (at 1.9 per cent of GDP 1978-81), as in most other countries, was sizeable
followingthesecondoilpriceshockbutithasbeeneliminatedmorerecently. Whilethe
improvementintheexternalbalancehasbeenlessmarkedthanincountrieswhichhave
pursued a more restrictive economic policy, the external balance is now less of a
constraint on policies than in many other Member countries. Austria's public sector
deficit has remained low by international standards (Table l)1.
Stronger growth than abroad over recent years has been the result of buoyant
export demand, reflecting sizeable gains in export market shares due to improved
competitiveness. More recently, private consumption and public expenditure have
supported activity, while foreign demand has weakened. Relatively strong consumer
demand (Diagram 2) largely reflects real income developments and tax reductions.
Immediatelyafterthe 1979oilpricerises,realincomesdeclined,aswageswerenotfully
adjusted to price increases. Wage restraint, together with the fall in the effective
exchangeratecontributedtotheimprovementofcompetitiveness in theearly phaseof
thecurrentrecession.Nevertheless,privateconsumption(volume)continuedtorisedue
to a reduction in the savings rate and a continuing increase in employment. Later on,
whenemploymentstartedtofallandthedeclineinthesavingratiomoderated,theslow
downwardadjustmentofwageincreasesinatimeofdeceleratinginflationtogetherwith
tax cuts ensured a continuing volume growth in private consumption. The low
unemployment level reflects the favourable growth performance but also sizeable
labour hoarding, evidenced by productivity developments in the early phase of the
recession. The latter explains the fact that unemployment, while still low by
international standards has accelerated more than in other smaller OECD countries
over the past year.
Theeconomyiscurrentlyexperiencingthelongestrecessioninthepost-warperiod.
Up to the mid-1970s -as can be seen from Diagram 1 - real GDP growth even in
recessionyearsdidnotfallmuchbelowthelong-termtrendrateof4percent.RealGDP
dropped slightly in 1975, but recovered strongly in the following year. The economic
slowdown in 1978, which reflected restrictive policy measures, was also relatively
short-lived.Thisfavourablegrowthperformanceexplains,amongotherfactors,thelow
levelofunemploymentmaintainedupto 1980,despitetherelativelystrongexpansionof
labour supply since the mid-1970s. But thevirtual stagnation oftheeconomyover the
last two years entailed, with some time-lag, a substantial deterioration of the labour
market situation. Price performance after the second oil price shock has been much
better than in the mid-1970s, as incomes policy has succeeded in preventing a strong
1. Theofficialestimatefor1982inTable1 maybeonthelowside,givenrecentdevelopmentsincentral
governmentfinances.
Table 1. Indicatorsofrelativeeconomicperformance
Growthof Raleofunemployment' Inflationrate Currentexternal GeneralGovernment
realGDP/GNP (percentoftotal (privateconsumption balance deficit
labourforce) deflator) (percentofGDP/GNP) (percentofGDP/GNP)
1978 1978 1978 1978 1981 1978 1981 1982
1981 1981 1981 1981 1981
Austria 2.6 0.0 0.7 2.1 2.5 3.7 6.0 7.2 5.7 -1.9 -2.1 0.1 -2.3 -1.8 -2.2
Netherlands 0.6 -1.2 -1.2 5.2 7.5 10.2 5.9 6.5 5.8 -0.4 2.2 4.5 -3.8 -4.8 -5.7
Belgium 1.2 -1.7 -0.5 9.2 11.1 13.0 6.5 7.7 9.0 -3.42 -5.52 -4.72 -8.9 -13.4 -11.8
Denmark 0.9 0.1 1.8 7.3 9.1 9.7 11.3 10.7 9.0 -3.5 -3.2 -4.5 -3.0 -6.9 -9.4
Norway 3.3 0.8 0 1.9 2.0 2.3 9.5 13.6 11.5 -0.3 4.2 0.7 3.4 5.3 4.7
Sweden 1.8 -0.8 0.5 2.2 2.5 3.1 10.1 11.6 10.5 -2.2 -2.6 -2.9 -3.2 -5.3 -5.9
Switzerland 3.0 1.9 -1.9 0.3 0.2 0.6 5.2 6.5 5.5 2.5 2.8 3.6 n.a. n.a. n.a.
Germany 1.9 -0.2 -1.2 3.5 4.4 6.5 5.2 6.0 4.9 -0.6 -1.1 0.5 -3.1 -4.0 -4.1
France 1.6 0.3 1.4 6.2 7.3 8.2 12.0 12.5 11.4 0.3 -0.8 -2.2 -1.0 -1.6 -2.9
Italy 2.8 -0.2 0.8 7.6 8.3 9.1 18.1 19.0 16.5 -0.2 -2.3 -1.6 -9.8 -11.9 -12.2
so UnitedKingdom -0.9 -2.2 0.5 7.4 10.9 12.5 13.3 10.9 8.5 1.0 2.4 0.9 -3.1 -2.0 -2.0
OECD 1.9 1.2 -0.4 5.73 6.73 8.23 11.9 9.4 7.6 -0.4 -0.4 -0.5 -2.4* -2.7« -4.1*
1. StandardisedunensptoymemralesexceptforDenmarkandSwitzerland.
2. BeigmnVUuernbourg.
3. Totalof15countries.
4. Totalof14countries.
Source: OECDSecretariat.