Friday, 17 May 2013
Image of Vienna
Overseas Business Risk - Austria
Political and Economic
Austria is a land locked nation, bordered by 8 other countries, with an economy which is heavily reliant on trade and exporting.
Austria has been a member of the EU since 1995 and of the EMU since January 2001. It is a member of the UN and hosts a number of UN agencies. It also hosts, in Vienna, the Secretariat of the Organisation for Security and Cooperation in Europe (OSCE) the Organisation of the Petroleum Exporting Countries (OPEC) and the European Union Fundamental Rights Agency. Since 1955, Austria has been a neutral state.
There are 8.44 million inhabitants in Austria. One fifth of Austria’s population lives in Vienna. Other major towns include Graz, Linz, Salzburg and Innsbruck all having more than 120,000 inhabitants. Currently (2013), unemployment is running at 4.3% (EUROSTAT) and is amongst the lowest in the EU. The total labour force (15-66) comprises 4.33 million people.
The economy grew in real terms by 0.6% in 2012 and is estimated, by the Austrian Statistical Office, to grow by 1,0 % in 2013, the 2013 figure is estimated at 1.8%. The GDP per person is US$ 49.688 (2011). The 2012 fiscal balance (Maastricht definition) was -3,1% of the GDP the estimate for 2013 is -2,6% and for 2014 is – 2,0%.
Inflation in 2012 was 2.4 % and is estimated to be 2.1% for the year 2013.
While benefitting from a strong year round tourism industry, with 131 million overnight stays in 2012 (+4%), the economy is in no way wholly dependent on such revenue streams.
71.4% of Austria’s exports and 69.7% of its imports originate from other EU states, with Germany being by far the largest trading partner. In 2011 exports totaled Euro 121.7 billion and imports Euros 131 billion. Approximately 40 % of Austria’s exports go to Germany, while the export rate to the UK has risen by 10 % with a total value of 3.7 billion Euros.
Austria has benefitted from the opening up of Eastern Europe, and is now the biggest investor (per head of population) in the region. In particular, Austrian banks and insurance companies have become market leaders in Austria’s eastern neighbouring countries which has also exposed them to risks due to a high rate of nonperforming loans and other toxic assets. Significant numbers of Austrian firms have established manufacturing operations in the neighbouring states - as well as benefitting from Austria’s historic role as a trading partner. Austria is also home to 350 international companies who operate their CEE HQs from the country.
The Green economy: Austria has a high proportion of renewable energy, (70% RESe) thanks largely to hydro-electric plants. Furthermore, Austria is a non-nuclear country. There is significant government support to extend domestic renewable energy production, most importantly through feed-in tariffs, and a range of other incentives including grants for household energy efficiency. The renewables sector employs upwards of 210,000 people and account for 11.8% of GDP.
History and Political Situation
After the Second World War, Austria was occupied by the USSR, US, UK and France for 10 years, and did not attain independence until 1955. The key aspect of Austria’s independence was a commitment to “permanent” neutrality, which Austrians subsequently came to see as a basic element of the Austrian state’s identity. Austria has used its neutrality to play a mediating role, often offering Vienna as a venue for meetings of rival parties during the Cold War and since.
Austria is a Federal Republic in which executive authority is divided between nine provinces and the federal bodies in Vienna. There is a provincial assembly and government in each of the provinces. The federal parliament consists of two chambers: the “Nationalrat” and the “Bundesrat”. Members are directly elected to the Nationalrat for a five-year term. Members of the Bundesrat are elected by the provincial assemblies for a five-year term (with the exception of the province of Upper Austria, where they are elected for a six-year term).
Austria’s government is a so-called ‘Grand Coalition’, between the Social Democratic Party (Sozialdemokratische Partei Österreichs, SPÖ) and the conservative People’s Party (Österreichische Volkspartei, ÖVP). This has been the most common form of government since WW2 and results in a very consensus-based approach to politics, which sometimes means that tough decisions are hard to take. The next national elections are due in September 2013.
