Austria's industrial decline sparks calls for urgent economic reforms

Georg Knill, president of the Federation of Austrian Industries, has warned that Austria’s industrial sector remains weak despite signs of stabilisation. He described the government’s latest budget plans as 'far too unambitious' and called for major reforms to restore competitiveness. Knill highlighted that Austria’s industrial sector has struggled in recent years, losing ground due to high labour costs, expensive energy, and excessive bureaucracy. Although the recession in the sector officially ended in 2025, he stressed that growth has since stagnated at a low level.

Looking ahead, he expects the government’s dual budget for 2027 and 2028 to require significant revisions this autumn. Instead of the current approach, he advocated for a balanced budget to strengthen economic stability. On pensions, Knill proposed a gradual increase in the statutory retirement age from 65 to 68 by 2040. He argued that this adjustment would align the system with demographic realities and ease long-term financial pressures. He also criticised the EU’s Pay Transparency Directive, calling its implementation 'disastrous'. While acknowledging the directive as a positive step in theory, he claimed the draft bill by Social Affairs Minister Korinna Schumann (SPÖ) fails to address the gender pay gap effectively. Despite these challenges, Knill noted that Austria still holds untapped growth potential in international markets.

Knill’s remarks point to ongoing economic challenges for Austria’s industrial sector. With calls for budget reform, pension adjustments, and better pay transparency measures, his proposals aim to address structural weaknesses. The government’s next steps will determine whether these issues are met with concrete action.