Spring Forward, Fall Back
The cost-of-living crisis, climate change, Ukraine, salary negotiations, and a possible recession look set to dominate Austria's political agenda this autumn
Servus!
And welcome back. This newsletter and Austria’s political class are back from their summer vacations. Parliament was recalled on August 30 for a special sitting, called by the Social Democratic Party (SPÖ) and the far-right Freedom Party (FPÖ), about the cost-of-living crisis. The government rejected proposals brought by the opposition including a rent freeze that would last until 2025, a temporary repeal of value added tax (sales tax) on certain grocery items, and a cut in the duty applied to petrol and diesel.
Instead, the government surprised everyone by announcing it had finally come to an agreement on a possible rent price cap. Under the agreement between the People’s Party (ÖVP) and the Greens, rent increases in regulated apartments would be capped at 5 percent for the next three years beginning in 2024. Too late, of course, for those who saw their rents go up by 5.5 percent at the beginning of July, and following a series of bad economic figures (see below) and with inflation projected to fall gradually between now and the end of 2026, this measure may end up being redundant in any case, instituted a day late and a dollar short.
On the other hand, it is to the coalition’s credit that it was able to reach an agreement at all, given that the ÖVP-Green government is in its twilight stage with elections due in about a year. The government not only announced a rent price cap, but also a road tax and annual national train ticket price freeze and a series of financial incentives to encourage municipalities to halt potential increases in fees for water and trash collection. Help for local government will be offset by a tax on energy companies’ excess profits.
The coalition, then, is here to stay. That’s what the Austrian people want and August’s bad economic news all but ensures it. It’s what the chancellor wants, too, or so he says. Karl Nehammer used his Sommergespräch with the ORF, which aired last week, to defend his record in government handling the twin inflation and energy crises, commit the ÖVP to governing with the Greens until Austrians go to the polls next year, and again reject the notion that his party would make FPÖ leader Herbert Kickl chancellor. Nehammer also announced another €4.5 billion in childcare funding, though where that money may come from and how it might be distributed remain unanswered questions.
The political battlefield, then, looks much the same after the summer as it did before it. The ÖVP’s fate and electoral fortunes remain hostage to a series of ongoing corruption investigations. The war in Ukraine continues, as does Austria’s internal conflict about its role in that war and place in Europe’s defense alliances. Both the SPÖ and FPÖ remain deeply skeptical about Austria joining the European Sky Shield Initiative, which Nehammer believes is vital for the country’s national security. This summer, Austria was hit by freak weather events, namely flooding in the west and south of the country, but a comprehensive climate change bill remains a distant dream.
The autumn will also be defined by the annual round of collective bargaining agreement negotiations between labor and industry. The latter, as well as economists at Austria’s national bank, are keen for the trade unions to be cautious in their wage demands as to avoid a wage-price spiral in a country whose rate of inflation remains above the European average. This request, however, amounts to asking unions to give up their raison d'être: securing the best deal for their members. The first round of negotiations for workers in the metal and machine building industries at the end of September will set the tone for the rest of the collective bargaining season.
Bis bald!
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The new, adapted COVID-19 booster shot targeting the Omicron XBB.1.5 subvariant has been approved by the European Medicines Agency (EMA) and the vaccine should be available in Austria next week (beginning September 18). There are three ways Vienna residents will be able get the jab:
From your local doctor. The list of doctor’s offices conducting COVID-19 vaccinations can be found here.
Via the City of Vienna’s vaccination service. (Note: The city’s network of COVID-19 vaccination centers has been closed and vaccinations are only being carried out at the Impfstelle Town Town.)
At one of the Österreichische Gesundheitskasse (ÖGK)’s health centers.
In particular, Austria’s National Vaccination Board recommends that those over the age of 60, those with pre-existing conditions, and the previously unvaccinated seek out the new COVID booster. The COVID-19 vaccine remains free.
Bad Numbers
GDP fell by 1.1 percent in the second quarter of 2023 due to poor performance in the trade and industrial sectors. Inflation climbed to 7.5 percent in August compared to 7.0 percent in July, while the unemployment rate increased to 6.1 percent.
Selmayr Spanked
Austria’s foreign minister summoned Brussels’ man in Vienna for a dressing down last week. Martin Selmayr, who heads the European Commission’s office in Austria, described the country’s ongoing purchasing of Russian gas as sending “blood money” to Putin.
Safe As Houses
Owner-occupied property up to a value of €1.5 million will be exempt from the Social Democratic Party (SPÖ)’s planned wealth and inheritance taxes. Party leader Andreas Babler clarified last week that both taxes will only kick in at €1 million, property excluded.