By Monika Austaller, Tanja Elend, Halliki Kreinin
Image: Michael Gray

The recent “Brexit” referendum win as well as the rise of parties campaigning for other “exits”, can in many ways be thought of as the logical outcome of the paradoxes of the neoliberal labour relation policies that the EU has (largely) supported until now. To what extent is the direction of this discontent valid when it comes to labour relations, however? Is the EU to blame for the worsening wage share in Austria or is is simply a scapegoat?

Academics like Keune (2015) have argued that the EU is undermining itself and its traditional support for collective labour relations, social cohesion, and welfarist policies through its market oriented outlook and increasing power imbalance in labour relations. While the far-right (and for most of his campaign, anti-EU) presidential candidate Norbert Hofer was defeated in the recent Presidential Elections in Austria, there are still those on both sides of the political spectrum that wish to see an “Öxit”. Critics of the EU on the left, like the UK based Paul Embery (2016) have said that the EU is now more than ever defined “by its fanatical commitment to the rule of market forces, privatisation and the rolling back of the power of national governments,” and that the only sensible thing for any country to do is to leave the union. While in the case of the UK the EU had delivered some rights to workers and trade unions in Embery’s view, its institutionalised and inherent enthusiasm for austerity and neoliberalism reached too far. Embery was also critical of trade unions who had supported the “Bremain” campaign, as in his view they failed to fully comprehended this inherent reality about the EU, and feared losing the (few) rights they had left outside of the minimal protection of the EU. Paul Embery campaigned for a left-wing Brexit because of the EU’s neoliberal stance and worsening labour relations, but even he contended that most workplace law in regards to pay, terms and conditions, industrial relations, dismissal, and dispute settlement was outside of the remit of EU decision-making.

It is arguable that the EU as an institution has “locked-in” neoliberalism, but is it not first and foremost a scapegoat for the increased neoliberalisation of labour relations? Baldwin and Wyplosz would argue yes (Baldwin/Wyplosz 2015: 186), as establishing socially desirable labour market conditions implies economic drawbacks that are untenable for the current economic and growth-driven motivation of the Union that, thus, rather fosters labour market flexilibity and labour migration. Also the ECJ (European Court of Justice) as the central actor within this discussion has often been referring to the pro minimum EU social policy attitude promoted in the Treaty of Rome already that the pursuit of the four freedoms should never be hollowed out by national social and employment protection measures (Rhodes 2010: 299f). Although over the years balancing the two perceptions of neoliberal versus socialist policies, the ECJ´s recent conviction and direction is well shown by two “landmark” cases where regulations defended by national actors were judged “disproportionate” and “unjustified” as with regards to free trade and economic competition. In the case of “Viking”, a strike of the Finnish Seamen’s Union against a Finnish company that operated a ferry out of Helsinki as Estonian, it was ruled to be interfering with the company’s rights on the freedom of establishment. The case “Laval” was about a Latvian company building a school in Sweden with Latvian workers that were paid 40 per cent less than the locally bargained wage for Swedish workers. The swedish union´s action against the company was judged illegal on the freedom to provide services (Zahn 2008). Those 2007 ECJ decisions raise major concerns about the robustness of social rights, like the right to strike and establish standards through collective action and bargaining, which are actually defended in the EU Charter of Fundamental Rights (2000), however, not impacting on the ECJ´s decision-making at all, as those rights are already acknowledged by the Court, indicating that at the moment it is simply the Court´s ruling of “proportionality” that is at stake (Rhodes 2015: 300ff).

As applied to the case of Austria, since the second half of the 1980s and even enforced after its EU accession in 1995, a change of political goals and motivations have been observed. Especially with regards to the in Austria unique collective bargaining landscape, some policy areas where social partnership institutions collaborating with the government had been essential, were now underlying EU decision-making, suffering a great loss of power and influence in Austrian labour policy (Tálos 2015: 185ff). Furthermore, the EU accession even increased the power shift observed in Austria already since the 1980s, from employer to employee interest organisations. The economic motivation of the EU and dominant lobbyist interest policies provides employer organisations with better chances of influence in the European battle of ideas and is, besides, institutionally and financially more broadly supported than the employee representatives. This traditional tendency of EU policy in favour of economic goals, thus, impeding the European social dimension has even been more focussed in the actions of the Commission after the 2008 crises. Overall, what Hermann points out with regards to the integration process that enabled policy makers, who were backed by European capital, namely “to circumvent and erode the social rights that were achieved in the postwar decades and that represented the essence of the various European social models” (Hermann 2007: 23), has also been observed in Austria and is especially and sadly true for Austria´s formerly outstanding collective bargaining arrangements, fought for and attained after the second world war.

