Pensioners to get more in 2012

The government and pensioners’ union officials agreed to increase pensions next year.

Karl Blecha, who represents the Social Democratic pensioners, and his conservative association partner Andreas Khol met Social Democratic (SPÖ) Chancellor Werner Faymann and People’s Party (ÖVP) Vice Chancellor Michael Spindelegger for talks in Vienna yesterday evening (Mon). ÖVP Finance Minister Maria Fekter and SPÖ Labour Minister Rudolf Hundstorfer also attended the gathering.

Blecha announced afterwards that next year’s pensions would be 2.7 per cent higher on average than this year’s rates. He pointed out that low pensions would be increased more while top retirement payments would not inch up less than 2.7 per cent. Blecha and Khol said ahead of yesterday’s talks they wanted the government to compensate for the inflation rate.

Austria’s inflation was 2.7 per cent on average in the past 12 months but significantly higher in the second half of this time span. Economists expect the rate to decline in the coming months. The inflation identifies the average increase of prices for products and services on offer in a country. Research has shown that goods in high demand among elderly people such as certain foodstuffs became more expensive than other products in the past few months.

The heads of Austria’s pensioners’ unions said they were happy about yesterday evening’s agreement which would confront the government coalition with additional annual costs of one billion Euros. The negotiating teams were expected to continue talks next week to await the result of the current civil servant salary debate. Employee representatives informed SPÖ Minister for Public Servants Gabriele Heinisch-Hosek they wanted an increase of 4.6 per cent. Heinisch-Hosek rejected the offer as “inappropriately high” but refused to reveal which increase she suggested.

The agreement between Blecha, Khol and the government comes in the midst of a heated debate about how the Austrian pensions system could be financed in the coming years and decades. Austrian men retire at an average age of only 58.9 years despite the country’s official retirement age of 65. Figures provided by the Organisation for Economic Co-operation and Development (OECD) show that women living in the alpine country stopped working aged 57.5 on average instead of an age of 60.

Federal statistics highlight an increasing number of people opting for early retirement due to mental illnesses such as depression and burnout. Hundstorfer said the number of invalidity pensions must be reduced as the pressure on the minister to avoid a collapse of the pension system as a whole is increasing.

Only four in 10 Austrian men and women aged between 55 and 64 have a job. This means that the government must do without their income taxes and payments into the social system. The state is forced to pay unemployment subsidies or pensions to them instead. More than seven in 10 people of this age group living in Sweden have a job. The Scandinavian country does best in this regard in European comparison. Austria spent 85 billion Euros on social services like pensions, public health insurance and support for jobless people in 2009, 45 billion Euros more than in 1990.

The agreement to increase pensions by 2.7 per cent on average in 2012 comes weeks after metal industry representatives avoided a continuation of strikes by accepting a 4.2 per cent wage hike. The accord stood at the end of a final discussion between unionists and industry officials which lasted 14 hours.

Rainer Wimmer of the PRO-GE Union revealed last month that metal workers who earned comparably little would receive 5.3 per cent more from 1 November 2011. The salaries of those who raked in above average incomes improved by just 3.8 per cent at the beginning of this month. Negotiators also agreed to increase the metal industry’s minimum wage from 1,515 to 1,583 Euros.

The agreements – which were welcomed by Federal Trade Union Federation (ÖGB) President Erich Foglar – came after 80,000 employees of metal industry firms across the country participated in strikes for several days. Around 200 companies were affected by their decision to down tools.

Austria’s retail sector – which employs 500,000 people – is currently holding wage negotiations. Most of the trade’s employees are women. Union official Manfred Wolf made clear before meeting company officials for salary discussions that “there is enough to share out” in his opinion. He added: “I see no reason for gentle reluctance.”