OECD Economic Surveys : Austria 1999.

138 Pages·0.552 MB·English

by  OECD

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OECD
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Latest Surveys Available: Y
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AUSTRALIA, DECEMBER 1998 9
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AUSTRIA, MAY 1999 O ECONOMIC
BELGIUM-LUXEMBOURG, JANUARY 1999
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CANADA, NOVEMBER 1998 D
CZECH REPUBLIC, MAY 1998 E
C SURVEYS
DENMARK, JANUARY 1999 O
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FINLAND, AUGUST 1998 O
FRANCE, JANUARY 1999 M
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GERMANY, AUGUST 1998 C
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GREECE, DECEMBER 1998 U C
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HUNGARY, FEBRUARY 1999 V
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ICELAND, MAY 1998 Y
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IRELAND, MAY 1997 A
ITALY, DECEMBER 1998 U
JAPAN, NOVEMBER 1998 ST
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KOREA, SEPTEMBER 1998 I
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MEXICO, APRIL 1999
1999
NETHERLANDS, MARCH 1998
NEW ZEALAND, APRIL 1999
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NORWAY, FEBRUARY 1999
POLAND, JUNE 1998
PORTUGAL, JANUARY 1998
SPAIN, MARCH 1998
SWEDEN, FEBRUARY 1998
SWITZERLAND, AUGUST 1997
SPECIAL FEATURE
TURKEY, JUNE 1997
UNITED KINGDOM, JUNE 1998 Promoting entrepreneurship
UNITED STATES, MAY 1999 and employment
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Surveys of "Partners in Transition" Countries
SLOVAK REPUBLIC, FEBRUARY 1999
Non-member Countries
BULGARIA, APRIL 1999
ROMANIA, FEBRUARY 1998
RUSSIAN FEDERATION, DECEMBER 1997
SLOVENIA, MAY 1997 O AUSTRIA
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1999 Subscription (18 issues)
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OECD
ECONOMIC
SURVEYS
1998-1999
AUSTRIA
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960,
and which came into force on 30th September 1961, the Organisation for Economic
Co-operation and Development (OECD) shall promote policies designed:
– to achieve the highest sustainable economic growth and employment and a rising
standard of living in Member countries, while maintaining financial stability, and
thus to contribute to the development of the world economy;
– to contribute to sound economic expansion in Member as well as non-member
countries in the process of economic development; and
– to contribute to the expansion of world trade on a multilateral, non-discriminatory
basis in accordance with international obligations.
The original Member countries of the OECD are Austria, Belgium, Canada,
Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the
Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the
United Kingdom and the United States. The following countries became Members subse-
quently through accession at the dates indicated hereafter: Japan (28th April 1964),
Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973),
Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary
(7th May 1996), Poland (22nd November 1996) and Korea (12th December 1996).
The Commission of the European Communities takes part in the work of the OECD
(Article 13 of the OECD Convention).
Publie´ e´galement en franc¸ais.
