Austria's Autumn Wage Negotiations Commence Amid Economic Headwinds

Autumn Wage Round Kicks Off in Austria

Austria's annual autumn wage negotiations have officially commenced, initiating a critical period of discussions between trade unions and employer associations. The talks are set against a backdrop of persistent inflation and a challenging economic environment, with unions steadfast in their demand to secure employees' purchasing power, while employers warn of threats to national competitiveness due to lost output and rising unit labor costs.

Traditionally, the metal industry negotiations set the tone for other sectors. However, this year, the autumn wage round did not begin with the metal industry as usual, as metalworkers had concluded a two-year agreement in the previous year. Instead, sectors such as trade and railway employees were among the first to open discussions in October and November.

Unions Prioritize Purchasing Power Amid Inflation

Trade unions, including PRO-GE (blue-collar workers), GPA (white-collar workers), and vida (representing railway, road, trade, warehousing, and cleaning sectors), are primarily focused on compensating for the impact of inflation. The basis for these negotiations is typically the 'rolling inflation,' which is the average inflation rate over the past 12 months.

For the current metal industry negotiations, the rolling inflation from September 2024 to August 2025 stands at 2.8 percent. However, the inflation rate in August 2025 rose to 4.1 percent, indicating a recent upward trend. Unions are also pushing for noticeable increases in minimum salaries and compensation for 'increased workloads.' In previous rounds, such as the 2023 metal industry negotiations, unions had demanded a significant pay rise, reaching 11.6 percent, to address the cost of living crisis.

Employers Voice Concerns Over Competitiveness and Economic Downturn

Employer associations, including the Metal Technology Industry Association (FMTI) and the Chamber of Commerce (WKÖ), are expressing significant concerns about the economic climate. Austria experienced a second consecutive year of recession in 2024, with industrial activity, construction, and some service sectors weakening. Employers argue that productivity has been flat or negative, leading to calls for wage agreements below the inflation rate to protect jobs and maintain competitiveness.

Factors such as high energy costs, industrial weakness in Germany, and US tariff policies are cited as additional pressures on industries, particularly in the metal sector. The growth of unit labor costs in Austria has been faster than in other EU countries, further fueling employer caution.

Sector-Specific Developments and Outlook

While the metal industry's 2023 two-year agreement included a 10 percent actual wage increase (capped at €400 per month) and an 8.5 percent minimum wage increase, it also featured a competitiveness and employment protection clause. This clause allowed companies facing economic difficulties to convert part of the wage increase into one-off payments or time off, a measure utilized by 9 percent of companies and affecting 21 percent of employees in autumn 2024.

In the retail sector, negotiations in 2024 led to a 3.3 percent salary increase for 2025, with a provision for 0.5 percent above rolling inflation in 2026, subject to renegotiation if inflation exceeds 3 percent. Due to current inflation trends, renegotiations for 2026 are considered highly likely. Public administration and municipalities also secured an average wage increase of 3.5 percent for 2025.

The ongoing negotiations are expected to be challenging, as both sides navigate the complexities of inflation, economic stagnation, and the imperative to balance employee purchasing power with business viability. The outcomes will significantly influence Austria's economic trajectory in the coming year.