The Green project for the Austrian welfare state is to carry it beyond a model based on male breadwinners and connect it to the issues of our time, from climate change to demographic ageing. Crises from the pandemic to energy shortages have shown that the need for such reforms is more urgent than ever.

Austria is an example of a conservative-corporatist welfare state. After the country’s experience with national socialism, the leaders of its Second Republic built a steady social partnership between employers and unions that was the basis for economic growth until the 1980s. This compromise helped Austria – a small country dependent on the economies of its larger neighbours – to build a welfare system that ensured prosperity for a large part of the population.

However, economic inclusion for working-class people failed to develop a concern for social mobility or political participation. Moreover, Austria’s welfare system stayed grounded in a 1950’s vision of society that jars with the realities of the 2020s. Families with working fathers are guaranteed support, while marginalised people are seen as responsible for their own predicaments. Social protection measures, targeted at heads of households, are often not available to individuals. Low-threshold support is available to helps combat social exclusion caused by violence, debt, illness, and disability, but intra-institutional cooperation on such challenges is poor.

This model of social protection is ill-suited to today’s Austria. More people than ever work insecure and seasonal jobs. Cohabitation outside of marriage is growing. In an ageing society, elderly care (as with childcare) is still seen as a private task for women in the home. Such attitudes mean that the care professions have a low social status and are poorly paid.

Meanwhile, the structure of Austria’s welfare system makes it difficult for it to adapt to challenges such as the impending climate catastrophe and the fallout of Europe’s energy dependence on Russia. The Greens entered government in January 2020, shortly before the outbreak of the pandemic and just as these problems were beginning to enter the public consciousness.

Priced Out: The Cost of Living in A Disrupted World
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Priced Out: The Cost of Living in A Disrupted World
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The Green Party’s priorities for the Austrian welfare system were to increase the level of public funding earmarked for combating poverty, integrate the marginalised into society, and improve cooperation between social institutions. They were especially keen to implement just transition programmes and build resilience against marginalisation. The Greens were also committed to promoting measures that would halt the decline in middle-class living standards. Then Covid-19 hit.

In the wake of the pandemic, the government identified 700,000 individuals (around 8 per cent of the population) as economically vulnerable and eligible for support. The bureaucratic difficulties in reaching these people exposed the fissures in the system. Reduced working time schemes were put together quickly, and extra support for households with children was easily provided alongside family allowance payments. However, the system struggled to reach self-employed people and businesses quickly enough. In the end, Austria managed to come out of the pandemic quite well. Since spring 2022, the country has seen record employment and low unemployment rates. The war in Ukraine has not slowed this trend, even as inflation has worsened. Nevertheless, as a result of the pandemic the Greens have been unable to introduce many of their planned structural reforms. The one notable win was the carbon tax, which is automatically paid out as a “climate bonus” to the entire population on an annual basis. In response to the inflationary impact of the Russian invasion, top-up payments to the most vulnerable were increased, and a certain level of support for energy bills was introduced. However, sharp rises in both prices and tax revenues raised the question of how additional funds could be used most effectively. On the one hand, they had to benefit all population groups to ensure that as many people as possible continued paying into solidarity-based systems such as the health system, unemployment insurance funds, the pension system, and other forms of insurance against poverty and marginalisation. On the other, it was important – at least for the Greens – to ensure that people on lower incomes and those at risk of marginalisation were not left behind.

The result is a basket of measures. Tax thresholds will automatically be pegged up by two-thirds of the inflation rate every year, while tax benefits for low earners and social and family benefits will be adjusted annually for inflation from 2023 onwards. The climate bonus for 2022 has been increased fivefold, and a “power price brake” has been set to encourage users to save energy. Moreover, substantial subsidies are earmarked for businesses that switch to more energy-efficient production methods.

The Austrian Greens entered government to drive both ecological and social change. Their aim is to enable more freedom and creativity for individuals through social security reform, as well as to ensure that Austria uses its room for manoeuvre (as one of the richest societies in the world) to combat climate change. The pandemic upended the rules of the game, and by no means could all these challenges be tackled at once. Nevertheless, when it comes to social security, the government proved capable of increasing financial assistance for the most vulnerable, introducing annual social benefit adjustments, and beginning the work of approaching social and environmental policy as one.

The risk of poverty and marginalisation still hangs over too many people in Austria. The welfare institutions that should be reaching out to them still have to learn to work together. The good news is that small steps are being taken to make this a reality.

This piece is part of a series in the edition on how Greens in government in AustriaBelgiumCroatiaFrance, and Scotland are responding to the social crisis.

Priced Out: The Cost of Living in A Disrupted World
Priced Out: The Cost of Living in A Disrupted World

This edition asks what the social and political impacts of the cost of living crisis are, and what alternatives remain for meeting our needs.

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