Human Resource Management In Austria Commerce Essay


Due to various reasons such as the legislative framework and the economic backgroud, Human Resource Management (HRM) and employment relation systems show many variations among different countries worldwide. An analysis of different countries may procure detailed information being conductive to further compare these countries with respect to their particular HRM and labor relations system.

The purpose of this essay is to outline the main characteristics of the HRM and labor relations system in Austria. Many issues have a high influence on the development as well as on the current stage of the Austrian HRM and employment relations system. This paper is going to focus especially on key aspects such as workplace representation, employee selection process and training and development, working time regulations, industrial conflicts, as well as diversity in the Austrian HRM system. These aspects will provide the reader a widespread insight into the HRM system in Austria.

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Another issue, which is going to be covered, is the collective bargaining system in Austria. The essay is going to outline the key characteristics of the Austrian collective bargaining system and is going to reflect the main developments in the system since 1980.

Finally, the end of this paper is going to address the most important recent trends the Austrian HRM and labor relations system have experienced; in this context, the essay is going to focus particularly on the development of the trade union density being one of the most important recent trends.

2 Key issues in the Austrian HRM system

2.1 Definition of HRM

According to Armstrong (2007), "Human Resource Management is defined as a strategic and coherent approach to the management of an organization's most valued assets - the people working there who individually and collectively contribute to the achievement of its objectives" (p. 3). HRM involves different policies with regard to "recruitment, retention, reward, personal development, training and career development" (Association for Project Management, 2006, p. 112). In the following the key issues related to the Austrian HRM system are going to be outlined.

2.2 Workplace Representation

Workplace representation plays a crucial role within HRM due to the fact that it gives employees the opportunity to have an influence on the decisions taken by the management.

2.2.1 Work Councils

In the Austrian HRM system, workplace representation takes place through work councils. The work council's task is to ensure employee codetermination, to set up works council agreements, to make certain that collective bargaining contracts are met, and to support the improvement of working conditions. Therefore, tasks and rights are mainly in the field of social and employment rather than in economic or finance. (Fulton, 2009a).

The basic requirement for introducing a works council in Austria is that the organization counts at least five employees at workplace. In Austria, generally speaking, works councils are not very common in small businesses with less than 50 employees. (Fulton, 2009a).

The members of the works council are elected by the organization's employees for four years. The main prerequisite for being elected is that the employee has completed the 19th year of age and has been employed for at least six month in the company. Every employee who is older than 18 years can take part in the election, no matter what citizenship the employee obtains. If the work council counts at least four members, one of these members may be a representative of an external trade union. Generally speaking, this is not very common in the Austrian workplace representation system. (Fulton, 2009a).

In Austria, employee representatives have a very high influence on decisions which are made by the management. In other words, this means that employee representatives may decide on any HRM-related issues, e.g. on selection tests and on employee pay. (Müller, 2000, p. 71-72).

Finally, the representation of employees in Austria is legally binding and the Labor Constitution Act, being the central legislative enactment in Austrian labor law and regulating the work constitution, makes sure that the representation of employees is ensured. (European Foundation for the Improvement of Living and Working Conditions, 2009, October 26).

2.2.2 Trade Unions

By definition, "a trade union is any organization, whose membership consists of employees, which seeks to organise and represent their interests both in the workplace and society and, (…), seeks to regulate employment relationship through the direct process of collective bargaining with management" (Salamon, 2000, p. 93).

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In Austria, similar to Germany, the trade union "is a single dominant confederation formed by a small number of industrial unions" (Hollinshead, 2010, p. 110). In case of Austria, the Austrian Trade Union Federation Ã-sterreichischer Gewerkschaftsbund (Ã-GB) is the only trade union confederation; this, at the same time, implicates that Austria belongs to those countries with a very high level of unity. The Ã-GB, not being affiliated to any political party, was founded in 1945 and actually counts more than 1.2 million members. In addition, the Ã-GB encompasses nine trade union affiliates. (European Foundation for the Improvement of Living and Working Conditions, 2009, October 26).