(cid:211) OECD 1999
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Table of contents
Assessment and recommendations 7
I. Slowing growth in a favourable macroeconomic policy environment 21
Overview 21
The peak of the growth cycle has passed 21
Monetary conditions and forces acting on the economy 27
Short-term prospects and risks 34
II. Fiscal policy: consolidation and reform 37
Completing the fiscal consolidation process 37
Structural budget challenges 45
Improving public sector governance 53
III. Progress in structural reform 59
Introduction 59
Recent labour market developments 59
Progress in structural reform 61
Improving skills, entrepreneurial dynamism and competition 67
Overview and scope for further action 72
IV. Promoting entrepreneurship 81
The scale of entrepreneurial activity in Austria 81
Factors affecting the entrepreneurial climate 93
Assessment and agenda for policy action 110
Notes 114
Annex
Chronology of main economic events 120
Statistical annex and structural indicators 123
•••••
Boxes
1. Proposals for tax reform by the Tax Reform Commission 50
2. Tax reform measures announced by the coalition parties on 23 March 52
3. The Stability and Growth Pact 56
4. The National Action Plan for Employment 62
5. Implementing the OECD Jobs Strategy – an overview of progress 73
6. Examples of Austrian entrepreneurship 90
7. The objectives of the National Action Programme to promote
entrepreneurship 103
8. Measures to support financing of start-ups and business expansion 105
9. Policies to foster technology diffusion 109
OECD 1999
OECD Economic Surveys: Austria 4
Tables
1. Demand and output 23
2. Current account of the balance of payments 24
3. Wages and prices 30
4. Capital account of the balance of payments 33
5. Economic projections to 2000 34
6. Net lending of the general government 38
7. The Federal budget 39
8. Budget deficit by government level 40
9. Firm survival rates 84
10. Sectoral incidence of start-up activity 87
11. Changing size distribution of new high-technology firms 88
12. Employment growth by size of enterprise 89
13. Inventiveness coefficient 93
14. Barriers to the planned longer-term development of small
and medium-sized enterprises 97
15. An international comparison of bankruptcy procedures 99
16. Researchers by sector of employment 110
Statistical annex and structural indicators
A. Gross domestic 124
B. General government income and expenditure 125
C. Output, employment and productivity in industry 126
D. Retail sales and prices 127
E. Money and banking 128
F. The Federal budget 129
G. Balance of payments 130
H. Merchandise trade by area 131
I. Labour-market indicators 132
J. Public sector 133
K. Production structure and performance indicators 134
Figures
1. Macroeconomic performance 22
2. Consumer price inflation 25
3. Employment, unemployment and the labour force 26
4. The climate in the business sector 28
5. Indicators of competitiveness 30
6. Interest rate developments 32
7. General government budget balances 42
8. Evolution of the deficit under adverse economic conditions 45
9. Public health and pension-related outlays 46
10. Costs in the hospital sector 49
11. Labour-market indicators 60
12. The changing structure of the public sector 83
13. Self employment in an international perspective 86
14. Assessment of the innovation system in Austria 91
15. Level and structure of R&D expenditures in the OECD area 92
16. Barriers to self employment 94
17. Perceived importance of barriers to self employment 95
18. Main long-term constraints on business expansion 96
19. Legal and administrative requirements to form companies 102
OECD 1999
BASIC STATISTICS OF AUSTRIA
THE LAND
Area, (1 000 sq. km) 84 Major cities, 1991 census
Agricultural area (1 000 sq. km), 1996 34 (thousand of inhabitants)
Exploited forest area (1 000 sq. km), 1996 33 Vienna 1 540
Graz 238
Linz 203
Salzburg 144
Innsbruck 118
THE PEOPLE
Population, 1997 thousands 8 072 Net migration, 1997, thousands 3
Number of inhabitants per sq. km 96 Total employment,1 monthly average 1997, 3 056
Net natural increase, 1997 thousands 5 thousands
Net natural increase per 1 000 inhabitants, 1997 0.6 of which: Primary sector 26
Secondary sector 967
Tertiary sector 2 063
PRODUCTION
Gross domestic product in 1997 (Sch billion) 2 514 Industrial origin of GDP at market prices,
GDP per head, US$, in 1997 25 532 1997 (per cent)
Gross fixed capital formation in 1997 554 Agriculture 1
Per cent of GDP 22 Industry 22
Per head US$ 5 627 Construction 8
Other 69
THE GOVERNMENT
Per cent of GDP in 1997 Composition of Federal Parliament: Seats
Public consumption 18.4 Socialist Party 71
General government current revenue 48.1 Austrian People’s Party 53
Federal government debt, end 1997 57.6 Freedom Union 40
Liberal Forum 10
Greens 9
Last general election: December 1995
FOREIGN TRADE
Exports of goods and services, Imports of goods and services
as a per cent of GDP, 1997 42.3 as a per cent of GDP, 1997 42.9
Main exports in 1997 (per cent of merchandise Main imports in 1997 (per cent of merchandise
exports): imports):
Food, beverages, tobacco 4.3 Food, beverages, tobacco 5.8
Raw materials and energy 4.7 Raw materials and energy 9.3
Semi-finished goods 15.2 Semi-finished goods 13.6
Finished goods 75.8 Finished goods 71.3
of which: Consumer goods 49.5 of which: Consumer goods 48.0
THE CURRENCY
Monetary unit: Schilling Currency units per US$, average of daily figures:
Currency units per euro on 1st january 1999 13.7603 Year 1997 12.20
February 1999 12.28
1. Wage and salary earners.
Note: An international comparison of certain basic statistics is given in an Annex table.
