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Austria unveils €2 billion relief package to fight rising cost of living

There will be changes to the commuter allowance and increasing public transport investments, but the package has also been criticised.

metro in austria station mask men
Austria has decided on a relief package for residents. (Photo by ALEX HALADA / AFP)

As the cost of living increases in Austria and Europe in general, governments scramble to halt inflation and galloping energy prices. Austria this weekend unveiled a package with some €2 billion promised as a relief for citizens. 

The primary measure is a reduction in taxes on natural gas and electricity by the end of June 2023, which is expected to cost €900 million and should cut tax by 90 per cent.

Additionally, there will be a 50 per cent increase in the commuter allowance and an increase in the “commuter euro”, which reduces income tax levies by €2 per kilometre distance between the place of residence and workplace. These should cost €400 million.

READ ALSO: UPDATED: How to save money on fuel costs in Austria

The package includes a €150 million investment in public transport to increase offers and lower prices. However, the government hasn’t given any specific details on these proposals.

Some €120 million will be spent in helping self-employed, small and medium-sized companies with high fuel costs switch to more sustainable energy sources. Finally, a further €250 million is set to be invested in wind and solar power generation.

One-off payments

This is the second relief package announced in less than 30 days by Austrian authorities.

The country’s National Council approved late last month one-off payments to ease the current cost of living crisis for specific households in the country.

Almost every Austrian who earns no more than €5,670 per month will receive a voucher for €150 euros to cushion the increased energy bill. Low-income people should get €300 after the €1.7 billion expense was approved.

READ ALSO: Cost of living: Petrol crosses €2 per litre in some parts of Austria

Coalition talks

It has taken a lot of negotiation and persuasion to reach an agreement between both coalition members, several Austrian media sources reported.

ÖVP spokespeople stated that their junior partners, the Greens, were reluctant to provide any financial support to drivers. A reduction in VAT on fuels was also off the table because it wouldn’t be allowed under European law, Kurier said.

“The targeted measures don’t provide relief to those who drive their second-car SUV through the city centre for fun”, but benefits people on their way to work, said Environment Minister Leonore Gewessler (Greens).

She reiterated that rising costs were mainly due to the Ukrainian conflict and Russia’s policies. “It is extremely important to name the culpable person for this price increase: Vladimir Putin”, the politician said.

In the future, Austria should diversify its energy matrix to reduce its dependence on Russian gas, especially with expanding renewable energies, the minister said.

“The sun and the wind don’t send us an invoice. Gazprom does”, she added.

Numerous reactions and criticism

The package did not come without some criticism.

The ​​Austrian trade union federation (ÖGB) stated the cuts were too timid and pointed out increasing the commuter allowance helped higher earners more than those on lower salaries, in strong disagreement with the government.

SPÖ spokesperson for energy matters also stated that the measures would benefit higher earners. Alois Schroll said in a press release that the package brought only small steps that wouldn’t properly “counteract the wave of inflation or really relieve people”.

For the Neos, the package is “cosmetics, not sustainable relief”, and FPÖ leader Herbert Kick also said that “too little relief is received by the people affected”.

Environmental organisations such as WWF criticised the lack of measures to save energy, especially the incentives for commuters who drive instead of using public transportation.

Useful vocabulary

Pendlerpauschale – commuter allowance
Entlastungspaket – relief package
Steuer – tax
Umweltorganisationen – Environmental organisations

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For members

LIVING IN AUSTRIA

How much do you need to earn for a good life in Austria?

Austria is known as a country with a high standard of living, but it also comes with a high cost of living. Here’s an overview of what you can expect to earn in Austria.

How much do you need to earn for a good life in Austria?

As with most things in Austria, the question of ‘what is a good salary?’ is difficult to answer as the cost of living (and wages) can vary between states and cities.

For example, the east of Austria is typically much cheaper than the west for housing (with the exception of Vienna). And those living in cities often have easier – and cheaper – access to public transport when compared with people living in rural areas. 

READ ALSO: ‘Bad-tempered locals’: Vienna ranked the world’s ‘unfriendliest city’

Childcare is also something to consider with huge differences between Vienna, where there is access to heavily subsidised services, and places like Tyrol where childcare costs more.

To delve a bit deeper, we looked at the data to find out the average salary in Austria and how it differs between professions and locations.

What is the average salary in Austria?

In 2021, the average gross annual salary in Austria was €44,395, according to the latest data from Statistics Austria

However, in the latest survey by online job platform Step Stone, the average gross annual salary in Austria is €49,609.

The Step Stone survey then broke it down further by industry with those working in pharma earning the most at €60,504. This was followed by energy at €60,345, medical technology at €59,106 and banking at €58,711.

The industry with the lowest average annual salary is hotels/gastronomy at €37,546, followed by agriculture at €39,779 and tourism at €43,965.

FOR MEMBERS: REVEALED: The best and worst districts to live in Vienna (as voted for by you)

Occupation also plays a part with people working in management earning the most – on average €66,768. Consulting came second at €53,721.

And like many other European countries, the gender pay gap in Austria prevails. The average annual salary for a man is €52,633 and for a woman it is €44,330.

Furthermore, the top earning city in Austria is Bregenz in Vorarlberg with an average annual salary of €54,620. When comparing the west of Austria with the east, the median salary in Vorarlberg is €46,450, whereas in Burgenland it is just €39,100.

What is the average cost of living in Austria?

Many international residents will find everyday living costs in Austria to be expensive, especially for those that come from countries with a much lower cost of living.

Inflation has also been rising steadily in Austria throughout 2022, leading to some steep rises in prices for groceries, housing costs and energy.

READ MORE: EXPLAINED: 10 ways to save money on your groceries in Austria

However, the average cost of living varies across the country, depending on the location. For example, Vienna and Innsbruck in Tyrol are two of Austria’s most expensive cities, but more affordable places to live are Graz in Styria and Klagenfurt in Carinthia.

In Vienna, the average price for a one bedroom apartment in the city centre is €915, going up to €2,000 for a three bedroom apartment, according to Expat Arrivals.

Whereas in Graz, the average cost of a one bedroom city centre apartment is around €609, and a three bedroom apartment is €1,170.

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