Tax evasion and avoidance and Democracy at a tipping point

The biggest losses from tax evasion and avoidance are caused by multinational corporations, followed by wealthy individuals. Sums in the triple-digit billions of up to one trillion. Euros are evaded annually in the EU. Of the global private wealth of around 160 trillion. US dollars, between 21-32 trillion US dollars are undeclared via tax havens

Everything was in a mist…
The past was erased,
the erasure was forgotten and
the lie became the truth.
George Orwell, 1984

The crises of self & capitalism are repressed. Neoliberalism has failed & broken down most strikingly in housing & taxation.

Tax evasion and avoidance and the contribution of the rich to society

by Silke Ötsch
[This article published on September 29, 2015 is translated from the German on the Internet, Steuerflucht und Steuervermeidung und der Beitrag von Reichen zur Gesellschaft – Arbeit&Wirtschaft Blog.]

Parties that polemicize against refugees with the cost argument, on the other hand, promote tax evasion by the rich, for example by advocating banking secrecy. Criticizing the rich is less opportune, even though they continue to benefit disproportionately from tax evasion and avoidance. This is above all a democratic problem. A coalition of long-term elites influences legislation, so counter-strategies should be pursued beyond day-to-day issues.

Rich benefit more than average from tax evasion and avoidance

The biggest losses from tax evasion and avoidance are caused by multinational corporations, followed by wealthy individuals. Sums in the triple-digit billions of up to one trillion. Euros are evaded annually in the EU. Of the global private wealth of around 160 trillion. US dollars, between 21-32 trillion US dollars are undeclared via tax havens. US dollars are invested undeclared in tax havens. Calculations have shown that Germany alone has a tax gap of 90 billion euros, equivalent to 3.7 percent of its gross domestic product. The rich hold an above-average number of shares in companies: In Austria, it is the three percent of households with an average net worth of more than 330,000 euros. In the USA, the top one percent of the US population owns 52 percent of corporate property. Thus, the rich benefit indirectly from corporate tax evasion and avoidance. Tax havens also have an indirect effect on tax systems. They provide impetus for lowering tax rates on corporate profits and moving toward a flat tax on capital income of 25 percent.

Tax privileges via wealth and geographic location

Trickery and tax havens can be used by those who can buy expertise and services from professionals, banks, law firms or accounting firms. Until after the turn of the millennium, black money could be hidden using simple techniques, such as a bank secrecy account. With the expansion of the exchange of information, tax avoiders currently have to expend more expertise. Banks or law firms charge fees and/or minimum investment amounts for this effort. The fees should start at 500,000 euros; depending on the tax evasion model, the effort is worthwhile for investments of 5 to 10 million euros. Experts assume that tax evasion among owners of high wealth has further increased.

Tax havens and companies in the tax evasion industry are mainly located in the global North. According to a 139-country study by the Tax Justice Network, these countries are creditors when foreign debt is offset against foreign reserves and outflows of undeclared funds. Poor countries have few resources to build functioning tax administrations. Multinational corporations and wealthy elites exploit this to minimize taxes. Progress in regulating tax evasion (US FATCA, EU exchange of information) primarily benefits Northern states. International tax matters are not with the UN, but with the OECD, the “club of the rich.”

Taxes, Democracy and the Power to Donate

Tax evasion and avoidance is above all a problem for democracy. Public services such as education, health, infrastructure, culture or social services seem to be naturally available to many citizens. With tax revenues, policymakers relinquish room for maneuver. This allows politicians to implement long-term projects and drive innovation. Without government investment programs, there would be no Internet, GPS or touch screens. Money can have macroeconomic effects, for example as stimulus measures or to control the allocation of resources among different population groups. This has an impact on the allocation of resources in the economic cycle, between the real economy and financial assets. Taxes also reduce inequalities in the primary distribution of resources in Austria. They can have a steering effect, e.g. as environmental taxes.

If taxes were lowered, the rich and corporations would donate on a voluntary basis – or so the theory of critics of taxation goes. However, the data show the opposite: donations are far below the tax money saved, even in countries with high levels of donations such as the USA. Assuming that in Austria – according to a low EU average – two percent of GDP is lost through tax avoidance and evasion, this corresponds to a sum of around 5 billion euros. However, in 2014, the Austrian Fundraising Association’s donations report recorded donations of only 550 million euros, much of which came from low-income donors.