The Ã-GB's main task and responsibility is to represent the employees' political, economic, social, and cultural interests towards employers, parties, and the state. All actions conducted by the Ã-GB and its affiliates underlie the rules and regulations of the Austrian Labor Law. (Traxler & Pernicka, 2007, p. 210). Besides the realization of the employees' interests, the Ã-GB's and its affiliates' main tasks also encompass the realization of price stability and economic growth, as well as the securitization and enlargement of the social security. (Ã-GB, 2003). With regard to the tasks and responsibilities, the Ã-GB focuses on the interests of all employees whereas its nine affiliates rather concentrate on representing „the specific interests of employees within their respective membership domains" (European Foundation for the Improvement of Living and Working Conditions, 2009, August 14a.)

Within the past decades, the trade union structure in Austria has experienced a significant process of restructuring. In the late 1990s, the Ã-GB counted 17 trade union affiliates. Due to several projects involving the merger of some of these affiliates, the number of trade union affiliates has dramatically decreased. As already mentioned in the previous paragraph, today the Ã-GB has nine affiliates. (European Foundation for the Improvement of Living and Working Conditions, 2009, October 26; Fulton, 2009b).

Besides this restructuring process, the Ã-GB has experienced some financial distress which has highly damaged the Ã-GB's reputation. Consequently, trade union membership has experienced an annual loss of about 1% within the last years. Therefore, getting new members is one of the most important priorities of the Ã-GB. (European Foundation for the Improvement of Living and Working Conditions, 2009, October 26). The tendency of declining trade union density is going to be discussed in greater detail in section 4.3.

2.3 Employee Selection Process and Training and Development

Besides the way workplace representation is handled in Austria, another important issue to be mentioned is the process of how employees are usually selected within a job selection process in Austria. The most common way of recruiting new employees is to make use of application forms and one-to-one interviews. (Erten, Strunk, Gonzales, Hilb, 2004, p. 111). One-to-one interviews are characterized by personal conversation involving the interviewer and the interviewee.

Furthermore, with regard to the amount of money spent for training and development of its employees, it is mentionable that Austrian companies do not aim at spending a lot of money on training and development issues. This observation applies to both the public sector and the private sector, whereas there may be remarkable differences among different organizations. Nevertheless, the importance of training and development has increased within the past resulting in a slight increase in the value spent on training and development issues. (Erten et al., 2004, p. 111ff.).

2.4 Working Time Regulations

By law, the maximum allowed working time per day is 40 hours. In 2007, Austria introduced flexible part-time arrangements; since then working time has been an issue to be dealt with in collective bargaining. Even though Austria experiences an increasing usage of the flexible part-time working system, about 50% of all Austrian organizations do not make use of this system. (European Foundation for the Improvement of Living and Working Conditions, 2009, October 26).

2.5 Industrial Conflicts

Industrial conflicts and strikes resulting from these conflicts also play a crucial role within HRM. According to von Eckardstein, Brandl, Maier, and Thurner (2008), strikes are not very common in Austria; this implicates that "the number and duration of strikes in Austria is among the lowest in Europe" (p. 34). The last remarkable strike took place in 2003 and involved more than 780000 employees. The reason for this strike activity was the reduction of pension funds through the government as well as the restructuring plans of the state-owned Austrian railway system. (Traxler & Pernicka, 2007, p. 226).

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2.6 Diversity in the Austrian HRM System

The Austrian HRM system is characterized by a relatively low level of diversity, at least with regard to gender equality. Gender equality does not play an important role within collective bargaining agreements, and studies have revealed that only between 5% and 6% of all top management positions are taken by female employees. Taking these figures into consideration, the Chamber of Labor in Austria aims at taking different measures and at implementing regulations finally resulting in an increasing representation of women in top management positions. (Adam, 2010, April 23).

