Austrian jobless rate still lowest in EU

Austria has retained its title of being the European Union’s (EU) jobless rate model pupil.The European Commission’s (EC) statistics body Eurostat found that Austria still had the lowest unemployment rate among the EU-27 with 4.3 per cent, followed by the Netherlands where 4.5 per cent of residents were out of work in August.The agency also said today (Fri) that Spain still has the highest jobless rate (20.5 per cent). It added the EU average was 9.6 per cent, up from 9.2 per cent year on year.Figures presented today also reveal that unemployment in the Eurozone – the 16 EU members which have adapted the Euro as their sole currency – rose by 0.4 per cent from August 2009 to the same month of this year.Year on year comparison shows Malta managed the most significant decline among the EU’s 27 member states as its jobless rate shrunk from 7.2 per cent to 6.2 per cent. Austria makes second place in this regard (August 2009: 5.2 per cent).Austria is in the best situation as far as the unemployment rate among young people is concerned. Only 8.5 per cent of Austrians under 25s had no job in August. Germany and the Netherlands share second place with 8.8 per cent, while Spain did worst (41.6 per cent).These figures are expected to help the Austrian government in its bid to reduce state debt as a higher number of employed people means more tax revenue and a stronger economy.The Institute for Economic Research (WIFO) and the Institute for Higher Studies (IHS) said last week they expected the Austrian economy to recover quicker from the economic crisis than initially predicted.IHS said the country’s gross domestic product (GDP) will increase by 1.8 per cent year on year in the second half of 2010, while WIFO forecast a two per cent improvement. IHS said in July Austrian GDP will rise by 1.5 per cent. WIFO announced at that time it expected GDP to grow by just 1.2 per cent compared to the second half of last year.Both Vienna-based think tanks warned that a certain insecurity about the future of the domestic and the global economy would keep investments at a relatively low level.They also appealed to the government coalition of Social Democrats (SPÖ) and People’s Party (ÖVP) not to pull out from trying to slash the budget deficit from next year despite the rather positive outlook.SPÖ and ÖVP have been at loggerheads on how to achieve this for months. While the Social Democrats said tax increases were still necessary to ensure poor and middle class people were relieved from some pressure, the ÖVP hinted the latest predictions could lead to less dramatic tax increases.Left-wing SPÖ officials have appealed to fellow party member and Chancellor Werner Faymann not to reverse from convincing the ÖVP a tax on assets was necessary. The SPÖ agreed it wanted such a levy to come into force from 2011 on its recent party summit. Some Social Democrats now fear that the famously pragmatist chancellor could waive in a possible bid to avoid a worsening of SP֒s relations with the ÖVP.The coalition partners have agreed on a bank tax set to help them to an extra half a billion Euros per year from 2011 after supporting the country’s biggest banks with billions of taxpayers’ money during the past one and a half years.The Social Democrats also want a tax on financial transactions. The ÖVP has, however, stressed it would back such a ruling only if it comes into force in the Eurozone or in the EU to avoid possible harm to Austria as a location to do business.Both SPÖ and ÖVP are aware the right-wing Freedom Party (FPÖ) is the most likely benefiter if they fail to agree on the 2011 budget or introduce overly cruel measures forcing the middle class to bear the brunt.This is also why an increase in the value added tax (VAT) rate seems unlikely.The ÖVP announced it would present an “eco tax focus” system which would guarantee higher subsidies for renewable energy systems. Some SPÖ and FPÖ representatives have warned the conservative party was only trying to disguise higher taxation of car petrol behind this term.Austria’s budget deficit reached 3.9 per cent last year. The state debt currently amounts to around 70 per cent of its GDP, but economists recently said it was likely the recuperation of the economy meant the rate will decline to 60 per cent.The SPÖ-ÖVP coalition is under pressure to push it below 60 per cent by 2013 to match the Eurozone’s Maastricht criteria and avoid sanctions as EU leaders are set to introduce stricter federal budget regulations.