AUSTRIA - The recently-settled deal on sustainability in the Austrian pension system may be forcing a breakdown in the government coalition.

The Social Democrats (SPÖ), the senior party in the Austrian government, has been under fierce internal, as well as external, criticism for being too weak in negotiations with their coalition partner the conservative ÖVP over the pensions deal.

Critics have noted, in particular, the pension deal in which social minister (SPÖ) and finance minister (ÖVP) agreed to negotiate measures included a hike in contributions to the pension system and raising the retirement age as soon as longevity increased to over a certain threshold. (See earlier IPE story: Austrian government reaches pensions agreement)

Karl Öllinger, deputy party head for the Greens, said "social minister Buchinger together with party leader Alfred Gusenbauer have led the SPÖ astray  in the case of the pension automation".

Because many people within the SPÖ agree, federal chancellor Gusenbauer has now made way for infrastructure minister Werner Fayman to become the new operational head of the party.

One of Fayman's first announcements was to reject the pensions deal saying it is not socially responsible and was the wrong signal in a time when people feared for their future and pensions.

"I will not be part of increasing people's uncertainties and fears," he said.

In a statement, Fayman openly told the coalition partner he was "not afraid" of early elections should the ÖVP choose to run an election campaign on "increasing the fears of pensioners and young people".

The SPÖ wants any measure changing the pension system to be run by parliament first but the ÖVP wants to stick to the deal which is already less than their original suggestion of an automatic raise in the pension age without a sustainability commission or an agreement between social and finance ministry.

However, unions argue raising the retirement age even with the agreement of parliament is "mocking older employees".

"The labour force participation rate of older people in Austria is still well below the EU-average," Wolfgang Katzian, head of the union of employees in the private industry.

"We need specific measures in order to increase employment possibilities for older people and measure to prevent work-related diseases to ensure people are healthy right up to retirement age."

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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