Besides a strong relationship to Germany, loosened mobility barriers and the process of globalization have lead to a strong connection between Austria and Eastern Europe. Many potential employees are aiming at working in Austria; Austria, in return, may benefit from this trend due to very low labor costs. Hence, in order to stay competitive within the European market, Austria will have to adapt its HRM system attracting foreign employees to work in Austria. (von Eckardstein et al., 2008, p. 35-36).

3 Collective bargaining in Austria

3.1 Definition of Collective Bargaining

By law, employees have the right "to self-organization, to form labor organizations, to bargain collectively, and to engage in concerted activities for purpose of collective bargaining" (Carrell & Heavrin, 2007, p. 112). In this context, collective bargaining can be seen as a process in which union leaders, which represent a group of employees, negotiate with representatives of management with regard to any term of employment. This may involve price of labor, work rules, individual job rights, as well as management rights and union rights. In case of collective bargaining, negotiations are done by a trade union also referred to as labor organization. (Carrell & Heavrin, 2007, p. 109).

3.2 The Collective Bargaining System in Austria

In Austria, collective bargaining mainly applies to the private sector and takes place on a multi-sectoral level meaning that bargaining is aiming at the standardization of employment-related issues within one industry. (OECD, n.d., p. 170).

The collective bargaining system in Austria rather focuses on quantitative aspects such as working time and remuneration than on qualitative issues like training and development. As already mentioned, besides training and development, collective bargaining in Austria does not highly focus on gender equality issues either. (European Foundation for the Improvement of Living and Working Conditions, 2009, October 26). Nevertheless, the collective bargaining system regulates the minimum current wage rate and the annual increase in the minimum wage rate. (Fulton, 2009c). Even though, by law, there is no minimum wage level in Austria, this issue is negotiated within the collective agreements. As of 2009, the overall minimum wage level amounted to 1000 Euro; in spite of this, the level may be different with respect to the employee's age, job classification, and period of employment. (European Foundation for the Improvement of Living and Working Conditions, 2009, October 26).

If an extension of the issues covered in the collective bargaining system is asked for, the Federal Arbitration Board is responsible for issuing any extension. But due to the fact that in Austria nearly all areas are covered, a request for an extension is not very common. (European Foundation for the Improvement of Living and Working Conditions, 2009, October 26).

Negotatiations usually take place between the unions, which represent the employees, and the Chamber of Commerce, which represents the employers. Very often different agreements for people with a different employment status are negotiated; this explains the existence of different trade union affiliates. (Fulton, 2009c).

Collective bargaining agreements are differentiated with respect to white-collar workers and blue-collar workers, industries, and company size, as well as production method. In this context, white-collar workers are employees mainly responsible for "non-manual, commercial, technical, administrative, non-technical, or office work" (European Foundation for the Improvement of Living and Working Conditions, 2009, August 14b). Blue-collar workers, on the other hand, are also called manual workers. Their main field of employment, amongst others, is within fabrication, material handling, as well as maintenance and repair. (OECD, 2002, August 13). Nervertheless, the Austrian HRM system tries to harmonize the negotiations for blue-collar and white-collar workers by introducing joint collective agreements for both employee groups.

Collective bargaining in Austria shows a tendency towards a decentralized system and an individual payment system. This is represented by high differences with regard to the employee status and the wage setting within different sectors but also within gender resulting in a high gender pay gap. According to Müller (2000), even if Austria indicates a tendency towards a decentralized collective bargaining system, compared to other European countries like Sweden it has not reached a very high level of decentralization so far. (p. 77).

3.3 Trends of Collective Bargaining in Austria

Besides outlining the main characteristics of the Austrian collective bargaining system, it is also very important to mention the trends the country has experienced with respect to collective bargaining.

Until 1973 only a limited number of collective bargaining issues had been covered. After 1973 many additional aspects with regard to collective bargaining have been covered, for example pension schemes.

