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MINIMUM WAGE

Will the EU force Austria to adopt a minimum wage?

Austria, which does not have a minimum wage, is resisting efforts at a European Union level to put a minimum in place.

A waitress serves guests at a roof-top cafe in Vienna. (Photo by JOE KLAMAR / AFP)
A waitress serves guests at a roof-top cafe in Vienna. (Photo by JOE KLAMAR / AFP)

The EU Commission is proposing each country adopt a minimum wage set at 50 per cent of the average wage, or 60 percent of the median income in each member state.

Currently, Austria, along with Sweden and Denmark, has no minimum wage. However, Austria has the most collective agreements in the EU, with 98 percent of employees covered in this way.

This means in Austria, minimum standards are not set by law, but by collective or individual bargaining with the employer.

READ MORE: What you need to know about the ‘minimum wage’ in Austria

However, Austria has resisted these efforts. 

The Labour Minister has said he does not support a minimum wage for Austria, but trade unions and the Chamber of Labour are in favour.

Austria’s Labour Minister Martin Kocher said on Wednesday the EU will not be able to force Austria to create a minimum wage along with other countries across the bloc, and he rejects the proposal.

The minimum wage directive will be discussed at an EU summit on Friday. 

Can the EU force Austria to adopt a minimum wage? 

This does appear to be somewhat of a grey area, with Austria saying it is up to them to set labour policy and the EU saying the same. 

Köcher said this week that the EU lacks the power to shape the minimum wage in Austria, saying that labour policy is the responsibility of EU member states. 

The EU however says it has the power to do so under article 153(5) of the Treaty on the Functioning of the EU (TFEU).

This section gives the EU power to shape working conditions in member states, provided they are ‘proportionate’ and ‘subsidiary’ – i.e. they do not go too far and they do not interfere in areas member states can organise themselves. 

Legal commentators are split on the issue, meaning that if the policy does come into place, it could be headed for the courts. 

Should Austria impose a minimum wage? 

Austrian employee representatives are said to be in favour of the introduction of a minimum wage as many bordering countries have significantly lower average wages, making Austria a hotspot for labor mobility, the Wiener Zeitung newspaper reports.

Generally, collective agreements will be negotiated by trade union representatives and will apply to an entire industry or in an entire state, meaning that you yourself do not need to negotiate your wage. 

Workers from Central and Eastern Europe often move to Austria, putting the wage level under pressure.

Austria’s Chamber of Labour (AK) and the Federation of Trade Unions (ÖGB) have called for Austria to adopt an EU minimum wage along with greater wage transparency in order to close the gender pay gap between men and women. 

In terms of the gender pay gap, women in Austria are third from the bottom of the table in the EU, earning an average of 19 percent less than men.

Across the EU, women earn an average of 14 percent less than men. At the current rate, the World Economic Forum has calculated that it would take 135 years to close the gender pay gap.

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For members

WORKING IN AUSTRIA

EXPLAINED: How to register as self-employed in Austria

Working as a freelancer in Austria is an attractive prospect for international residents. But the process might not be as easy as back home. Here’s what you need to know.

EXPLAINED: How to register as self-employed in Austria

Anyone that has set up a business as a freelancer in Austria will know how confusing it can be. Especially if they are from countries like the UK and US where starting a business as a sole trader is fairly easy.

In Austria though, there are several steps to registering as self-employed, with limited information in English on how to navigate the process. 

So to help foreigners in Austria get started, we spoke to Vienna-based business consultant Miglena Hofer to break down the steps when registering as self-employed.

READ ALSO: EXPLAINED: What can I deduct from my tax bill in Austria?

Obtain a business licence (or not)

The first step to becoming self-employed in Austria is finding out if you need a business licence.

Sounds simple enough, right? But for those without strong German language skills, it can quickly become tricky.

Miglena Hofer told The Local: “There is a lack of information about the process in English, especially explanatory information. 

“In Austria there are also different types of self-employed people. The two main types are business owner and operator, and the new self-employed [such as writers, photographers].” 

“Almost everything requires a business licence in Austria. Even if you only intend to cover costs with your work, it still counts as a business.”

READ NEXT: ‘Brutal’: What it’s really like to learn German in Austria

The Ministry of Labour and Economics has a list of regulated trades that need a business licence in Austria (only available in German). Professions include electrician, hairdresser, florist and masseuse. 

If you do need a business licence, an application has to be submitted by the first day you plan to start working in your business. 

To apply for a licence, visit the Gewerbe­informations­system Austria (Business Information System Austria). This website has the option to translate the information into English.

Any professions that don’t require a business licence, like journalists, artists and teachers, are classed as new self-employed (Neu Selbständige) and can move on to the next steps.

Notify the tax office 

This involves filling in the form Verf24 and sending it to the tax office (Finanzamt) to inform them that you are self-employed. There is a deadline of four weeks after you have started operating for this part of the process.

You also have to make an appointment at the WKÖ (Austrian Economic Chamber) and become a member. This involves paying an annual fee (which varies depending on the type of business) and in some places, like in the Alps, you might have to pay a tourist tax.

However, finding information or help in English at this stage can be difficult, and business consultant Miglena advises anyone struggling to reach out for help.

FOR MEMBERS: Digital nomad visas: How does Austria compare with other countries?

She said: “Many Austrians refuse to give advice in English, which is a curious thing. This applies to all kinds of professional services, but it’s important that we are understood.

“I don’t want people to be afraid. I want to make starting a business in Austria easy. Once you know how to do it, it’s fine. But it’s easy to feel lost and be overwhelmed by legal German words.”

Set up social insurance

The final stage in the process is to register with SVS – the social insurance fund for self-employed people in Austria.

It is mandatory for everyone living in Austria to have social insurance (or comprehensive private health insurance). It gives people access to public health care and includes pension contributions.

Registering with SVS has to take place within four weeks from the date of starting a business. You will then receive an e-card (if you don’t already have one) and start paying social insurance bills on a quarterly basis.

The good news about SVS payments though is that they are tax deductible, so don’t forget to include them in your bookkeeping.

Useful vocabulary

Business registration – Gewerbeanmeldung

Business licence – Gewerbeschein

New self-employed – Neu Selbständige

Social insurance – Sozialversicherung

Tax – Steuer

Tax office – Finanzamt

Useful links

Austrian tax office

Business Information System Austria (GISA)

Social insurance

Self-employed in Austria

Ministry of Labour and Economy

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