Even higher repayment in the form of donations must be evaluated ambivalently because donors exert socio-political influence. A cautionary example is the influence of U.S. billionaires Charles and David Koch. They influence politics through think tanks, spending billions on election campaigns, supporting the Tea Party and climate change denial organizations.

Manipulation of legislation by the offshore coalition.

It’s not just because of the complexity of tax systems or location competition when tax laws are not followed. A coalition of beneficiaries influences legislation over the long term and is supported to varying degrees by other social forces. This offshore coalition includes:

Tax evaders and avoiders, motivated by financial benefits and money laundering opportunities.
Service providers (banks, law firms, accounting firms) with an interest in income and (labor) markets.
Politicians expecting potential support from financial and economic elites, avoiding conflicts, acting ideologically or being insufficiently informed.
Lobbies and think tanks that act in return for payment and driven by ideology.
Bureaucracies and government agencies that are hampered in doing their jobs, cooperate with the regulated, and expect financial incentives (job changes, corruption).
Journalists and scientists who expect justification through persuasion, financial incentives (advertisements, honoraria, third-party funding) or career advantages.
Voters who tolerate the practices out of opportunism, ignorance or other relevance.

Changing practices requires staying power because organized and well-funded organizations and groups of people have strong interests in preserving offshore services. In addition to combating tax avoidance and evasion, the primary distribution of income and wealth should be leveled more so that inequalities do not arise in the first place. Simplification and harmonization of tax systems should be worked toward, as should minimum standards. Policymakers should aggressively advocate public funds. These are needed for a socio-ecological transformation at the national level, as well as the North-South perspective.

Dr. Silke Ötsch is a university assistant at the Department of Sociology at the University of Innsbruck.

They call it fringe benefits – but they’re welfare state contributions

by Sybille Pirklbauer and David Mum
[This article published on June 2, 2022 is translated from the German on the Internet,]

At regular intervals, Austria discusses a reduction of “non-wage labor costs”. Employer representatives and lobby agencies use every situation to place this demand. In doing so, an increase in employment, economic growth and incomes as well as an improvement in the competitiveness of the domestic economy are brought into play. What are the so-called “non-wage costs” and why should their reduction increase general prosperity? The opposite is the case: such a measure does not benefit employees at all, but endangers their social security.

No Uniform Definition – Social State Contributions Relevant in Any Case

Even the term “non-wage labor costs” itself must be questioned. What is described here as a minor matter are in fact important welfare state contributions that finance core services of our social welfare system. These are not relevant for international competitiveness, but rather (total) labor costs in relation to productivity and thus unit labor costs – and these are better in Austria than in many other highly competitive countries.

What is understood by nonwage labor costs in the debate varies widely (more on this below). Internationally, a distinction is made between direct and indirect labor costs (= non-wage labor costs). The latter are those costs that are incurred in addition to the gross wage. Essentially, these are the employers’ social contributions. These include accident, health, unemployment and pension insurance. They also include the employer’s contribution to the Family Burden Equalization Fund (FLAF), which finances the most important family benefits (family allowance, childcare allowance, free school transportation, school books, etc.), the contribution to the Insolvency Compensation Fund (IESG), which ensures continued payment of wages for employees in the event of corporate insolvency, the housing subsidy and the municipal tax, which is the most important source of funding for municipalities (kindergartens, local public transport, etc.).

These employer contributions are therefore central to the financing of the social system, which benefits employees. They are used to finance pensions, flow into the health care system or benefit families through family allowances. It is therefore by no means the case that non-wage labor costs reduce income. Rather, they finance incomes such as pensions, family allowances, etc.

This figure provides an overview of the aforementioned welfare state contributions and their functions:

In addition, wage-related taxes and expenditures for education and training are often included in the definition.
Marked cuts already in recent years

Marked cuts in welfare state contributions have already been made in recent years: the FLAF contribution was reduced by 0.4 percentage points from 2016 and by a further 0.2 percentage points from 2018 as part of a labor market package. Also in 2016, the IESG contribution was reduced by 0.1 percentage points and then halved to 0.1% in 2022. In 2007, this was still at 0.7%. As of Jan. 1, 2019, the accident insurance (UV) contribution was reduced from 1.3% to 1.2%, having already been reduced from 1.4% to 1.3% in 2014. This entailed considerable costs:

– IESG reduction (by 0.2%): in total, around 230 million euros annually

– Reduction in the FLAF contribution rate: around 800 million euros per year

– UV contribution rate reduction by 0.1% around 130 million euros

This meant tangible and lasting effects for the financing of the welfare state: for example, in 2017 and 2018 the FLAF did not write the originally expected surpluses, but deficits in the 3-digit millions. This hole had to be covered from general tax revenues.

