The directors of the Austrian Employment Service (AMS), Petra Draxl and Johannes Kopf, are advocating for the expansion of job foundations for the unemployed due to the deepening crisis in the industrial sector. “We need to structurally better position ourselves and have resources available,” Draxl said in an interview with APA. Despite rising unemployment numbers, the AMS will have less funding for active labor market policies in the coming year.
Job foundations aim to retrain unemployed individuals and reintegrate them into the workforce. People who face job losses, such as those at KTM or Kika/Leiner, can be helped quickly and effectively through such foundations. One example of a similar initiative was created during the closure of the Opel factory in Vienna-Aspern. Additionally, organizations like the Environmental Foundation promote the training of professionals for green jobs, independent of layoffs or specific insolvencies.
Concerns Over Another Recession Year
Following a series of negative news from the economy, the AMS shares concerns about a further worsening of the situation. “We are now facing an obviously longer economic problem, especially since we are already in our second year of recession. And I have no indicators that suggest things will improve next year,” Kopf said. If 2025 turns out to be another recession year for the Austrian economy, as opposed to the latest forecasts from Wifo and IHS, “unemployment will rise significantly,” Draxl warned. Some industries, such as the struggling automotive suppliers, are already facing contraction.
Looking ahead to 2025, there are many uncertainties regarding Austria’s economic and labor market developments. Weak business performance in parts of industry, trade, and construction, as well as tariff threats from the future U.S. President Donald Trump, complicate a potential recovery. In October, Wifo and IHS economic researchers forecasted real GDP growth of 1.0% and 0.8%, respectively, for 2025, after two years of shrinking economy. The unemployment rate is expected to rise by 0.2 percentage points to 7.2%. Whether this forecast will hold when the updated economic forecast for 2025 is presented on December 20 is still uncertain. Kopf believes that there is a greater risk of “a downward correction” than an “upward correction.”
No Need for Kurzarbeit (Short-Time Work) Yet
Despite the expected rise in unemployment next year, AMS leadership does not see the need for a new round of short-time work even if the situation worsens. Kurzarbeit is a useful tool for dealing with crisis events like the COVID-19 pandemic, but not for economic slumps like Austria is currently experiencing. “Kurzarbeit is not an economic tool,” Kopf reminded.
Less Money for Active Labor Market Policies
Despite the expected rise in unemployment, the funding for active labor market policies is likely to be reduced. The AMS board currently estimates fixed funding of 1.3 billion euros for 2025, down from over 1.4 billion euros in 2024. Measures like the qualification of unemployed people may have to be scaled back, which could lead to job losses for trainers from external education institutions that work with the AMS. However, Draxl noted that the number of job losses is uncertain at this stage.
AMS’s active labor market policy primarily includes promoting professional training and mobility, as well as temporary employment in commercial businesses or social enterprises. Unemployment benefits and emergency assistance are insurance benefits paid from the unemployment insurance fund. Due to lower AMS funding, hundreds of adult education trainers lost their jobs in 2018 and 2019.
Satisfaction with the Planned Budget
Despite the budget cuts, the AMS directors were not dissatisfied with the planned funding, as it provides some level of planning security before the government transition. “Otherwise, we would already have had to stop programs out of financial caution,” Kopf said. Additionally, there is always the option for special budgets, such as for the labor market integration of migrants. The AMS board is also actively contributing expertise to the ongoing government negotiations.
Suggestions for the Future Government
Kopf and Draxl have suggested expanding AMS-funded youth colleges. Over 5,000 young people in Vienna, aged 15 to 25, are currently honing their craft skills or preparing for the compulsory school-leaving exam or an apprenticeship.
Given the challenges ahead in both economic and budgetary policy, the AMS leaders believe that further efforts are needed on the labor market. For example, in light of digitalization and the ecological transformation—two of the most important trends in the labor market—employees, as well as the unemployed, should be included in qualification programs.
Labor Market Integration of Refugees
The Vienna labor market is under particular pressure. Of the 372,000 unemployed people and AMS training participants in Austria, around 155,000 live in Vienna. About 45,000 asylum seekers and individuals with subsidiary protection status were unemployed or in training, with three-quarters of them based in Vienna. Draxl noted that the proportion of basic education in the Vienna AMS funding budget has “increased enormously.” To better distribute recognized refugees across Austria, the AMS leadership advocates for nationwide alignment of social assistance benefits and a two- to three-year residency requirement in the federal states. The AMS board also emphasized the expected decline in the working-age population over the next decades. This decline cannot be compensated solely by labor from outside the EU through the Red-White-Red Card, so the AMS must focus on all potential workforce resources, including part-time workers, refugees, and the “silent reserve” (those not actively seeking work despite wanting a job).
Additionally, the issue of apprenticeship shortages is particularly relevant in the capital. In Vienna, there are five times more applicants for apprenticeships than available positions. In contrast, regions like Tyrol, Upper Austria, and Salzburg have more offers than seekers.
