Current location analysis by Bank Austria Group Economics: As an economic location, Vienna ranks among the top 10 European cities
- The standard of living is the highest in Austria and also one of the highest in Europe
- The federal capital should cope better with the crisis thanks to its structural advantages
- Second-highest R&D ratio in Austria, the EU’s “Barcelona goal” has already been achieved
In recent years, the city of Vienna has successfully exploited its geographical position at the centre of a Europe that is growing ever closer and today it ranks among the top 10 European cities in terms of prosperity, location quality and structure. That is the conclusion of the latest location analysis by Bank Austria Group Economics, which was presented today by Renate Brauner, Vienna’s Deputy Mayor, Helmut Bernkopf, a member of Bank Austria’s Managing Board and Stefan Bruckbauer, Bank Austria’s deputy chief economist. Vienna should also be able to cope with the current economic crisis better than the other provinces thanks to its structural advantages. Namely, the city’s economy is dominated by sectors such as the retail trade, business-oriented and other services, which are less badly affected by the economic slowdown. Thanks to its lower export orientation, the Viennese economy is feeling the global economic recession less.
In the Bank Austria location analysis, Vienna scored in the “prosperity” category, in particular. With a per capita GDP of roughly EUR 43,500, the federal capital’s standard of living is 125 per cent of the average for Austria as a whole and consequently is the clear leader among all the provinces. Its performance at international level is equally gratifying. Allowing for purchasing power differentials, Vienna achieves more than 165 per cent of the EU average. Of the structurally comparable cities, only Munich ranks ahead of Vienna. “A transparent administrative structure, an efficient infrastructure, moderate costs, highly qualified employees and high levels of productivity have made Vienna an undisputed supra-regional economic centre. “These success factors will also help us in the current difficult economic environment”, says Deputy Mayor Renate Brauner.
Vienna’s economic growth has averaged 2 per cent per year since 2000. This figure is slightly below the Austrian average because of the comparatively small industrial sector and a low export orientation. Growth in the Austrian capital is driven by knowledge-based services, the manufacture of technologically intensive physical goods and a sound consumer goods industry; a factor, which should bring the Viennese economy above average results in 2009 and 2010. Vienna also coped better with the bursting of the dotcom bubble in 2001/2002 than most other provinces.
Structural advantages apparent in the crisis on the employment market
“Vienna’s structural advantages are also apparent on the employment market”, says Helmut Bernkopf, a member of the Bank Austria Managing Board, “While the number of people in employment has already begun to fall across Austria, it is still stable in Vienna.” The same is true of regional unemployment, which has reacted less sharply to the crisis in Vienna, so far, than in the other provinces.
Despite this, the federal capital has opportunities for improvement in the second target figure in the comparison of locations, namely the employment market. While the employment rate of 79.3 per cent is well above the Austrian average of 71.2 per cent and a sharp rise in employment was recorded during the boom times of recent years, the above-average unemployment rate and the below-average ranking in the international comparison of cities indicate potential for improvement on the employment market.
En route to a modern urban economy
“The city of Vienna is making consistent progress in becoming a modern urban economy. The composition of the economic sectors is shifting further in the direction of higher quality”, states Helmut Bernkopf, a member of Bank Austria’s Managing Board. While low-technology and averagely low-technology sectors such as textiles are declining in importance, average quality sectors such as medical and measurement technology are becoming more and more important. Services are also enjoying rapid growth. The federal capital has now achieved the highest ratio of people employed in these growth sectors in Austria. Generally, the ratio of people employed in the manufacture of more technologically developed physical goods has risen from 48 per cent in 1995 to 57 per cent in 2008.
Although Austria is not a low wage country, employment costs are relatively moderate. They occupy the midfield among the “old” EU15. “Among competing locations, the cosmopolitan city of Vienna can point to obvious cost benefits. It offers a good range of commercial space; office rentals are even lower than some cities in Eastern Europe in some cases. Employment costs have not risen much since 2000 – only Germany ranks better in this respect”, says Stefan Bruckbauer, deputy chief economist at Bank Austria.
Innovation as a means of guaranteeing the city’s future as a location of choice
The vast range of educational opportunities and amount of research and development being undertaken there constitute a major component of Vienna’s quality as a location. With an R&D ratio of 3.2 per cent of GDP, Vienna is well above the Austrian average and consequently already fulfils the EU’s “Barcelona goal”. Even though the corporate sector ranks above the Austrian average in research and development, the federal capital also benefits from the substantial public sector. “Ranked 24th among more than 200 European regions in the EU’s regional innovation scoreboard, Vienna is Austria’s frontrunner. But we should not be satisfied with this, the efforts to establish Vienna as a top technological location must continue unremittingly”, warns the study’s author, Stefan Bruckbauer.
Population trends underline Vienna’s long-term future potential. Accordingly, the federal capital’s population will increase by over 15 per cent within the next 25 years and will provide the economy with a larger pool of potential employees. Since this population growth will be fed, most notably, by immigration from other provinces and abroad, skill-enhancing measures will be crucial to the future success of the Viennese economy.
“Location Vienna” brochure: Economic handbook and guide for development programmes
Together with the Viennese regional authorities, Bank Austria’s Economics department has prepared a detailed brochure which puts the federal capital’s attractiveness as a location, competitiveness and growth potential to the test. The second section of the “Location Vienna” brochure gives an overview of grants and development, including national development programmes and joint financing by the EU. As a member of UniCredit Group, Bank Austria has access to a global network with a particularly strong focus on Germany, Italy and Central and Eastern Europe. This guide from Bank Austria is intended to help companies to be well-equipped for impending economic challenges, irrespective of whether they are at the start-up, consolidation or expansion stage.
The “Location Vienna” brochure is one of a new series of analyses of the federal provinces available from Bank Austria branches and downloadable here.
Enquiries: Bank Austria Press Office Austria
Tiemon Kiesenhofer, Tel. +43 (0)5 05 05 ext. 52819;
Printable photos are available to download here . Reproduction free of charge.