The reduction of the UV contribution prevents the containment of work-related stresses as a preventive task of the General Accident Insurance Institution (AUVA). In addition, the statutory cost reimbursement that AUVA transfers to the Austrian Health Insurance Fund (ÖGK) for the care of occupational accidents will expire in 2023, and there is no successor regulation yet. This is completely at odds with the expansion of ÖGK’s tasks (hospice and palliative care, higher statutory payments to private hospitals). But the accident insurance itself, in particular, cannot accept any further reduction in contributions. Occupational diseases for which accident insurance is responsible are completely under-reported, and the list of recognized occupational diseases has not been adapted for decades. As a result, they no longer reflect today’s working world.

Cutting welfare state contributions: missing the point when it comes to inflation – also hardly brings employment

Bringing the reduction of welfare state contributions into play as a measure against inflation is a miss of the point. After all, the reduction of these contributions only directly relieves the burden on companies. For employees, for whom it is becoming increasingly difficult to pay rent, food, electricity and fuel, this does not bring any relief, but endangers their social security. Moreover, the empirical findings show no employment effects or often only short-term effects that are not adequately proportionate to the costs. This is shown by a report published in 2017 by Eurofound, the European Foundation for the Improvement of Living and Working Conditions. A WIFO study published in 2020 confirms this finding.

In both studies, however, the targeted reduction of employer costs for certain groups of workers:inside who have particular difficulties finding employment is found to be useful. This has been implemented in Austria for older workers: For employees aged 60 and older, the contribution to accident insurance is eliminated, as is the employer’s contribution to the FLAF (a total of minus 5.1 percentage points). The obligation to pay unemployment insurance ends at the age of 63, and the IESG supplement is only payable up to this age (a total of minus 8.2 percentage points).

Supposed gain costs employees a lot

Presenting the reduction of welfare state contributions as a win-win measure is classic neoliberal communication: measures that only benefit a certain group – in this case, companies – are presented as if they were in the general interest. Neoliberals and their PR agencies are masters at presenting measures in which the majority of the population would lose as if they would win. For example, they suggest that a reduction in welfare state contributions would increase the net incomes of workers. The opposite is true: a reduction in employers’ contributions to social security or continued payment of wages harms employees.

Rarely have those who want to reduce “non-wage costs” said which of the financed benefits they want to eliminate or cut. Indeed, if they did, it would become apparent that cutting welfare state contributions has its costs. Employers would save themselves something, while benefits for employees:inside would be underfunded or reduced.

High productivity in relation to costs – this determines competitiveness

Contrary to the rhetoric of the employers’ side, the competitiveness of a company or a location is not decided by the welfare state contributions and also not by the total labor costs, but by how much productivity a company gets at these costs. The costs per hour worked must be set against the value created in that hour. This is reflected in the unit labor costs – and here Austria ranks very well in an EU comparison, especially in the manufacturing sector. This finding was already established in 2017 in a study commissioned by the Advisory Board for Economic and Social Affairs at WIFO and confirmed with more up-to-date data in the more recent WIFO study cited above.

In manufacturing, which is exposed to strong competition due to its export orientation, unit labor costs are even more favorable than the EU average. Higher labor costs are financed by higher value added.

Moreover, companies in the Austrian economy compete internationally on the basis of the high quality of their products and services through skilled labor and high-quality production processes – and not through low labor costs or poor social and environmental standards.

Productivity does not only arise directly at the workplace

Employers like to use a very broad definition in which everything that cannot be attributed to direct presence at the workplace (“attendance wages”) is defined as ancillary costs. In this context, paid vacation, paid sick leave, and in extreme cases also holidays as well as absences and costs for training and further education are assigned to ancillary costs.

This view is highly questionable. While the inclusion of training and education is common practice internationally, these measures obviously serve to maintain and increase productivity and thus have the character of investments.

Paid vacations and holidays, in turn, serve reproduction and are just as indispensable for people to be productive and creative in their work in the long term. It is relatively absurd to qualify the 13th and 14th month’s pay as ancillary costs. This important wage component is anchored in collective agreements and is part of the remuneration due for work performance.

