“The economy could pick up again in the summer”

Economics Minister Martin Kocher is cautiously optimistic about the economy. The economist sees a possible trend reversal in the OÖ Nachrichten interview for the summer.

OÖ Nachrichten: While some economists are predicting an explosion in government debt and a severe recession, many companies are saying that the actual situation is not that bad. How is the economy really doing?

Martin Kocher: This is actually difficult to predict because of the geopolitical aspects. In the first half of the year, the entire world will experience a very weak growth phase because of the high energy prices. But by the summer at the latest, the economy could pick up again. Despite all the uncertainty, I see good reasons why the negative development will not last long.

On the other hand, the states have had to spend a lot of money to cushion the pandemic, the energy crisis and inflation for the people. So much that the question arises whether one can afford another crisis like this at all.

Let’s not hope that there will be another crisis. But it is true that more attention will have to be paid to solid public finances in the coming years. The room for maneuver has narrowed, even more so as a result of the interest rate hikes. It is all the more important that the government measures that are really necessary are accurate. About the climate change.

But shouldn’t the states invest even more money to actually achieve climate change?

That may be the case, but it doesn’t have to be just public investment. The question is where the strongest leverage is. It is important that politicians guarantee long-term planning security for the private sector. Hence our climate and transformation offensive until 2030. This will activate private capital.

Up until a year or two ago, we were able to generate our growth with cheaper energy. That’s over now. How does this affect our prosperity?

You have to differentiate. I think it is possible that the prices for electricity that were paid before the war can be reached again, because the rise in prices was also driven by the design of the electricity market. Gas prices will remain higher, making production more expensive for certain industries. This means that we have to get better at other location factors, such as skilled workers, so that energy-intensive production is still possible in Europe.

The former German Economics Minister Peter Altmaier called for a European electricity price for industry in the OÖN interview. Is something like that conceivable?

We would have proposed something similar, but so far we have not received a majority for it. The idea was an upper limit for the price of electricity. Anything above that should be subsidized at European level. This would mean that the price of electricity would go down and would not be dominated by the most expensive gas-fired power plant. Along the Iberian model but with a volume component. But that is only possible in European harmony.

A fragmented global economy will be discussed at the World Economic Forum in Davos next week. Countries and economic blocs are bringing production, for example for medicines or microchips, back to Europe so that they are not dependent on others. There is already talk of the end of globalization. Is the pendulum swinging the other way now?

It takes the right balance. There are areas where you strategically want to be less dependent, like medication. But the international division of labor has created a great deal of prosperity and should not be reversed. Besides that, the entire production couldn’t be retrieved from anywhere. We wouldn’t have enough workers for that in Europe, for example.

The labor market reform that you have been negotiating in the government for several months has failed. Are you still mad at the Greens?

I’ve never been mad at the Greens. We were too far apart in terms of content to put together a sensible package for unemployment insurance reform. I also didn’t want to sell something that wasn’t a major reform as such. We prefer to take small but effective measures. We have extended the education bonus. By the end of the quarter, we want to present proposals on how working in old age can be made more attractive. What won’t change is the unemployment compensation model itself. I think there are ways to improve that. But there is currently no majority for this.

In order to make working in old age, i.e. after retirement, more attractive, wage tax or pension insurance contributions could be eliminated. What do you prefer?

I don’t want to anticipate the working group. We’ll talk about taxes and duties. It is also about the framework conditions, such as the health aspects of working in old age. And there should still be protection for those who can no longer work.

But the question arises as to whether the majority of Austrians see work as a burden from which one has to free oneself.

It’s a matter of presentation. Of course, there are jobs that are more physically demanding and where people prefer to retire earlier. But we want to make it possible to work when it is wanted. In principle, it is important to increase the employment rate between the ages of 60 and 65, and Austria has some catching up to do. There are several reasons for this: not enough preventive health care, but also collective agreements that mean that employees become more expensive as they get older. But something is also changing: more people want to work, companies are increasingly hiring unemployed people who have not been employed for a long time. Long-term unemployment has almost halved.

How do you intend to get part-time employees to add hours again? That would also relieve the labor market.

The Netherlands and Austria have the highest part-time rates in the EU, with many more women working part-time in Austria. We must succeed in creating framework conditions in order to persuade more part-time employees to work full-time or to work more hours per week. On the one hand, this has to do with the lack of childcare and, on the other hand, with the incentives.

Because the taxes almost eat up the plus?

Rather the ancillary wage costs, we have already done a lot with taxes. That’s why I urge that the difference between gross and net continues to decrease. Especially in the lower income bracket, where income tax plays little or no role.

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Dietmar Mascher

Deputy Editor-in-Chief, Head of Economics

d.mascher@nachrichten.at

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