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23.11.2017

UniCredit Bank Austria Analysis:
Austrian labor market would benefit from greater worker mobility

  • In terms of qualifications, the alignment of supply and demand on the Austrian labor market has been stable since 2011
  • The alignment of labor supply and demand between the federal states has deteriorated
  • To achieve an even distribution of job-seekers to job vacancies, around 30 percent of job-seekers would have to relocate to different federal states
  • An increase in mobility from east to west could compensate for the lack of qualification-related alignment in sub-segments such as tourism, retail and some business services

The positive effects of economic recovery are now being felt distinctly on the Austrian labor market. From its peak of 9.2 percent at the start of 2016, the unemployment rate has fallen to a seasonally adjusted 8.6 percent in autumn 2017. While the number of job-seekers fell by almost 20,000 in this period, the number of job vacancies has increased sharply by around 24,000.

This means that, on the Austrian employment market, there has been a disproportionately strong increase in job vacancies on the one hand, and a relatively slowly falling rate of unemployment on the other. For the first time since 1990, the number of job vacancies has increased faster than the number of job-seekers has fallen. In a new study, UniCredit Bank Austria economists are investigating the reasons behind this structural change, which represents an obvious deterioration in the alignment of labor supply and demand on the Austrian labor market.

“The distribution of the labor supply to the demand in the different federal states has deteriorated significantly in the past five years”, said UniCredit Bank Austria Chief Economist Stefan Bruckbauer, speaking about the key results of the new study. “And yet, in Austria, there has been no deterioration in the alignment between supply and demand due to a lack of qualifications. The so-called qualification mismatch has not changed in the past five years. Only the regional mismatch has increased sharply, i.e. the distribution between the federal states”, said Bruckbauer. The reason for this is the sharp 10 percent increase in the labor supply since 2011, which is also responsible for the slow fall in the unemployment rate.

Alignment of supply and demand stable with regard to qualifications
The discrepancy between supply and demand on the labor market due to no training, inadequate or unsuitable training or even over-qualification, has not increased in Austria since 2011. The mismatch indicator calculated by the Bank Austria economists is relatively stable during this period, at 0.18. This means that just less than every fifth job-seeker would have to change their educational qualifications in order to achieve an even distribution of the ratio of job-seekers to job vacancies across all education categories in Austria.

The extent of the mismatch between supply and demand across individual industries in Austria also barely changed between 2011 and 2017. “The sector-related mismatch, which can also be viewed as a qualification mismatch, has indeed increased in Austria since 2011, but only very slightly”, says UniCredit Bank Austria economist Walter Pudschedl.

Increasingly uneven distribution of job-seekers to job vacancies between the federal states
A look at the federal states reveals that the regional mismatch within Austria has increased and is now considerable. Based on the study by the UniCredit Bank Austria economists, the indicator calculated for this rose from 0.20 at the start of 2011 to 0.29 in autumn 2017.

“From 2010 and then again in the year 2015, the regional mismatch in Austria increased significantly. Despite a slight improvement in the current year, around 30 percent of job-seekers in Austria, nearly 120,000 people, would have to look for work in a different federal state in autumn 2017, in order to achieve an even distribution of the ratio of job-seekers to job vacancies across all federal states”, says Pudschedl.

The increase in the regional mismatch in Austria was most significantly influenced by the development in Vienna. Over 100,000 people, around two-thirds of the job-seekers in Vienna, would have to move away from the Viennese employment market in order to reduce the ratio of job-seekers to job vacancies in the capital city to the average level. From Burgenland (over 30 percent of job-seekers), Carinthia (20 percent) and Lower Austria (10 percent), job-seekers would also have to relocate to federal states with a below-average ratio of job-seekers to job vacancies in order to achieve an even distribution across all Austrian federal states.

Increased worker mobility could achieve a better balance
The increase in the regional mismatch can also be seen primarily in the consideration of education categories and different industries. The comparison of job vacancies and job-seekers shows a clear increase in the regional mismatch between the federal states across almost all education categories, but most particularly in the field of secondary schools and tertiary education.

“The regional mismatch has also increased noticeably in relation to the economic sectors in Austria, most significantly in the production sector and construction. The highest regional mismatch, however, is currently in the service sector”, says Pudschedl. In the service sector, around a third of job-seekers would have to move to different federal states to achieve an even distribution of the ratio between job-seekers and job vacancies. In particular in retail, tourism, business services and in the field of health and social care, there has been a divergence between supply and demand on the employment market between the federal states since 2011.

“With an increase in worker mobility, we would be able to achieve a better balance between labor supply and demand between the federal states, thereby compensating for a lack of qualification-related alignment in sub-segments”, says Bruckbauer. In autumn 2017, there was a ratio of 6.7 job-seekers to one job vacancy on average. Having increased to a value of up to 16 in 2014, the figure has therefore now returned to a pre-crisis level. The increase in job vacancies in recent months is therefore not unusual, taking into account the strong rise in employment.

“The competition for jobs indicates a clear east/west divide. An increase in worker mobility among job-seekers from Vienna, Lower Austria, Burgenland and also Carinthia towards the west could make a significant difference in alleviating the regional shortage of qualified workers in some industries, such as in tourism, retail or in some business services”, concludes Bruckbauer. This would kill two birds with one stone – it would relax the situation on the labor market in the east and would lead to faster and higher quality recruitment in the west.

The UniCredit Bank Austria analysis “Shortage in surplus: Increasing structural problems on the Austrian labor market?” is now available to download on our homepage in German only.

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Enquiries: UniCredit Bank Austria Economics & Market Analysis Austria
Walter Pudschedl, Tel. +43 (0) 50505 - 41957;
E-mail: walter.pudschedl@unicreditgroup.at