Do not give away scope for inflation compensation and higher social benefits

We are currently seeing sharp price increases for energy and food, and there have already been massive increases in rents in recent years. Especially in the areas of housing, energy and gastronomy, companies are at the same time recording excess profits and there is a threat of a profit-price spiral. The reduction in welfare state contributions goes directly to the companies, but it is the employees whose social entitlements are endangered that have to pay.

The order of the day is to relieve those people who suffer most from the price increases, instead of giving companies tax gifts with a watering can and thereby restricting the scope for important measures. The ÖGB and AK have already made a number of proposals to this end.

The problem of inflation is urgent and must be dealt with immediately. A discussion on a tax structure reform with a higher contribution from wealth makes sense. In this context, broader welfare state financing that goes beyond the wage bill can also be implemented.

Sybille Pirklbauer is Head of the Social Policy Department of AK Vienna.

David Mum is an economist and head of the department of fundamentals as well as a member of the federal management of the GPA-djp.

Labor leasing – wrestling with terms and perspectives

by Matthias Specht-Prebanda
[This article published on May 30, 2022 is translated from the German on the Internet,]

Arbeitskräfteüberlassung, Leiharbeit, Zeitarbeit: three terms that mean the same form of gainful employment and at the same time express a social conflict about it. It lasts only half as long as a “normal” employment relationship and produces systemically broken employment careers. Overwhelmingly, however, it is a leg-hungry business model in a fiercely competitive market.

A characteristic feature is the triangular form that constructs the affected persons as employees of the temporary employment agency, while the actual work activity is performed at the client company – referred to in technical jargon as the employer – and they are also subject to the hierarchy there. Thus, temporary employment per se contradicts the so-called normal employment relationship, which is understood as a long-term employment relationship with a company. For the sake of completeness, it should be mentioned that there are non-profit variants of temporary employment, which bring this form of employment close to the “second” labor market.

From exploitation to the flexible labor market

The change in value attitudes toward this form of employment can be seen in a major historical leap in the positioning of the International Labor Organization (ILO). Originally, shortly after World War II, the ILO called for a total ban on temporary work, arguing that it was a form of overexploitation that took the commodity nature of labor to the extreme. In the currently valid 1997 convention, on the other hand, this form of employment is seen as a necessary part of a labor market that has now become flexible, with the advantages of the flexibility of temporary work benefiting both sides – entrepreneurs and workers. The latter, however, can be understood more as a phrase that obscures the real power relations but is nevertheless effective. This is because, as a rule, workers in temporary employment are oriented toward longer-term stable integration in a company and thus behave in a certain sense paradoxically toward this construct.

The reality of the flexible labor market

In a sense, the changed positioning of the ILO as an expression of a neoliberal understanding of social and labor market policy has not become a reality only since yesterday. The space for labor leasing was only created by the withdrawal or chronically scarce funding of the public labor market administration. Today, temporary employment is an integral part of the labor market and especially of the job market in Austria. A relevant share of the vacancies registered with the AMS (about a quarter nationwide, about a third in Upper Austria, the stronghold of temporary employment) can only be filled through the intermediary of a temporary employment agency. In a pointed way, one could say that the AMS has outsourced part of its tasks to temporary employment agencies. It is obvious that this is not associated with stable labor market integration.

Temporary employment as a suspension bridge

The average duration of employment in temporary staffing, currently 190 days (period June 2020 to July 2021), is about half the average duration of all dependent employment relationships overall. And more than half (55 percent) of labor assignments lasted less than one month. The much-strained bridging function of temporary employment must be viewed with skepticism; it is a shaky and steep suspension bridge at best. A 2018 study by Riesenfelder, Danzer, and Wetzel commissioned by the Ministry of Social Affairs found that a temporary work episode was most often followed by another temporary work episode, second most often by unemployment, and only third most often by a “normal,” direct employment relationship. Temporary work produces systemically broken employment careers.

