Expensive energy, high labor costs, extreme bureaucracy and a high tax burden are putting Europe, and therefore Austria, under increasing pressure as a business location. Four in ten domestic industrial companies are already moving their production abroad. “The situation is extremely worrying,” warns Harald Mahrer, chairman of the Economic Chamber, who sees an urgent need for action.
“Europe and Austria also have a substantial problem in maintaining their competitive position,” the chamber boss continued. This is also supported by the latest results of a Deloitte study. Three quarters of entrepreneurs already see the danger of deindustrialization. In Germany, two out of three industrial companies have moved all or parts of their production abroad in the past three years.
Austria would “be left behind” for about two years, Mahrer said. But here too the train goes faster. 41 percent of our companies have already moved parts of the value chain to other countries in the past three years. This will also accelerate because many of our companies are highly dependent on German industry.
Cost-intensive areas are hit hard
Cost-intensive sectors have particularly high migration trends. In the foreground is parts production, 40 percent of which has already moved or is planning to do so. This is followed at 38 percent by production companies in general, pre-assembly (32 percent), final assembly (24 percent) and warehousing (20 percent).
North America and Asia are becoming increasingly attractive
While in the past eight out of ten times it was other countries in Europe where people settled, Asia (e.g. Vietnam, Malaysia, South Korea) or the US are now becoming increasingly important as a location. “Asia and the US are using Europe’s weakness to attract investments,” Mahrer emphasizes.
Where the problems lie
There are many reasons why Austria is becoming less and less attractive. However, almost eight in ten companies cite high labor costs as the main reason for the move. A real reduction in indirect labor costs is therefore urgently needed. For two out of three, this is closely followed by the excessive bureaucracy (reporting and auditing obligations, sustainability reports, etc.) that Austria and the EU impose on companies. Even advisors no longer know their way around, says the WKO boss, who questions the desirability of some regulations.
Energy prices, labor and taxes are crucial
Energy security and costs are also critical for 61 percent of industrial companies. 63 percent criticize the issue of taxes and fees and 64 percent criticize the availability of workers.
Anyone who works in a pension must receive gross for net
For these reasons, a clear location strategy for Austria is needed. In terms of easing the burden on the labor factor, in addition to reducing indirect labor costs, Mahrer can also imagine tax exemptions for people who continue to work after reaching the standard retirement age. Your gross amount must then be paid out net. The employer ‘only’ pays for accident insurance. “Why should I pay twice for health insurance?” says Mahrer. This allows tens of thousands of (experienced) employees to remain at work. The taxation of full-time and part-time work has also changed. Mahrer: “If you work full-time, you can’t be stupid.”
But we should also ensure ‘safe’ energy prices. Plannability and prices are sometimes considerably better in other countries. And the “bureaucratic monster”, which is currently on the loose, so to speak, must be caught urgently.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
