The Austrian economy has weathered the crisis well on the back of an export-led recovery. The authorities should seize the opportunity to strengthen reforms and maintain high growth, which in the past has been considerably boosted by European integration effects which are likely to fade out in the future. In this context recommendations from earlier OECD Economic Surveys remain relevant:
• All subsidised avenues into early retirement should be eliminated.
• The work incentives of low-skilled workers should be strengthened and their cost of employment reduced. Successful up-skilling programmes should be further developed.
• Early child care infrastructure and full-day schooling should be expanded, with recent government initiatives going in the right direction.
• Education reforms should continue, to overcome the excessively early streaming of students, and to permit universities to select students and charge tuition fees, accompanied by a comprehensive grant and income-contingent loan system to avoid socioeconomic segregation.
• Competition should be further enhanced in network services such as rail, postal services and electricity, as well as in liberal professions.
Fiscal vulnerabilities, while low in international comparison, have increased through the crisis. The recent consolidation measures may not suffice to prepare for future risks and challenges, not least related to ageing. In these circumstances, Austria should make full use of the performance budgeting framework that it plans to introduce from 2013, for more assertive spending prioritisation and cost-benefit checks[...]