Fine line between enabling and exploiting

“Leasing allows you to get in quickly, but it also gets you out quickly,” is how one affected person from an ongoing, work-biography-oriented research project on temporary work puts it. An initial finding from the research interviews with those affected, however, is that for certain people, temporary work has a relieving function in the search for work. The laborious and socially and communicatively demanding process of finding and applying for a job is, to a certain extent, taken over by the temporary employment agency. It should also be added that there are hardly any barriers to entry in the temporary employment market. In contrast, however, there are processes of social closure on the part of the client companies, which fill certain job profiles exclusively in this way. Institutional signposts to temporary employment should not be underestimated, for example, when companies that are attractive on the regional labor market refer applicants to the temporary employment agencies with which they work, or when the AMS, as mentioned above, frequently assigns jobs in temporary employment to unemployed persons. There is also a fine line between enabling participation in the labor market and exploiting certain plights of people from underprivileged classes. This applies not only to migrants, but also to school dropouts, people from the so-called educationally deprived milieus, or those who suffered health-related strokes of fate early in their lives.

Temporary work or temporary employment?

The different attitudes toward this form of work are also expressed in the terms used. In the German-speaking world and in part of the academic literature, the term “temporary work” is more commonly used, which points to the reifying dimension of this phenomenon. However, the literal meaning of the term “lending” also includes careful handling and undamaged return. The situation is different with the colloquial term “leasing”, which is widely used in Upper Austria for temporary work and which combines use with a certain loss of value. The employer side, on the other hand, prefers the term temporary employment, combined with the reference to overcome the old – also for the employees – stigmatizing term temporary work. The trade unions have taken this up to some extent, for example when works councils speak of “our temporary workers” in order to show their appreciation. However, the concept of temporary work is also not very convincing, because the fact that work is limited and defined in time in one way or another is always true. And the specific triangular character of this form of employment mentioned at the beginning is lost in the process. In a certain sense, the English term “temporary agency work” and the employees as “temps” is more appropriate. Does this leave the formal legal concept of temporary agency work as a (conceptual) compromise? But here, too, caution is called for: In Austria (and not only here), one is not considered a mere worker, but an employee who is not viewed and treated exclusively in functional terms. Can the staffing industry and its clients guarantee this?

Successful enforcement of workers’ rights

The history of temporary employment in Austria can also be read as a history of successful enforcement of workers’ rights and successful social partnership regulation. In particular, the AKÜ collective agreement, which covers blue-collar workers and is negotiated by the production union PRO-GE with the labor leasing companies in the Chamber of Commerce, can be seen as a milestone. In practice, however, there are always problems. In particular, the question of how to deal with the problematic practice of terminations by mutual agreement, which circumvents the notice periods stipulated in collective agreements, remains unresolved. This is because it is prohibited to synchronize the end of the work assignment at the customer and the end of the employment relationship at the labor supplier; notice of termination may be given no earlier than the fifth day after the end of the employment relationship. In combination with the minimum two-week notice period (three weeks from 2023), there is therefore a certain safety net which, at least in theory, prevents “hire and fire”. More recently, there have been clear differences of opinion between employers and PRO-GE following the former’s intention to declare labor leasing a seasonal industry in order to enforce shorter notice periods.

Self-aware articulation of interests

Raising awareness among those affected is enormously important. For many years, PRO-GE has operated the website , which points out basic rights in several languages. The fact that entry into temporary work typically takes place against the backdrop of a specific emergency or crisis situation is not conducive to a self-confident articulation of interests from the outset. Rather, this is the result of a hard learning process and also requires trade union intervention. There are also temporary workers who do not come from traditional working-class backgrounds and therefore have little experience of workers’ rights in their families and education.

Rich votes, poor misses – Democracy at a tipping point

by Boris Ginner
[This article published on May 25, 2022 is translated from the German on the Internet,]

Our parliamentary democracy has a problem: People with less income are less likely to go to the polls. And more and more people have no right to vote at all. The principle of democratic equality is being undermined, and the political system has ever greater problems of legitimacy.
Elections are something “for the others”

“I don’t have the impression that elections have anything to do with me and my life. For me, life always remains the same bad.”

Statements like these, made by Viennese non-voters, get to the heart of why an increasing number of socioeconomically disadvantaged people are turning their backs on democracy and the political system altogether.

Participation in democratic processes suffers from an increasingly massive social imbalance: In the 2019 National Council elections, people with higher socioeconomic resources participated much more than members of poorer classes. While a full 83 percent of eligible voters in the most socioeconomically privileged third went to the polls, the figure for the lowest third was only 59 percent. At the Viennese level, too, it is striking that voter turnout is significantly lower in neighborhoods with a precarious social situation. In particular, unemployment, low educational attainment, low income and low occupational prestige have a strong negative impact on voter turnout.

