The welfare state contributions, often under the banal term “non-wage costs“, play an important role for the Austrian welfare state and thus for all of us who benefit from the welfare state. Because these finance the developed and robust Austrian social system, on which the population could rely, especially in the serious crises of recent years (financial crisis, Covid-19 pandemic, inflation). Nevertheless, business people in particular do not see the advantages for society and thus also the location, but rather the costs that employers pay to the welfare state for their employees – as part of the employee remuneration.
1.7 billion euros in revenue loss per year!
There are constant calls for (further) reductions in these welfare state contributions. Important sources of financing have already been reduced several times in recent years. What employers save in costs, however, does not reach the employees as a higher net salary, but at the same time the state or social security funds lack important social benefits. Cumulatively, the loss of income – if you take into account the reductions since 2016 – add up to a total of 7.3 billion euros (incl. 2023). This results in a reduction in income of an average of 1.67 billion euros per year.
Reduction of FLAF contributions
Until 2016, the employer’s contribution to the Family Burdens Equalization Fund (FLAF) was 4.5% of the wage bill. In 2016, this contribution was reduced by 0.4 percentage points to 4.1%, followed by a further reduction of 0.2 percentage points in 2022 as part of the inflation relief packages. The employer contribution has only been 3.7% since January 1st, 2023. The total loss of income thus corresponds to over 2.1 billion euros (incl. 2023). Missing funds in the FLAF are subsidized by federal funds (i.e. taxes, which consist of over 80% employee and consumer contributions). The cost burden is thus indirectly passed on from employers to employees. Numerous important family benefits such as family allowance, childcare allowance, free school trips, school book campaign, etc. are financed from the FLAF. The funds that have to be made available from the budget are then lacking in other areas and can lead to cuts there.
Reductions in accident insurance premiums
Social accident insurance replaces entrepreneurial liability. While necessary performance improvements have not been implemented for years, the contribution rate in accident insurance has already increased in recent years several times lowered. Up until 2014, employers still paid 1.4% of the contribution basis (of the total wages) in accident insurance contributions. Successive reductions were also decided here. In 2014 the contribution was reduced from 1.4% to 1.3%, in 2019 again to 1.2% and as part of the inflation relief packages there was a further reduction in 2022, so that the accident insurance contribution is currently only 1.1% .
Part of the 2019 contribution rate reduction was cross-financed at the expense of the Austrian Health Insurance Fund (ÖGK). The so-called “special lump sum”, which regulates a flat-rate payment for the treatment of occupational accidents in non-UKH hospitals, was no longer valued from 2019 and was newly regulated for the years 2023 and following. The additional burden on the ÖGK in recent years (including the forecast up to 2025) thus amounts to almost 400 million euros.
A lack of funds jeopardizes accident insurance benefits
The funds for the expansion of services would be urgently needed: for example, the expansion of the list of occupational diseases Long COVID for all those who have become infected in a professional context. This would also involve an expansion of preventive offers. This should actually also be in the interest of employers, since insured persons at risk of occupational diseases are given preventive care by the Allgemeine Unfallversicherungsanstalt (AUVA) and preventive activities in companies are stepped up. However, a lack of expansion of benefits is particularly at the expense of the affected patients, since accident insurance grants more extensive benefits and pension payments than would be the case in health insurance. And it’s at the expense of the health insurance community, which has to “cross-finance” work-related illnesses because they’re the insurance line of business that doesn’t recognize them as work-related injuries or diseases.
It is now questionable whether the current benefits can still be covered after the renewed reduction. Any cuts, especially in the preventive area, increase the risk of accidents at work and occupational diseases. This has fatal consequences for both employees and employers. At the same time, the main beneficiaries of a reduction are large, heavily staffed companies, with small and medium-sized enterprises receiving only minimal financial benefits, while the potential damage from benefit cuts could be significant.
The further the UV contribution is reduced in historical comparison, the more the justification for the liability privilege falls away! This is particularly harmful to employers in companies with a higher risk of accidents (such as the construction industry or in production).
Reduction of IESG contributions
The insolvency payment security surcharge, which is used, for example, to finance the salaries of employees in insolvent companies, was still 0.7% in 2007. After numerous cuts, it has stood at 0.1% since 2022. According to the individual tax list of Statistics Austria, significantly lower income has been recorded since 2020. Before 2020, the state took in around 350 – 400 million euros a year, but since the contribution was reduced, income has fallen from 2020 by around 40% to around 230 million euros per year.
Instead of less, we need more welfare state!
The Austrian welfare state is largely based on the comprehensive social system that represents the wealth of the many. You can rely on him in all situations and regardless of the social or economic situation of the individual. Anyone who wants to continuously lower the financing basis has one goal: to undermine the Austrian welfare state. The costs are then successively passed on to the individual. We are in the midst of major social upheavals, be it due to the climate crisis, digitization and demographic developments. If we want to prevent social risks from becoming more and more individualized, our welfare state must continue to function in the future. In order to be able to guarantee this functioning of the welfare state, we all need more funding instead of less.