Until 1980, the Parity Commission for Pay and Prices had been responsible for regulating all issues regarding collective bargaining. The Parity Commission for Pay and Prices involved, amongst others, the Chamber of Labor and some delegates of the Ã-GB; the Commission has become less important in the 1980s. (Traxler, 1999, December 28). The reason is that Austria has experienced a trend towards a so called "organized decentralization", meaning that bargaining tasks have been handed over from higher-level bargaining parties to lower-level bargaining parties while keeping control over low-level bargaining. (European Foundation for the Improvement of Living and Working Conditions, 2009, October 26)

The importance of collective bargaining has continuously increased within the last years resulting in an increasing number of collective agreements and a very high level of collective bargaining coverage. The reason for the increasing number of collective agreements is that issues which have been regulated by the government so far are now included within the collective bargaining system. Furthermore, industry sectors like health care and the social sector are now included within the Austrian collective bargaining system. The coverage of additional sectors is represented by a very high level of collective bargaining coverage in Austria being currently between 98% and 99%. (European Foundation for the Improvement of Living and Working Conditions, 2009, October 26). Actually, Austria has always been characterized by a very high level of collective bargaining coverage. The level of collective bargaining coverage has already added up to more than 70% in the year 1960. (Ochel, n.d.).

4 Major recent trends in the Austrian HRM system

In the following the major recent trends in the Austrian HRM system are going to be mentioned. The author is going to focus on and discuss in greater detail the development of the trade union density in Austria being regarded as a the most important major trend in the Austrian HRM system.

4.1 Demand for Part-time Working Agreements

In Austria, the demand for part-time working agreements has continuously increased within the last decades. Figure 1 displays the development of part-time working from 2000 until 2009. Even though not outlined in the Figure 1, the demand for part-time working agreements has also experienced an increasing trend within the years prior to 2000. (Statistik Austria, 2010a). Figure 2 displays the trend of part-time working from 2000 until 2009 taking the separation between male and female employees into consideration. Figure 2 shows that, in general, the career of female employees is more characterized by part-time working agreements than the career of male employees. In addition, the annual increase in part-time working is higher in case of female employees than in case of male employees.

Figure 1: Part-time quota (2000 - 2009) in %

Figure 2: Part-time quota (2000 - 2009) in %; Classified by gender

The reason for this development could be that women, in comparison to men, are still more responsible for childcare and housework and may finally benefit from part-time working agreements. Furthermore, the introduction of part-time working agreements especially in branches employing a high portion of women like the retail industry and cleaning companies may be another reason for the increasing trend of female part-time employees. (Statistik Austria, 2010b).

4.2 Women in the Austrian HRM System

As already mentioned in the section "Diversity in the Austrian HRM system", the Austrian collective bargaining system does not cover gender equality, and the representation of women in management positions amounts to only 5% to 6% being a very small proportion. Additionally, the Austrian wage system shows high differences between the wages of female and male employees indicating a high gender wage gap.

There may be different reasons for the position of female employees in the Austrian wage system. One reason could be that female employees are rather employed in branches which are overall lower valued than those branches male employees are mainly working in. Furthermore, another explanation could be that women's competences are, generally speaking, highly undervalued compared to men's competences resulting in a high wage gap between both genders. Finally, as already mentioned in the previous section, women are still regarded as more responsible for childcare and housework than men. This implies that overall women tend to take more part-time working agreements resulting in a reduced amount of working hours. (Adam, 2010, April 27). In Austria, part-time working is still associated with small opportunities for advancement, with a low level of qualification required, and with a very low level of income. (Scambor, 2003, p. 17).

In order to address and to act against the problem of the gender wage gap, the government as well as social partners have taken several measures. For instance, different measures taken include awareness-raising campaigns launched by the Ã-GB and the Federal Ministry for Women and Public Employees, special education and training policies, childcare benefit schemes, as well as the increase of the number of childcare facilities. (Adam, 2010, April 27).

In the end, due to the increasing awareness of diversity and the increasing importance of diversity on a global level within almost every business sector, it is necessary that the Austrian government and the social partners take certain measures in order to address the problem of the existing gender wage gap in Austria and in order to adapt their system to the European system.

4.3 Development of Trade Union Density in Austria

Trade union density compares the actual number of employees within a trade union and the potential number of employees; the figure is usually given in percentage.