Injustice -> apathy

Thus, a sense of injustice apparently does not mobilize people to participate and act democratically, but leads to apathy and turning away from democracy itself. However, this was not always the case – on the contrary: for decades, voter turnout in classic working:class districts was higher than in affluent, middle-class districts. A brief look at the following figures from Viennese districts will suffice:

In working-class districts such as Simmering, Rudolfsheim-Fünfhaus, Brigittenau or Floridsdorf, voter turnout in the 1970 National Council elections was above the 80 percent mark, while in bourgeois districts such as Josefstadt, Döbling, Währing or the affluent Inner City, voter turnout was in some cases significantly lower. A look at the 2019 National Council elections shows that this ratio has been completely reversed: While turnout in all of the aforementioned working-class districts fell sharply, in some cases by up to 20 percentage points, it actually rose in the Inner City and Josefstadt as well as in Währing – in Josefstadt even to over 80 percent, and in the 1st and 18th districts by over 5 percent each.

Unemployment leads to more non-voters

According to the SORA survey on the effects of social inequality on democracy from 2020, low educational attainment, low occupational prestige and unemployment are the main factors contributing to lower voter turnout, while higher rates of university graduates or a high annual net income have a positive effect on voter turnout. For example, the unemployment rate in the decile with the highest turnout is only 6 percent, while in the decile with the lowest turnout it is 22 percent. There are also clear differences between the first and tenth tenths in terms of educational attainment and the share of low occupational prestige.

A look at the districts shows how strong the socioeconomic differences are: In Brigittenau, for example, the annual net income in 2018 was around 18,700 euros, there were as many as 144 unemployed per 1,000 inhabitants, and the share of academics was just over 20 percent. In Währing, the annual net income (26,800 euros) and the share of academics (almost 50 percent) are significantly higher, and there were only 75 unemployed per 1,000 inhabitants.

Rising social inequality

In addition, economic inequality is on the rise in Austria. The richest family alone, the Porsche-Piechs, with an estimated fortune of 51 billion euros, has more money than the bottom half of Austrians, who have less than 3 percent of total private assets (about 35 billion euros). Overall, the richest one percent already holds around 40 percent of the wealth. The development of incomes also shows that lower incomes are losing ground, while only high incomes are gaining. The lowest-earning income quarter had 2.4 percent less annual income in real and net terms in 2018 than the comparison group in 2008, while the income quarter with the highest wage or salary income earned 2 percent more in net terms than ten years earlier.

Education system exacerbates inequality

Inequality in Austria is further cemented by the education system, which does not compensate for social disadvantages through early selection at the age of nine or ten, but rather exacerbates them. An intergenerational comparison of education shows that 57 percent of children whose parents are academics also attain a university degree in Austria. If the parents have at most a compulsory education, only about 7 percent of their offspring succeed in completing their education with an academic degree. This figure has hardly changed over the past 20 years: Even 20 years ago, the chance of graduating from university was also around 57 percent if the parents had a university degree, and only around 6 percent if the parents had a compulsory school degree at most. This makes it clear that educational qualifications are socially inherited, and advancement through education is hardly possible in real terms.

Second-class citizens

“Politicians treat people like me as second-class citizens.” This statement is agreed to by 74 percent of those who feel they belong to the lower or working:class. The statement is also true for 55 percent of those who perceive themselves to be in the lower middle class. More than 60 percent of both groups believe they have no influence on what politics does in Austria. Moreover, Viennese with low socioeconomic resources more often experience low social recognition and even devaluation, humiliation and embarrassment, as a statement by one respondent puts it succinctly: “I can’t do much with politics. As a child, I experienced how my family was humiliated by the employment office, youth welfare office, social welfare office – we had to disclose everything, answer the most intimate questions, adults were treated like little children. To this day, I’m afraid of the authorities.”

Who is allowed to vote anymore?

Socioeconomic realities thus determine one’s experience with the political system, because they determine whether one is heard and perceived as part of the system or not. Non-privileged segments of society are thus less and less represented, and their voting behavior is less and less reflected in ballots due to the higher number of non-voters. To make matters worse, larger and larger segments of the population – and especially workers – are excluded from the right to vote because they do not have Austrian citizenship. In Vienna, it is mainly blue-collar workers (60 percent), freelancers (35 percent) and white-collar workers (26 percent) who are not entitled to vote. Among 27- to 40-year-olds, about 40 percent are excluded from the right to vote.

