Austria’s Domestic Industry Faces Recession: Challenges and Solutions

The domestic industry is facing a range of challenges, including falling production, a lack of orders, and high unit labor costs. Siegfried Menz, chairman of the federal industry division in the Chamber of Commerce (WKÖ), recently declared that the industry is in recession and may remain so for an extended period. Industry representatives are urging politicians to address these issues by improving framework conditions.

According to preliminary data, Austria’s manufacturing sector saw a decline in production value in 2023 compared to the previous year. The energy trade associations, metal technology industry, paper, wood, non-ferrous metal industries, and chemical industry experienced particularly negative developments. In addition, incoming orders from abroad have fallen, putting pressure on production in 2024. Despite this challenging environment, employment figures in the industry have remained relatively stable, with around 473,000 people employed in 2023.

Companies are working hard to retain skilled workers despite difficult production situations. However, industry representatives warn that current unit labor costs and labor costs could affect competitiveness if production continues to stagnate or decline. They predict a challenging year ahead in 2024 with negative or stagnant economic assessments for the current year. To support competitiveness, they are urging politicians to extend electricity price compensation and ensure energy security while providing more funding for research and development. Additionally, they advocate for a reduction in non-wage labor costs by financing the family burden equalization fund (FLAF) through the public budget at a level equivalent to Germany’s non-wage labor costs.

To further support growth and competitiveness in the long term