Since the 1980s trade union membership has decreased in almost every European country. With regard to Austria, trade union density has already experienced a continuous decline since the 1960s. According to Traxler (1998), "Austria (has) experienced one of the sharpest declines in the density of employed membership" (p. 250). Figure 3 illustrates the development of trade union density in Austria, focusing on the years 1990, 1995, 1999, 2004, and 2007. (Adam, 2010, May 17). The decrease of the trade union density is reflected in Figure 3 as well.

Figure 3: Trade union density (1990 - 2007) in %; Percentage of employees

According to Lesch (2004), inflation as well as the unemployment rate have a great impact on the union density within a specific country. (p. 14). In case of an inflation, employees aim at joining a trade union in order to "defend their real wages" (Lesch, 2004, p. 14); this is attributed to the trade unions' main responsibility in achieving higher wages and in looking after better working conditions. On the other hand, an increasing unemployment rate has a negative impact on the trade union density as well. Other reasons for a decline in trade union membership could also be certain economic and structural changes unions are not able to handle with or not able to adapt to.

In case of Austria, the main cause for the decline in trade union density is the long-term structural transformation of the Austrian economy as well as the increasing unemployment rate, especially within the manufacturing sector and the public sector. (European Foundation for the Improvement of Living and Working Conditions, 2009, October 26). In the 1960s and 1970s, the Austrian labor market was characterized by nearly full employment. But in the 1980s the unemployment rate continuously increased and reached 4.3% in the 1980s and even 6.4% in the timeframe from 1990 to 1997. Even if, in comparison to other European countries, this rate is very low, the increasing number of unemployed people has had a negative impact on the trade union density. (European Foundation for the Improvement of Living and Working Conditions, 2009, August 14c).

Another very important reason for a decline in the trade union density could be that employees have not seen any incentives in joining a union. In Austria, employees are obliged to be a member in the Chamber of Labor. Due to this compulsory membership, workers already benefit from the basic services provided by the Chamber of Labor. In conclusion, a membership in a trade union may not be regarded as an incentive by many Austrian employees. (Traxler & Pernicka, 2007, p. 216). Therefore, it is of great importance to address this problem of lacking incentives and to focus on the question what types of measures have to be taken in order to attract potential members to join trade unions.

The Ã-GB and its trade union affiliates have recognized the decline of trade union membership and have realized the need to implement certain strategies and measures in order to attract potential trade union members which will support the increase of trade union membership. One strategy that has been implemented is to focus more on the interests of foreign workers by concentrating more on migrants' interests within the Ã-GB and the trade union affiliates. Another measure taken is the increasing involvement of female employees in the trade unions. In the past, the proportion of women in trade unions was very low in comparison to male employees. In order to attract more women to join trade unions, departments focusing on the women's interests have been introduced in different trade union affiliates. In this context, a regulation, which was implemented in 2006, states that the number of female representatives within the Ã-GB and its affiliates is supposed to reflect the number of total female employees within the trade unions. In the end, another strategy pursued is that employee groups which have not been included in the Austrian trade union structure so far are now allowed to join trade unions. These employee groups include, for example, part-time workers, temporary agency workers, call center agents, as well as dependent self-employed people. (Adam, 2010, May 17).

5 Conclusion

After having conducted the analysis on the Austrian HRM and employment relations system it can be concluded that many different features like workplace representation, training and development, diversity, and collective bargaining characterize the Austrian HRM and labor relations system. In this context, key characteristics of the Austrian HRM and employment relations system encompass, for example, the workplace representation through work councils, the very low level of industrial conflicts in comparison to other European countries, the monopolistic trade union structure, as well as the highly decentralized collective bargaining system showing a very high collective bargaining coverage. Austria has also experienced several trends within the last years, whereas the continuous decline in the trade union membership may be regarded as one of the major developments within the recent years. In the end, other countries will, for sure, show other characteristics with respect to the range of HRM-related features. Therefore, this study may serve as a good basis for further comparing the Austrian HRM system with other countries' systems.