A particularly dramatic picture emerges if we take the 15th Viennese district of Rudolfsheim-Fünfhaus as an example: While the resident population there has remained almost unchanged since 1970 at just under 80,000, the number of eligible voters has fallen from 67,000 to 39,000 (!) during this period. And of these 39,000, only 26,000 took part in the last National Council elections. The electorate, i.e. the sum of all voters, is less and less a reflection of the population.

Non-eligibility to vote and non-voting are infectious

Democracy researcher Tamara Ehs agrees: “If you live in an area where you are surrounded by many people who are not eligible to vote (neighbors, acquaintances, relatives, etc.), the other eligible voters are less inclined to participate. “This in turn has an effect on Wiener:innen whose families have held Austrian citizenship for generations: Because they are surrounded by many non-eligible voters and non-voting naturalized citizens, they also vote less often, and when they do vote, their vote as Brigittenauer:in or Favoritner:in the municipal council and state parliament is underrepresented in relation to the population size of their district.”

Those who have sufficient capital and property are also in a position to assert their own interests – for example, by influencing parties, the media or state institutions. The much larger group in the current economic system, however, includes those people who are forced to keep their heads above water through gainful employment. This group has only one advantage: it is numerically superior. In a democratic system, therefore, it should be able to protect its interests against a powerful, but numerically further inferior minority.

With democracy to social progress

The workers’ movement fought for universal suffrage with the aim of achieving better working conditions and living conditions for all through a strong vote of the working class at the ballot box. For decades, it was thus possible to achieve high voter turnouts in traditional workers’ districts. This mobilization has collapsed in recent decades. It is further undermined by restrictive provisions in citizenship law, which primarily affect system holders who earn too little to meet the income limits. It would be urgently time to offer socioeconomically non-privileged people an attractive option again to ensure their participation in democracy. Rising social inequality leads to higher political inequality, which in turn enables politics on the backs of the majority and in favor of a few rich people. If we want to break this spiral of inequality, the exclusion of an ever-growing group from democracy must be remedied at the same time. Democracy must be fought for again and again!

Boris Ginner is an education policy officer at AK Vienna; main areas of work: political education, school democracy, compulsory internships, student representation.

Refugees from Ukraine in Vienna’s housing market
May 27, 2022

The refugee coordinator for Austria expects 200,000 war refugees to arrive from Ukraine. His forecast refers to people who will stay in Austria for a longer period of time. In other words, people who will need housing here, most of them in Vienna. For the already tight housing market, this means an urgent need for action on the part of policymakers.
Refugees need housing

Secure and affordable housing is the essential basis for all areas of social inclusion. The quality and legal security of a housing situation not only affects the subjective quality of life, it is also a prerequisite for personal stability and the processing of flight experiences. Furthermore, it is evident how crucial the housing situation is for the labor market integration and social integration of refugees. It is therefore essential to consider long-term housing needs and consequences for the housing market in the course of integration policy efforts for newly arriving Ukrainians and other refugees.

Based on the refugee coordinator’s forecast and the average household size in Ukraine of 2.6 persons, this results in approximately 77,000 new households that will require housing in Austria in the longer term. Experience from previous refugee movements has shown that the majority of refugees remain in Vienna. Assuming that about 50 percent of the refugees remain in the capital, this results in an estimate of about 38,000 additional households for Vienna due to the Ukraine war.

The question of what kind of housing is needed by the refugees can only be answered approximately. Of the approximately 40,000 Ukrainians:inside already registered in Austria in the first quarter of 2022, 37 percent are children and young people under 20, some of whom are of school age. About 80 percent of the adults are women. Since about 75 percent of families in Ukraine have only one child, a high proportion of women with one child can be assumed among the refugees. Accordingly, there is likely to be a particular demand for two- to three-bedroom apartments. However, there is also a need for apartments for refugee women with two children or even larger households with several children and, for example, grandparents and other relatives.

