Skip to main content

Advertisement

Log in

A low growth path in Austria: potential causes, consequences and policy options

  • Original Paper
  • Published:
Empirica Aims and scope Submit manuscript

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.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4
Fig. 5
Fig. 6
Fig. 7

Similar content being viewed by others

Notes

  1. A literature overview on participatory scenario development and its advantages and limitations is provided by Reed et al. (2013).

  2. Stakeholders are defined as all those actors who are affected by or can affect a decision or action (Freeman 1984).

  3. 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/).

  4. 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).

  5. 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.

  6. 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.

  7. 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.

References

  • Adger WN (2006) Social and ecological resilience: are they related? Prog Hum Geogr 24(3):347–364

    Article  Google Scholar 

  • Adriaanse A, Bringezu S, Hammond A, Moriguchi Y, Rodenburg E, Rogich D, Schütz H (1997) Resource Flows: The Material Basis of Industrial Economies (Washington DC)

  • Almon C (1991) The INFORUM approach to interindustry modeling. Econ Sys Res 3:1–7

    Article  Google Scholar 

  • Barker A, Hinterberger F, Lutter St, Pirgmaier E, Pollitt H, Polzin CH, Stocker A (2010) A scoping study on the macroeconomic view of sustainability. Final report for the European Commission, DG Environment

  • Biffl G (2001) Die Entwicklung des Arbeitsvolumens und der Arbeitsproduktivität nach Branchen. WIFO Monatsberichte 1/2001

  • BMF (2010) Budgetbericht 2011. Bericht der Bundesregierung gemäß § 34 BHG, Wien

  • Bock-Schappelwein J, Bremberger C, Hierländer R, Huber P, Knittler K, Berger J, Hofer H, Miess M, Strohner L (2008) Die ökonomischen Wirkungen der Immigration in Österreich 1989–2007. Wien

  • Dittrich M, Giljum S et al (2012) Green economies around the world? Implications of resource use for development and the environment. SERI, Vienna

    Google Scholar 

  • Freeman RE (1984) Strategic management: a stakeholder approach. Pitman, Boston

    Google Scholar 

  • Fretschner R, Hennicke P, Hilbert J (2002) Ökoeffiziente Tertiarisierung. Konzeptionelle Überlegungen und Schritte zu ihrer Realisierung. In: Bosch G, Hennike P, Hilbert J, Kristof K, Scherhorn G (Hg.) (2002) Die Zukunft von Dienstleistungen: ihre Auswirkung auf Arbeit, Umwelt und Lebensqualität Campus Verlag

  • Hartwig J (2005) Messprobleme bei der Ermittlung des Wachstums der Arbeitsproduktivität—dargestellt anhand eines Vergleichs der Schweiz mit den USA, KOF, Working paper Nr. 100, März 2005, revidiert im Mai 2005, Zürich

  • IEA (2009) World Energy Outlook 2009

  • Jackson T (2009) Prosperity without growth. Economics for a Finite Planet, Earthscan

    Google Scholar 

  • Jäger J, Rothman D, Anastasi C, Kartha S, VanNotten P (2008) Training module 6Scenario development and analysis, In: Pintér L, Chenje J and Swanson D (eds) IEA training manual: A training manual on integrated environmental assessment and reporting. United Nations Environment Programme and the International Institute for Sustainable Development

  • Kommission zur langfristigen Pensionssicherung (2010) Bericht über die langfristige Entwicklung der gesetzlichen Pensionsversicherung für den Zeitraum 2009 bis 2060. Wien

  • Kummer S, Schramm H-J (2010) Analyse der finanziellen Auswirkungen einer Mineralölsteuererhöhung im Zuge der Budgetsanierung 2010. Kurzfassung. Institut für Transportwirtschaft und Logistik, WU Wien. Im Auftrag der Wirtschaftskammer Österreich

  • Lutz C, Meyer B, Wolter MI (2010) The global multisector/multicountry 3E-Model GINFORS. A description of the model and a baseline forecast for global energy demand and CO2 emissions. Int J Global Environ Issues 10(1–2):25–45

