After the Second World War until the mid-1970s, the Austrian economy developed positively and the labour market reached full employment. Welfare state services were continually expanded. Therefore Austria is described as a social state or, in economic terms, as a social market economy.

The biggest socio-political change in the Second Republic was when Austria joined the European Union (EU) in 1995. EU membership changed all aspects of political and economic life: Austria participates in the economic and monetary union, the schilling was replaced by the euro. The country carries out functions in the European Union and participates in discussions on the reform of the EU and its institutions.

Joining the EU also strengthened trade relations: 95% of these are with member states of the EU or European countries. Austria’s main exports are machines, vehicles and vehicle parts and also metals (source: Statistics Austria).

The economic and financial crisis in 2008 also affected the Austrian economy. The unemployment rate has also increased in this country, but with various measures, e.g. reduced working hours and continuing education and training programmes, this has been kept relatively low in comparison with other EU states. Currently (as of 2018) there is sustained economic recovery. In 2017 the Austrian economy grew by 3%, and this figure is also forecast for 2018 (source: Statistics Austria).

The biggest economic sector in Austria is services, in particular in the areas of trade, tourism and health. Industrial companies also have high significance, e.g. in the areas of production and construction. With a share of 1.3% of the gross domestic product, the primary sector is only of marginal importance. The corporate landscape is characterised by one-person businesses (56%) and small enterprises with up to four employees (28%) (source: Statistics Austria).

The education and training system in Austria is very much linked with the economy: dual training takes place 80% of the time in companies, with the contents of the training geared towards the needs of the businesses. The curricula of schools for intermediate vocational education and colleges for higher vocational education are also aligned with the requirements of the economy. Since the 1990s, with the universities of applied sciences, there have also been more and more vocational education and training programmes in the tertiary sector in Austria.

The most important current challenges faced by the Austrian political system include lowering unemployment, migration, administrative reform and education policy measures:

• Lowering unemployment

To further lower unemployment, it wants to introduce more employment incentives and take modernisation and debureaucratisation steps in labour law. To minimise unemployment among young people, one measure already came into effect in 2016, the “training obligation up to the age of 18”, which stipulates that, until they reach the age of 18, young people have to complete a training programme going beyond compulsory school (cf. Chapter 2.1.).

Public Employment Service Austria also plays a particularly important role in lowering unemployment in Austria: it finds vacant positions for jobseekers, provides these with continuing education and training according to the requirements of the labour market, and maintains contact with companies.

• Migration

To ensure social peace in Austria, the Federal Government is endeavouring to develop an EU-wide migration strategy together with the EU member states. In terms of domestic policy, rapid integration in the labour market and in the education system needs to be ensured for refugees and people entitled to political asylum. The Citizenship Law also needs to be updated.

• Administrative reform

The public administration needs to be optimised and made sustainable. This will be achieved by improving quality, increasing closeness to citizens, greater efficiency, reducing costs and also by effectively using public funds.

• Education policy measures

Since the 1970s the Austrian education system has been continuously modernised and expanded, e.g. with the following measures:

• nationwide expansion of after-school day-care facilities and kindergartens to provide children with corresponding support and to enable their parents to reconcile work and family
• expansion of university education in order to provide suitable and sufficient offers for academic education
• implementation of universities of applied sciences to enhance tertiary vocational education and training (VET)
• expansion of adult education, in particular in the area of VET, in order to support lifelong learning and meet the requirements of the labour market

A current focus is the expansion of dual training and the further development of higher education establishments.

Well-developed education and training programmes for skilled labour/in the academic sector enable continuous access of a qualified workforce to the labour market. As Figure 1 shows, the level of education has improved considerably over time: between 2001 and 2015 there was a fall of more than a quarter in the number of people aged between 25 and 64 with compulsory schooling as their highest qualification. An increasing number of Austrians are obtaining a higher qualification. Despite a slight downward trend, dual training is still the most popular vocational qualification in Austria.

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Figure 1: Highest educational attainment   the 25-64 age group, in percent

Source: Statistics Austria, in-house calculation

Data for 2019:

• Compulsory School 17,6
• Intermediate Vocational School 14,4
• Post Secondary 2,2
• Apprenticeship Training 33,4
• Upper Secondary 16,0
• Higher Education 16,5.

Figure 2 illustrates the expenditure for education as percentages of the gross domestic product (GDP). The data comprises all areas of education and training – from the elementary sector to tertiary education and training – and, for around 15 years, expenditure has been between 5% and 6% of GDP. Austria is therefore at the level of the OECD average (Source: Statistics Austria). This situation remained the same in the following years (data available until 2018).

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Figure 2: Expenditure on education as a percentage of total GDP expenditure

Source: Statistics Austria