VIENNA: When Austrian Finance Minister Karl-Heinz Grasser wants to tell people why they should vote for his government he holds up German magazine articles about Austria.
“Why Austria is great,” said a Stern magazine cover Grasser pulled out during a televised debate in the run-up to the country’s general elections this Sunday. “Less jobless, more growth, better mood,” it said.
Less than five per cent are unemployed in Austria, compared to almost eight per cent in the euro zone. Growth, forecast at just under three per cent this year, also beats the European Union average. Exports are soaring, particularly to eastern Europe. Austria is the EU’s third-richest country.
For conservative Chancellor Wolfgang Schuessel’s governing party, praise by its big northern neighbour that devours a third of Austrian exports endorses its plan to stay on a course of tax cuts, budget austerity, privatisations and welfare state reform.
Yet while Austrians love to smirk when Germans — more often seen as belittling the country of eight million — gaze at their achievements, many sound rather worried than proud when asked about jobs and the economy.
“They must do something, because there are so many jobless people,” said Erwin Naderer, a florist in the capital Vienna. “I believe this is the main issue in Austria.”
Unemployment has risen by a quarter under Schuessel. For those in jobs, wages have stagnated while company profits have flourished, helped by corporate tax cuts.
And in its most controversial reform, Schuessel’s government has taken an axe to the country’s generous pension system, penalising early retirees. Meanwhile, people prepared to work for a fraction of Austrian salaries live just an hour’s drive east of Vienna, heightening concerns.
“People compare their situation with how it used to be when everybody had a job and nobody feared losing it,” said Karl Aiginger, head of economic research institute WIFO. “They don’t compare it to Germany or elsewhere where it may be worse.”
The centre-left Social Democrats’ campaign try to exploit those cracks, portraying Schuessel and his popular finance minister Grasser as front men for the wealthy and big business.
“We believe Austria is a rich country and that its wealth needs to be distributed more even-handedly,” Social Democrat leader Alfred Gusenbauer told Reuters in a recent interview.
Gusenbauer pledges to close corporate tax loopholes to fund tax breaks for medium incomes and public investments to create jobs. He opposes Schuessel’s plan to scrap inheritance tax and favours keeping the few remaining state stakes in infrastructure firms such as Telekom Austria and energy firms.
Until a few months ago this went down well with voters. But in March a series of scandals at trade union-owned bank BAWAG upstaged the political discussion and marred swing voters’ confidence in the Social Democrats’ economic competence.
Their lead on Schuessel’s People’s Party evaporated in the space of a few weeks. According to the latest opinion polls, the People’s Party will come in first with around 38 per cent of the vote, the Social Democrats are seen taking around 35 per cent.
With up to four more parties making it into parliament, a “grand coalition” of the two big parties — which ruled Austria for most of the time after World War Two — might be the only viable option, analysts say.
This prospect has blunted the edges in the campaign. Beneath the rhetoric, differences between the big camps are rather nuanced compared to the painful debates that marked campaigns in other European countries like Sweden or Germany.
Rather than undo the Schuessel’s pension and tax reform, the Social Democrats merely want to tweak the rules. They say they too are committed to a balanced budget.
Schuessel has carefully avoided spelling out sweeping plans for labour law reform. And with most privatisation already accomplished, he has room for compromise on slowing down the pace.
“Black (conservatives) and Red (Social Democrats) will get their act together and there will be no radical break with current policies,” said Harald Egger, a fund manager at Sparinvest, one of Austria’s top investment funds.—Reuters
