Abstract
This paper reports on an Austrian research project that deals with the question how the Austrian society could cope with long-lasting low economic growth. Various causes of low-growth that are relevant for Austria (a deteriorating balance of trade, increasing resource prices, consumer restraint of households and less immigration) have been identified, leading to an only moderate gross domestic product growth of 0.55 % per year. The resulting impact on the economy is substantial: the labour market suffers from a shortage of labour supply (due to reduced migration) and from a reduced demand for labour (due to reduced demand in consumption, investments and exports). Subsequently, less employment decreases the development of the disposable income of private households (tax rates and social security contributions held constant). Related to this, public debt is higher due to reduced tax incomes and slightly growing public expenditures. From an ecological perspective, resource consumption increases at a slower rate, however, no absolute reduction can be reached. CO2 emissions also slightly increase. Therefore, it cannot be assumed that low growth necessarily leads to the achievement of energy and environmental policy goals. Based on these results, a policy scenario was used to analyze whether and how policy measures are able to cope with the negative consequences of persistent low growth. The results reveal that the selected measures are suitable to reduce negative economic effects: The implementation of reduced working time and an eco-social reform of levies might improve the labour market situation. The negative effects on the national budget can be diminished by a reduction of environmentally harmful subsidies. Induced behaviour changes of private households can reduce energy and resource-intensive consumption.
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Notes
A literature overview on participatory scenario development and its advantages and limitations is provided by Reed et al. (2013).
Stakeholders are defined as all those actors who are affected by or can affect a decision or action (Freeman 1984).
The initiative “Growth in Transition” constantly tries to involve as many institutions and persons as possible in a dialogue on how a process of transition towards sustainability can be framed. From the beginning, “Growth in Transition” in Austria was aiming at including all kinds of stakeholders, the whole range from innovative and critical toward business as usual to conservative and preserving business as usual. In the meantime, “Growth in Transition” has over 20 partners (ministries, companies, research institutes, interest groups, etc.) actively participating in the process (http://www.growthintransition.eu/partners/).
The DMI comprises “the flow of natural resource commodities that enter the industrial economy for further processing. Included in this category are grains used by a food processor, petroleum sent to a refinery, metals used by a manufacturer, and logs taken to a mill” (Adriaanse et al. 1997, p. 8).
Labour productivity is the product of working hour productivity and average working hours per capita. It rises with increasing labour productivity per hour and decreases with reduced working hours. Employment can only increase if the increase in labour productivity per hour is smaller than economic growth - otherwise the working time must decrease to offset increases in the labour productivity per hour.
Discussions about a reduction in working hours are associated with the question whether and how wages should be adjusted. The decrease of working hours without wage compensation (in other words, wages remain stable) have the highest effect on employment rates. In this case, the costs per hour of work would stay the same as long as there is no increase in labour productivity or decrease, respectively, if labour productivity rises. This method of reducing working hours represents a suitable alternative, especially for those who are highly qualified and belong to the upper salary range. However, those who belong to the lower-income groups are also in need of reduced working hours, in order to be able to better balance their job and family life. To reach this target, the reduction of working hours would have to be coupled with a corresponding minimum wage. Complete or partial wage compensations would also represent a possibility. If they are granted, the costs per hour of work would rise; but only if (at a constant level of employment) increases in productivity do not cover the rising costs. However, if the wage compensation is implemented proportional to the increases in productivity, additional work force can be employed. Since the unit labour costs stay the same when implementing this measure, it is referred to as a cost-neutral reduction of working hours.
The Kyoto target stipulates that the total greenhouse gas emissions have to be reduced by 13 % between 2008–2012, relative to the base year 1990, when they amounted to 68.8 million tons of CO2 equivalents. Since the e3.at model only accounts for CO2, and not all greenhouse gases included in the Kyoto Protocol, the relevant CO2 stabilization target of 1990 would be at 62.08 million tons of CO2 (assuming that the share of CO2 emissions in total greenhouse gas emissions is about 80 %; see e.g. Umweltbundesamt 2009). If the Austrian Kyoto target of −13 % is referred to this amount only, the CO2 reference value would be at about 54 million tons.
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Acknowledgments
We want to thank the clients of this project, the Federal Ministry of Labour, Social Affairs and Consumer Protection, the Ministry of Science and Research and the Federal Ministry of Agriculture, Forestry, Environment and Water Management for financing the project. In addition, we thank the expert advisory board, who enriched the project work with many valuable suggestions and inputs. Finally, we are grateful to Stefanie Gerold for proof-reading.
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Paper submitted to the Empirica Special Issues on the WWWforEurope Conference on “Modelling Growth and Socio-ecological Transition”.
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Stocker, A., Großmann, A., Hinterberger, F. et al. A low growth path in Austria: potential causes, consequences and policy options. Empirica 41, 445–465 (2014). https://doi.org/10.1007/s10663-014-9267-x
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DOI: https://doi.org/10.1007/s10663-014-9267-x