Economy of Austria: Felix Austria, What Now?

Text: Žikica Milošević

Austria, a land with no kangaroos, as they use to say by these funny T-shirts, is actually very close to Australia at one point. Well, it is one of the richest countries in the world. Actually, Australia is doing a bit better: it is 9th richest country in the world, while our Austria is 14th. It is OK for a country like Qatar, full of oil, or Norway, for the same reason, but to be in Top15 without much natural resources, only by wit and hard work, well, it is quite an outstanding achievement.


Having passed through many phases, the Austrian economy after the World War II became such that it quickly turned into a role model for the majority of the other countries in the world. If we quite often spoke about the „Swedish Socialism“ or their, or largely viewed, Scandinavian welfare state (similar like in Iceland, Norway, Denmark or Finland), sometimes the people in Eastern Europe (save Estonians, of course) think that Scandinanian model cannot be applied since culturally, climatically, economically and religiously we are very different. And yet, Austria seems quite close to all of us, from Lithuania and Poland to Serbia and Romania. So their vision of economics can and should be readily applied. One of the things that made Austria economically great was its neutrality. The military budgets were cut, and the neutral country that applied Western capitalism with strong Social state seemed acceptable for both Soviets and Americans. It quickly became a hub for economic development of the Eastern Bloc even during the Cold War era, and especially after that, when Western companies felt the joy and promises of lucrative and empty Eastern markets. and the Austrians, having known all of us only too well, were the fist to jump the train and invest in Czechia, Hungary, Serbia, Croatia. Without hesitation that, say, British or Belgian companies had had.


But, let us that this story a bit further. If we take a look at the list of the richest of the rich, there are some countries that… err, should not be there. If we talk about the natural resources. Luxembourg? Switzerland? Ireland? Singapore? Denmark? All of them have wit, and are not afraid to work hard to tame the inhospitable or simply tiny land, to make it great. Austria is no exception. A landlock country decided to cut the social differences (until the 1980s, generally largest companies in Austria were nationalised, and the state’s grip was gradually loosened in the forthcoming years), with labour movements influencing strongly labour politics and industries. The Austrian Trade Union Federation (ÖGB) comprises constituent unions with a total membership of about 1.5 million—more than half the countries wage and salary earners. Since 1945, the ÖGB has pursued a moderate, consensus-oriented wage policy, cooperating with industry, agriculture, and the government on a broad range of social and economic issues in what is known as Austria’s “social partnership”. Well, while Baroness Thatcher talked about the new liberalism, and President Reagan introduced his policies, Austria remained faithful to slow but steady progress. And it paid off: in 2004 Austria was the fourth richest country within the European Union, having a GDP (PPP) per capita of approximately €27,666, with Luxembourg, Ireland, and Netherlands leading the list.


Being the easternmost of all capitalist states in the central Europe (the only country that lied far to the East was Finland), Austria was forced to work with Italy and especially Germany, as its main trading partner. Having two of these giants as neighbours, Austria suffered a lot from every fluctuation in these two large economies, G-7 members. The limited cooperation with Yugoslavia and other countries could not stabilise the economy in the case of the huge turmoil. But now, since Austria became surrounded by EU-members, and for that matter, the strong ones (Slovenia ranked 35th, Czechia 40th, Slovakia 46th and Hungary 57th), Austria is more comfortable, and its cooperation with non-Eastern members of the EU further stabilised the country. And what Austria does the most, is investing Eatswards. Namely Austria is known for its the service sector generating the vast majority of Austria’s GDP. Vienna has grown into a finance and consulting metropole and has established itself as the door to the East within the last decades. Viennese law firms and banks are among the leading corporations in business with the new EU member states. We know it quite well. Since the country generates a steady growth from 1% to 3%, no crisis on the horizon. No spectacular growth either. But it is very Austrian. Do not change the system that wins. Now they are doing so well that they don’t really not to work too hard or grow spectacularly, although they working week of 45h per week is the longest in Europe. But, since they have a lot of leisure and social benefit, you can’t tell it.

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