Contrary to the populistically charged everyday observation of expensive cars with Ukrainian license plates in downtown Vienna, the economic situation in Ukraine is many times worse than in Austria. In Austria, basic welfare and later social assistance provide those who cannot immediately earn an income from a job – for example, because of problems with the recognition of qualifications – with only limited financial means for finding housing.
Housing boom and price explosion

The good news at first glance is that there is a lot of construction going on right now. Currently, up to 50,000 new homes are expected to be built across Austria in 2022, including 20,000 new homes in Vienna. However, a closer look at the new construction that has been built is sobering: new apartments in Vienna now cost around 6,400 euros per square meter when purchased and 12 euros/m² when rented. The reasons for the annually rising prices and the difficulties in building subsidized apartments are, on the one hand, the high cost of land throughout the city and, in addition, the currently rapidly rising construction costs. On the other hand, forms of investment in concrete gold and the steadily advancing financialization of housing are also contributing to speculative price increases. Rents in existing apartments have also been rising constantly for years. Especially in the area of privately rented apartments, which account for about 33 percent of the stock in Vienna, rent increases of 53 percent between 2008 and 2016 can be seen. The situation is better in the subsidized areas of the housing market, where mainly public housing and older non-profit apartments offer affordable housing. However, people with a refugee background in particular often do not find access to these fundamentally affordable parts of the housing market.
Barriers to access on the Viennese housing market

Refugees from third countries have very difficult access to subsidized housing in Vienna, as they are usually unable to obtain the Vienna Housing Ticket as an access key. A basic requirement for the Vienna Housing Ticket is a continuous main residence at a Viennese place of residence for more than two years. People who have recently moved to Vienna as well as people in very precarious living situations with frequent changes of residence cannot fulfill the criteria and are excluded from the system. Persons eligible for subsidiary protection are generally excluded from access. Additional assistance, such as the social housing track at Wiener Wohnen or the housing allowance, requires a five-year minimum stay in Vienna. As a result, refugees are almost exclusively dependent on the private rental housing market, where rents and prices are high and discrimination by landlords makes finding housing difficult. Racist discrimination on the basis of language, religion, appearance and origin, as well as prejudice against a perceived inability to pay and a perceived insecure residence status are frequent reasons why an apartment cannot be rented.

The result is often highly precarious and difficult housing situations in which refugees find themselves in Vienna. This ranges from legally insecure subletting and dependency relationships to poor quality apartments and severe overcrowding.
Refugee Ukrainians in private accommodation

In the current flight movement from Ukraine, the housing needs of the first arriving Ukrainians in March and April were largely absorbed by private housing donations. In addition to a federal agency, various NGOs in particular are active in mediating between people who provide housing and those seeking housing. While on the one hand this shows a great willingness to help on the part of many Viennese, private housing also poses some dangers for people on the run. In this vulnerable situation, people can easily be exploited for unpaid work, forced into other dependency relationships and fall into the danger of human trafficking. Cases from the AK’s housing law consultation also show that donors seek easily terminable precarious contracts for understandable reasons, which, however, remain associated with great insecurity and planning uncertainty for the residents. Accommodation in privately donated housing is not a permanent solution for refugees. Affordable and accessible housing is needed to provide permanent housing.

How housing supply can succeed in the longer term.

The current housing boom needs to be better managed. Commercial developers in particular must be made more socially responsible. Skimming off reallocation profits or an obligation to create socially responsible housing in new buildings or loft conversions through urban development contracts are important starting points here. Price increases must also be counteracted in existing housing. A central issue here is the extensive abolition of fixed-term contracts as a price driver for rents. Furthermore, an effective vacancy tax would be an important step toward mobilizing unused or underused housing for urgent needs. This would require a corresponding allocation of competencies by the federal government and consistent implementation by the City of Vienna. In the subsidized sector, a new housing offensive of the Vienna Housing Fund would secure urgently needed affordable and long-term socially committed housing. However, it is also important to facilitate access to subsidized housing. Above all, the requirement of two years’ continuous registration at a Viennese address would have to be dropped. In order to be able to react quickly and effectively to people’s highly precarious housing and living situations, the possibilities of a central social housing pool should also be explored. Inexpensive apartments from the subsidized but also private sector could be allocated here quickly and precisely to people in challenging life situations. These measures not only make an important contribution to the long-term inclusion of refugees from Ukraine and other countries, but also contribute to the general affordability and accessibility of housing.

Malena Haas is a geographer and consultant in the Department of Municipal Policy and Housing of the Vienna Chamber of Labor.

Sina Moussa-Lipp is a social scientist and consultant for the area of Social City in the Department of Municipal Policy of the Vienna Chamber of Labor.

Mara Verli? is a consultant in the Department of Municipal Policy at the Vienna Chamber of Labur.

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