Austria's wages are rising rapidly: Danger to competitiveness!

Austria's wages are rising rapidly: Danger to competitiveness!

Austrian wages are rising faster than in the euro area, as a current analysis by Agenda Austria shows. According to the data, collective bargaining wages in Austria are expected to be 3.7% higher than the previous year by the end of 2025. In comparison, an increase of just 1.6% is forecast in the euro area. However, these significant wage increases in Austria could lead to a growing cost disadvantage compared to competing countries.

A central problem for domestic companies is the insufficient increase in labor productivity. This is not enough to compensate for the higher labor costs. In fact, unit labor costs in Austria have increased more since 2020 than in many relevant Western European countries. Jan Kluge, an economist at Agenda Austria, warns that “Made in Austria” is becoming more expensive, which could lead to customers turning to alternative suppliers.

Impact of wages on the economy

The development of wages cannot be viewed in isolation; it is significantly influenced by factors such as productivity and inflation. Rising wages lead to higher labor costs for companies. This can have a negative impact on competitiveness, especially if external factors such as rising raw material and energy prices increase the burden on companies and employees. However, a simultaneous increase in wages, prices and labor productivity indicates solid economic development.

Unit labor costs, which describe the relationship between labor costs and labor productivity, are an important indicator of international competitiveness. These costs include not only wages, but also additional wage costs, capital formation benefits, Christmas bonuses, vacation pay, continued payment of wages in the event of illness and travel allowances.

Challenges in social partnership

The central task of the social partnership in the coming years will be to reduce the wage gap with the Eurozone. This is crucial in order to minimize Austria's competitive disadvantage and to sustainably stabilize the economy. Pressure on companies to increase wages could become a challenge in an increasingly globalized market, as competitiveness must always be a priority.

In summary, although Austrian wages are increasing, this could continue to happen at the expense of international competitiveness. The development of wages, on which productivity and inflation depend, remains a central issue for the domestic economy agenda-austria and working world portal clarify.