Measures are needed to prevent relegation, said IV President Stefan Pierer at the traditional press conference at the start of the year. Above all, he demanded from politicians that increased performance and full-time work should be tax-rewarded and not underperformance, nothing or little work. Otherwise, the “dream of prosperity without performance will become a nightmare.”
The cost gap with other countries in Europe is increasing enormously due to inflation (“poison” for exports), high energy costs, unit labor costs and taxes as well as bureaucracy, and Austria’s competitiveness is falling massively, said IV managing director Joachim Haindl-Grutsch. The location is on the “hard shoulder with hazard lights on.”
Leading companies are shifting value creation and investments abroad, staff are being cut, this is all happening gradually and increasing, said Pierer: “At some point we will be Hallstatt.” According to him, medium-sized contract manufacturers and suppliers who cannot go international are particularly under pressure. The situation among small and medium-sized companies is “almost depressed”. The number of bankruptcies is increasing.
Austria and especially Upper Austria with their high export share also depend heavily on international developments. “The US and EU elections as well as the Austrian National Council elections are of central strategic importance for the industry,” said Pierer. In the election year in Austria there is a risk of a standstill that cannot be afforded. Even worse, expensive election gifts might be distributed once more. In the EU it is regarding a directional decision, currently “Europe is regulating itself to a standstill”.
China’s exports are on the rise
In the USA, Pierer is worried regarding the “hostile” blocs between Democrats and Republicans. There he is hoping for a “soft landing” economically, i.e. no recession. China is still struggling with problems such as the real estate crisis and high youth unemployment. And: “China has built up large excess capacities in production with technological standards that are at least as high as those in Europe. This means that the Chinese will attack exports in the next few years.” Europe should not primarily think regarding punitive tariffs on electric cars from China, for example, but rather, like the USA with its “Inflation Reduction Act”, make investments in plants in Europe a prerequisite.
Pierer fears that there will be no economic growth in Austria this year either. “2024 will be a year of decision-making,” says the President. According to IV, the “repair instructions” that Chancellor Karl Nehammer should follow in his speech in Wels planned for January 26th (“Austria 2030”) include: tax incentives for overtime; Step-by-step plan to reduce the tax and contribution ratio from 43 to less than 40 percent; massive reduction in non-wage labor costs; state debt brake; De-bureaucratization and digitalization in the public sector; Influx of qualified skilled workers (currently often “uncontrolled immigration of low-skilled people”); expand dual training; Continue to expand research budgets; Securing energy supplies and expanding infrastructure; technology-open green transformation.
From the IV’s perspective, are there also positive aspects? The expected interest rate cuts by the central banks would “help everyone” and might support the economy in the second half of the year, said Pierer. “I also hope that there will be a rethink at the political level in Europe because the situation has become so difficult.”
