Executive Summary

Inclusive to a point, but failing to adapt
Incorporating a broad swath of interests into the policymaking process has traditionally been a strong point of the Austrian political system. However, the system has proven less capable of expanding the scope of political and social participation and has been even less successful at adapting effectively to new social and economic challenges. This pattern has continued throughout the period under review.
Shifting political behaviors
Membership rates in political parties are now lower than ever before, and voter turnout in general has been declining. At the same time, electoral volatility has increased as voting behavior grows increasingly less predictable, with the success of some new parties demonstrating the system’s adaptability. There has been serious debate in recent years over instruments of direct democracy such as popular initiatives, which could enhance the roles played by citizens in the policymaking process.
Economic power structures changing
As a consequence of globalization and migration, social-partnership networks have lost some of their significance. Labor unions are playing less of a role in the economy, while globalization has meant the loss of traditional industries. As the Austrian economy is less and less an island led and controlled by Austrian institutions – ranging from the government to the neocorporatist social partnership – the situation is indubitably changing. Compared to other European countries, Austria is still quite efficient in its capacity to accommodate and reconcile divergent interests, but less so than in the past. A growing number of young people, in particular those without higher education, are finding it increasingly difficult to access the labor market, while migrants often feel isolated and unable to improve their position within society.
Compromises have undermined innovation
A clear negative correlation between innovation and the accommodation of interests has been evident in recent years. Interest accommodation in Austria still involves powerful veto players being able to satisfy the basic expectations of important clients. Organized labor may not be as strong as it used to be, but it is still strong enough, for example, to prevent any significant reform of the school system. Unionized teachers and conservative politicians have an interest in defending the status quo, and the government has not proven able to push forward with any wide-reaching reforms in this area. Despite increasing pressures associated with the effects of demographic change, unions in general have prevented significant reforms of the pension system by vetoing a meaningful increase in the retirement age. In respecting these veto powers, the government may be strengthening social peace, but it does so at the cost of innovation. The situation is even worse in health care, where the physicians’ organization is blocking all reform measures at high costs.
Establishment wary of taking on xenophobia
Austria also features contradictory tensions with regard to interest accommodation and societal participation. A significant number of Austrian political parties have proved reluctant to criticize the xenophobic attitudes articulated by some influential print-media publications. Fears of losing votes have trumped concerns regarding participation, which has left Austria without an effective integration policy.
Rising instability not being taken seriously
Austrian society and its political system are changing. Long considered to have one of the most stable party systems in Europe, Austria is growing increasingly subject to political polarization and voter volatility. Policymakers have yet to respond credibly to these developments, which underscores the fact that the risks of growing instability are not being taken seriously.
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