    Article  Google Scholar 

  • Millennium Ecosystem Assessment (2005) Ecosystems and human well-being: synthesis. Washington, Island Press

    Google Scholar 

  • Meyer B, Lutz C, Schnur P, Zika G (2007) Economic policy simulations with global interdependencies: a sensitivity analysis for Germany. Econ Sys Res 19:37–55

    Article  Google Scholar 

  • Pirgmaier E, Stocker A, Hinterberger F (2010) Implications of a persistent low growth path. A scenario analysis; WP 1: Literature Review and Expert Interviews

  • Reed MS, Kenter J, Bonn A, Broad K, Burt TP, Fazey IR, Fraser EDG, Hubacek K, Nainggolan D, Quinn CH, Stringer LC, Ravera F (2013) Participatory scenario development for environmental management: a methodological framework illustrated with experience from the UK uplands. J Environ Manage 128:345–362

    Article  Google Scholar 

  • Rockström J, Steffen W, Noone K, Persson A, Chapin FS, Lambin EF, Lenton TM, Scheffer M, Folke C, Schellnhuber HJ, Nykvist B, De Wit CA, Van Hughes T, der Leeuw S, Rodhe H, Sorlin S, Snyder PK, Costanza R, Svedin U, Falkenmark M, Karlberg L, Corell RW, Fabry VJ, Hansen J, Walker B, Liverman D, Richardson K, Crutzen P, Foley JA (2009) A safe operating space for humanity. Nature 461:472–475

    Article  Google Scholar 

  • Rohwer B (1982) Beschäftigungspolitik bei anhaltend geringem Wirtschaftswachstum Eine Analyse der Beschäftigungswirkungen längerfristig niedriger Wachstumsraten und möglicher wirtschaftspolitischer Kompensationsstrategien. Volkswirtschaftliche Schriften Heft 317, Berlin

  • Rubinstein A (1998) Modeling bounded rationality. The MIT Press Cambridge, Massachusetts

    Google Scholar 

  • Statistik Austria (2009) Bevölkerungsstand 1.1.2009, Wien

  • Statistik Austria (2010a) Arbeitsmarktstatistik. Jahresergebnisse 2009. Mikrozensus Arbeitskräfteerhebung, Wien

  • Statistik Austria (2010b) Volkswirtschaftliche Gesamtrechnungen 1976–2009. Schnellbericht, Wien

    Google Scholar 

  • Statistik Austria (2010c) Energiebilanzen Österreich 1970-2009. Wien

  • Statistik Austria (2010d) Gebarungen und Sektor Staat, Teil 2, Wien

  • Steininger K, Hausberger S, Getzner M (2007) Klimaschutz, Infrastruktur und Verkehr. Informationen zur Umweltpolitik Nr. 175. Kammer für Arbeiter und Angestellte für Wien (Hrsg.), Wien

  • Stocker A, Bohunovsky L (2009) Volkswirtschaftliche Auswirkungen eines Ausbaus von Erneuerbaren Energien. In: Wirtschaftspolitische Blätter 4/2009

  • Stocker A, Großmann A, Madlener R, Wolter MI (2011) Sustainable energy development in Austria until 2020: insights from applying the integrated model “e3.at”. Energy Policy 39(2011):6082–6099

    Article  Google Scholar 

  • Umweltbundesamt (2009) Emissionstrends 1990–2007. Ein Überblick über die österreichischen Verursacher von Luftschadstoffen (Datenstand 2009). Umweltbundesamt, Wien

  • Victor PA (2008) Managing without growth: slower by design, not disaster. Edward Elgar, Cheltenham

    Book  Google Scholar 

Download references

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.

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Andrea Stocker.

Additional information

Paper submitted to the Empirica Special Issues on the WWWforEurope Conference on “Modelling Growth and Socio-ecological Transition”.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

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

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10663-014-9267-x

Keywords

JEL Classification

Navigation