Thus, looking at the labour relations in Austria, it gets clear that after Austria’s Keynesian, corporatist era from the 1950s to the 1970s, neoliberal features already arose in the 1980s, when due to the oil crisis, the economy grew very slowly, prices rose, there were more unemployed. Smithin (1996 cited by Ederer et al. 2015: 36) argues that at the onset of the new era of deregulation and mobile global capital, in Austria the particularly strong position of the workers as well as the rising inflation, led to a situation where industrial capital broke the deal between workers and capital, moving instead to a “deal” with global financial capital – a turning point for Austrian labour relations. Austria’s EU succession followed fifteen years later, thus at a time when things had already been changing in Austrian political economy: According to Régulation theory, Austria has since the 1970s, and even more so since its EU integration, moved towards a fictitious accumulation regime, building on financialization. This has also had severe impacts on wage relations. The huge growth and deregulation of the Austrian financial sector made investments into financial assets more lucrative than investments into the real economy (Jäger/Springler 2012: 40). A big income share shifted from labour to capital, which together with financialization, was pushing down demand, being compensated by higher exports. Thus, the Austrian economy is presently export-driven, or an extroverted accumulation regime.

In conclusion, the EU enabled the “lock-in” of neoliberalism, also impacting industrial relations in Austria. But, tendencies of power shifting from labour towards capital had been occuring already years before, thus it was not EU accession alone that led to the worsening pay-gap and working conditions. It might be the fact that will make it more difficult to enact change, and follow a different path in the future, however.