This Survey is based on the Secretariat’s study
prepared for the annual review of Austria by the
Economic and Development Review Committee on
23 March 1999.
•
After revisions in the light of discussions during the
review, final approval of the Survey for publication was given
by the Committee on 21 April 1999.
•
The previous Survey of Austria was issued in
April 1998.
Assessment and recommendations
Overview of At the time of the previous review in February 1998, eco-
current policy nomic prospects were favourable, with activity picking up
issues and Austria about to meet the macroeconomic criteria for
EMU entry. In the event, growth proved even stronger than
expected in 1998, despite the Asian crisis and the turmoil
on world financial markets, and Austria became a founding
member of the Economic and Monetary Union on 1 Janu-
ary 1999. EMU membership has replaced the Deutschemark
link with a new monetary policy framework based on euro-
area wide monetary conditions, while fiscal policy is now
constrained by the Stability and Growth Pact and the asso-
ciated national stability programmes. At the same time, the
ambit of European policy co-ordination has widened to
include co-ordination in the area of employment promotion,
with the issuance of guidelines for the development of
National Action Programmes for the promotion of employ-
ment. These will contain verifiable targets to be reviewed
on a peer group basis. Against the background of increasing
EU integration but slowing world demand, the Survey begins
with a review of short-term prospects (Chapter I). It then
reviews the ongoing fiscal consolidation programme (Chap-
ter II), which raises important issues of public sector
efficiency, control over social programmes and containment
of public pension commitments. Fulfilling the government’s
commitment to a tax reform in 2000 with a net reduction in
the tax burden constitutes a special challenge in this con-
text. Chapter III discusses the progress made towards more
flexible labour and product markets, building on the policy
recommendations made for Austria under the OECD Jobs
Strategy in the 1997 OECD Economic Survey of Austria. An
important recommendation of the Jobs Strategy is the need to
OECD 1999
OECD Economic Surveys: Austria 8
support an entrepreneurial climate, and the policy issues
associated with this objective are reviewed in Chapter IV.
Growth has GDP expanded by some 31/4 per cent in 1998, driven by
slowed but strong domestic demand and buoyant exports. However,
the deceleration activity slowed markedly in the second half of the year and
should be limited business expectations have deteriorated to levels last seen
at the start of 1995. GDP growth is projected to slow in 1999
to around 21/4 per cent, as exports slow and investment
adjusts to both lower export demand and renewed softness
in the construction sector. Continued growth of domestic
demand should, however, limit the extent of the slowdown.
Consumer sentiment has remained resilient, supported by
rising household real disposable incomes, based on low
inflation, a stable fiscal burden and a pick-up in employ-
ment. Employment growth is now slowing somewhat, but
consumer demand is projected to grow by some 2 per cent,
which should in turn support capital spending by domesti-
cally-oriented sectors. Despite the projected slowdown, the
macroeconomic fundamentals are sound, with moderate
wage developments and favourable price and productivity
trends supported by a macroeconomic policy conducive to
growth. As a result, the slowdown is projected to be only
temporary and GDP growth is projected to recover in 2000
to around 21/2 per cent, underpinned by a gradual recovery
in world trade.
Downside risks The turbulence in world financial markets had only a limited
are significant, direct impact on the Austrian economy, despite the rela-
but underlying tively large bank exposure to Russia and other emerging
conditions are market economies, but the more volatile international envi-
sound ronment means that the projection is associated with
greater uncertainty than usual. Moreover, the downside
risks of the global financial crisis in terms of its influence on
world trade and investment activity are accentuated by the
interdependence of the economy with Germany, where bus-
iness confidence has recently weakened markedly. Never-
theless, though significant, the downside risks need to be
kept in perspective. EMU accession has been part of an
ongoing process of European integration which continues to
benefit Austria and makes for rather good fundamentals. In
the event of any negative shock encompassing the euro
OECD 1999