Although Austria has weathered the financial crisis well, the government is under increasing pressure to do more to reform the state and to reduce long-term debt.
Political and Economic Risk
Businessman reading newspaper
Austria’s economy is estimated to grow by 1.0% in 2013 and estimates are + 1,8% in 2014 Generous stimulus measures during 2010, tax reform and capital support to the banks helped defy more pessimistic predictions, but also created record levels of public sector debt.
The unemployment rate in EUROSTAT/ILO terms was 4.5% in 2012 and is expected to remain at the same level for 2013, according to the same source.
The Austrian government announced their plans in 2010 to reduce public debt. Included and implemented in 2010, was the extension of tax applied to profits made on share and fund transactions, an increase in gasoline tax and a reduction of social benefits (such as family support). The national debt levels stand at 72.2% of GDP.
Austria is the headquarters of the EU’s Fundamental Rights Agency, has a functioning and effective trade union system and operates a Human Rights Commission (MRB), which investigate accusations of human rights abuse and carries out spot cheques in prisons and police stations.
Employees have the right of assembly and membership of trade union organisations. The unions have the right to strike but Austria has traditionally had a very low strike rate, on average 4 days per annum per 1000 employees. Employees are encouraged to play a role via elected representatives in the management of the organisations they work for. Austria has ratified all the major ILO conventions relating to fundamental rights.
Traditionally women have been underrepresented in both government and in business. The government has decided to try to implement quotas to raise the numbers of women in leading positions in government owned business to 25% by 2013 and 35% by 2018. Similarly, Universities and the Civil Service have been tasked to raise the percentage of women working in these establishments. Additionally, the government is seeking to take measures to rectify the difference between what men and women with similar qualifications are being paid which is currently, this difference currently being 25.5%.
Bribery and Corruption
Businessman working at a computer
Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.
In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.
There is an Austrian governmental, independent organisation ( which is fighting corruption in Austria. Any potential corruption cases can be reported to them. As in many Western countries the construction and infrastructure industries are considered to be those most prone to this type of misuse. Corruption in Austria is generally low. In 2012 Austria was again ranked 25th least corrupt of 174 countries in , a drop of 9 positions and equivalent to Ireland. Over the past couple of years there have been a number of high ranking political figures who have been involved in accusations of corruption and the purchase of political influence. 2011 and 2012 has seen a marked increase in the number of cases being investigated. Several formerly high ranking individuals, politicians and lobbyists on a federal as well as provincial level have faced criminal prosecution and in some cases imprisonment – trials are continuing in 2013.
There is a low threat from terrorism in Austria. There have been no recent attacks directly connected to international terrorism in Austria. The authorities work to protect the public from any perceived threats.
Please follow the instructions of the local police and other authorities in case of any sort of disruption.
Protective Security Advice
The Centre for the Protection of National Infrastructure also provides protective security advice to businesses
Most visitors to Austria do not have any troubles and there is a generally low rate of crime compared to other countries. Crime is more targeted towards property than towards physical assault. Please be aware, however, of pickpockets, confidence tricksters and thieves in city centres, airports, railways and other public places. When travelling by train overnight, please take precautions against being robbed while you sleep. You should not become involved with drugs of any kind.
Manufacturers and traders are strongly advised to patent their inventions and register their trademarks.
Application for Austrian patents for up to 20 years can be made at the Austrian Patent Office; smaller inventions are protected for up to 10 years. The Austrian Patent Office also accepts requests for European patents and forwards them to the headquarters of the European Patent Office in Munich, Germany. The Austrian Patent Office further assists with the registration of international patents.
Dresdner Straße 87
Phone: +43 (0)1 534 24 0
Fax: +43 (0)1 534 24 535
As in many other European countries, international organised criminal activity takes place in Austria and is increasing. Often this is linked to people trafficking and drugs. The majority of crime bands are originating from outside Austria’s borders. The number of internet scams is constantly on the increase in Austria and often results in a financial loss for its victims.
As a member of the European Union, Austria is part of the Schengen zone.