Bibliography and further reading

  • Afonso, Alexandre (2013): Social Concertation in Times of Austerity. European Integration and the Politics of Labour. Market Reforms in Austria and Switzerland. Amsterdam: Amsterdam University Press.
  • Atzmüller, Roland/ Hermann, Christoph (2004): Liberalisierung öffentlicher Dienstleistungen in der EU und Österreich: Auswirkungen auf Beschäftigung, Arbeitsbedingungen und Arbeitsbeziehungen. Wien: Kammer für Arbeiter u. Angestellte für Wien.
  • Austrian federal chamber of labour (2016): Austrian federal chamber of labour. Online (13.11.2016):
  • Austrian institute for European law and policy (2016): Austrian institute for European law and policy. Online (13.11.2016):
  • Baldwin, Richard/Wyplosz, Charles (2015): The Economics of European Integration. 5th Edition. London: McGraw Hill Education.
  • Becker, Joachim (2002): Akkumulation, Regulation, Territorium. Zur kritischen Rekonstruktion der französischen Regulationstheorie. Marburg: Metropolis Verlag.
  • Boyer, Robert (Ed.) (2002): Régulation theory: the state of the art. London: Routledge.
  • Dicken, Peter. (2015): Global Shift. Mapping the Changing Contours of the World Economy (7th Ed.). London: SAGE.
  • Diendorfer, Gertraud [Red.] (2000): Bruno Kreisky: seine Zeit und mehr, era and aftermath. Innsbruck: Studien-Verlag.
  • Eckstein, Harry (2000): “Case Study and Theory in Political Science.” Case Study Method. Roger Gomm, Martyn Hammersley and Peter Foster (Eds.). 119-. London: Sage Publications.
  • Ederer, Stefan/Stockhammer, Engelbert/Cetkovic, Predrag (2015): 20 Jahre Österreich in der EU – Neoliberale REgulationsweise und exportgetriebenes Akkumulationsregime. In: BEIGEWUM (Hg.): Politische Ökonomie Österreichs. Kontinuitäten und Veränderungen seit dem EU-Beitritt. Wien: Mandelbaum Verlag.
  • Embery, Paul (2016):  “Why on earth would socialists support the neoliberal, undemocratic EU?” OpenDemocracyUK. 10.05.2016. Online (1.2.2017):
  • etui, european trade union institute (2016): Industrial Relations in Austria: Background Summary. Online (4.2.2017):
  • Europäische Union (2015): Beschäftigung, Soziales und Integration. Online (1.2.2017):
  • Hayek, Friedrich A. (1948): Individualism and Economic Order. London: The University of Chicago Press.
  • Hermann, Christoph (2007): “Neoliberalism in the European Union: Thematic Paper.” Dynamics of national employment models (DYNAMO) Project. Working Life Research Centre Forschungs –  und Beratungsstelle Arbeitswelt, Vienna. (accessed: 02.02.2017)
  • Hyman, Richard (2015): Three scenarios for industrial relations in Europe. International Labour Review, 154(1), 5-14.
  • Katzenstein, Peter J. (1987): Corporatism and Change: Austria, Switzerland, and the Politics of Industry. Ithaca: Cornell University Press.
  • Keune, Maarten (2015): “Shaping the future of industrial relations in the EU: ideas, paradoxes and drivers of change”. International Labour Review. 154 (1).
  • Onaran, Özlem (2008a): The Effects of Globalization  on Employment, Wages and the Wage Share in Austria. Study Commissioned by the Chamber of Labour Vienna. (accessed: 02.02.2017)
  • Onaran, Özlem (2008b): “The effect of foreign affiliate employment on wages, employment, and the wage share in Austria.” Department of Economics Working Paper Series, 118. Inst. für Volkswirtschaftstheorie und -politik, WU Vienna University of Economics and Business, Vienna.
  • Onaran, Özlem (2016):  “The political economy of income distribution: industry level evidence from Austria.” Materialien zu Wirtschaft und Gesellschaft, Nr. 156 Working Paper-Reihe der AK Wien.  (accessed: 02.02.2017)
  • Pernicka, Susanne/Hefler, Günter (2015): “Austrian Corporatism – erosion or resilience?”. OZP – Austrian Journal of Political Science. 44 (3). 39-56.
  • Pernicka, Susanne/Stadler, Bettina (2015): Beschäftigungspolitik. In: BEIGEWUM (Hg.): Politische Ökonomie Österreichs. Kontinuitäten und Veränderungen seit dem EU-Beitritt. Wien: Mandelbaum Verlag.
  • Raza, Werner (2016). Politics of scale and strategic selectivity in the liberalisation of public services–the role of trade in services. New Political Economy, 21(2), 204-219.
  • Rhodes, Martin (2010): Employment Policy. Between Efficacy and Experimentation. In: Wallace et al.: Policy-Making in the European Union. Oxford University Press. 6th Edition.
  • Stake, Robert E. (2005): “Qualitative Case Studies.” In The Sage Handbook of Qualitative Research, by N. K. and Lincoln, Y. S. Denzin. Thousand Oaks, CA: Sage publications, Inc.
  • Tálos, Emmerich (2015): Austrokorporatismus zwischen Kontinuität und Veränderung – EU-Beitritt als ein Bestimmungsfaktor für Veränderungen. In: BEIGEWUM (Hg.): Politische Ökonomie Österreichs. Kontinuitäten und Veränderungen seit dem EU-Beitritt. Wien: Mandelbaum Verlag.
  • Thomas, Gary (2016): How to do your case study. London: SAGE Publications Ltd.
  • Unseld, Christopher (2015): POMFR: Viking, Laval and the Question if Anybody Cares. In: European Law Blog. News and comments on EU law. Online (3.2.2017):
  • Yin, Robert (2003): Case Study Research: Design and Methods. Thousand Oaks, CA: Sage publications, Inc.
  • Zahn, Rebecca (2008): The Viking and Laval Cases in the Context of European Enlargement. Web Journal of Current Legal Issues, 2008(3).
  • Figure 3: Blog Arbeit Wirtschaft (2013): Öffnet sich die Schere zwischen arm und reich? Ist das überhaupt ein Problem. Available under: [Accessed on 22.01.2017].