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Austria has low levels of labour migration from non-EU/EFTA countries. At the same time, intra-EU free mobility has grown significantly and since 2011, overall migration for employment is above the OECD average. It recently reformed its labour migration system, making it more ready to accept labour migrants where they are needed, especially in medium-skilled occupations in which there were limited admission possibilities previously. This publication analyses the reform and the Austrian labour migration management system in international comparison.

This chapter reviews the role of the different components of migration for employment – i.e. permanent and temporary labour migration as well as free-mobility flows – in meeting labour needs in Austria. Assuming that approximately half of free movement flows are for employment, employment-related free mobility is currently about 15-20 times as large as managed labour migration, which suggests that most needs are in fact filled by free mobility. That notwithstanding, while it is difficult to assess the labour market impact of the different components of labour migration to Austria, the available evidence suggests that free mobility and managed labour migration are complementing each other with free mobility mainly filling jobs in the medium-skilled segment. This stands in contrast to managed labour migration, where most permanent migrants are employed in highly skilled jobs, as well as temporary migration, which mainly concerns low-skilled seasonal occupations.

Austria is a country with favourable labour market conditions and high quality of living. However, it does not appear to be on the radar screen as a destination country among potential labour migrants abroad. Employers seem reluctant to consider recruiting from abroad. Compared with other OECD countries, there have also been relatively few, mainly small-scale and largely un-coordinated efforts to promote Austria as a destination for labour migrants, although there have been some improvements recently. To better tap into the potential of labour migration, a comprehensive approach is advisable. This should encompass the marketing of the RWR-Card into a broader branding strategy, making opportunities for labour migration to Austria better known to employers and applicants alike. Ideally, the social partners should be systematically involved in the process.

Labour migration policy in Austria was long associated with the guestworker scheme of the 1960s. Following the first oil crisis in the early 1970s, official recruitment was curtailed but the guestworker model continued to provide the overarching steering mechanism for immigration. The early 1990s marked a turning point. Against the backdrop of sizeable inflows of humanitarian migrants, the guest-worker regime was replaced by a general quota on foreign employment and a system of annual numerical limits for residence titles. Migration from non-EU/EFTA countries was limited to family members, seasonal labour and so-called key workers, that is, persons holding special skills that were deemed necessary on the Austrian labour market. Following the accession of the EU-8 countries in 2004, transitional arrangements were implemented to protect the Austrian labour market with exemptions being granted to EU-8 nationals in shortage occupations. In 2011, in light of looming demographic challenges, a major reform of the Austrian legal framework for labour migration, the so-called Red-White-Red (RWR)-Card, replaced previous regulations based on numerical limits by a points-based admission scheme, making the system more transparent and ready to accept labour migrants where they are needed, including in medium-skilled occupations in which there were limited admission possibilities previously. The reform coincided with the implementation of the EU Blue Card and the full opening of the labour market for the countries which joined the European Union in 2004, making its effect difficult to assess.

In July 2011, in light of looming demographic challenges, a major reform of the Austrian legal framework for labour migration took place, with the introduction of the so-called Red-White-Red (RWR)-Card for non-EU/EFTA nationals. The reform built on an initiative of the social partners, which play a unique role in the management of labour migration in Austria. It replaced previous regulations based on numerical limits by a points-based admission scheme, with a view to make the system more transparent and to increase the scale and scope of skilled and highly skilled labour migration to Austria. The new model has three main tiers – a highly skilled tier, a medium-skilled tier for shortage occupations and a labour market tested tier in the medium to highly skilled range with a salary threshold. Points are given for formal qualifications, language, age, and work experience. There is now a six-month job-search visa available for migrants eligible in the highly skilled tier and a facilitated student route. In addition, Austria has implemented the EU Blue Card in parallel with the RWR-Card system in 2011.

Most labour migration to Austria is temporary. Flows are equivalent to 0.5% of the labour force, which is above the OECD average. The by far largest component of temporary labour migration is seasonal labour, accounting for well above two thirds of all temporary flows. Following the end of the transitional arrangements to nationals from the central and eastern countries which joined the European Union in 2004, numbers of admissions of seasonal workers have dropped significantly as these nationals working in seasonal employment no longer require a separate permit. Further categories of temporary labour migration include intracorporate transfers and posted workers, where numbers are small, as well as researchers, artists and a sizeable other category. Common to most of these categories is the fact that they cannot be transformed into a permanent residence permit – although technically, temporary residence permits may be renewed indefinitely upon expiry. Another important component of temporary flows is the many international students who are not considered labour migrants but have some work rights. The bulk of working international students go into low-skilled occupations in the hospitality and cleaning sector.

Austria has favourable labour market conditions compared with other OECD countries. Employment levels are high and in Q1-2014 the Austrian harmonized unemployment rate was the lowest in the EU, although it is on the rise and there are considerable regional differences across Austrian states. Demographic challenges are stronger than elsewhere and, in the absence of migration, Austria is one of the OECD countries in which the impact of demographic change on the labour market will be felt soonest. At the same time, labour shortages do not seem to be particularly pressing and widespread yet, although the available evidence suggests that there are currently some shortages in Austria, and that the incidence of shortages is growing. Despite a considerable increase since 2010, labour migration flows from non-EU/EFTA countries remain low in international comparison and new labour migration is currently not expected to provide a major contribution to countering ageing-related labour shortages. Free mobility, however, is important and per-capita flows from the European free-movement area are among the highest in European OECD countries.

Austria has favourable labour market conditions compared with other OECD countries, and the demographic challenges are stronger than elsewhere. Against this backdrop, a major reform of the legal framework for permanent labour migration – the Red-White-Red (RWR)-Card – was introduced in 2011 with a view to facilitate admissions of labour migrants in highly skilled occupations and to open up for migration for shortage occupations in the medium-skilled segment. The reform abolished numerical limits on permanent labour migration and converted the system into a points-based admission scheme. At the same time, the EU Blue Card was introduced. In spite of a significant increase since then, Austria still has one of the lowest inflows of permanent labour migrants relative to its population.

This chapter examines the functioning of the Austrian system for permanent labour migration. It looks both at its efficiency – i.e. the time, cost and complexity of processing – and its effectiveness, that is its ability to respond to labour market demand. Labour market tested “key workers”, mostly in higher skilled occupations, are by far the most important category under the new RWR-Card scheme, followed by workers in shortage occupations. Numbers in the very highly skilled category, the international student track and the entrepreneur track are marginal, as well as the inflow of EU Blue Card holders. Overall, the system is rather complex and does not build sufficiently on the potential strengths of Austria as a destination country. Examples of the complexity include overlapping schemes, which are often aimed at the same target group. The number of schemes could be rationalised, and the structure for admissions of highly skilled workers could be simplified. The introduction of a points-system has made admission criteria more transparent, but the parameters of selection do not always seem well balanced and targeted. Examples include the low rating given to German-language skills, and the lack of preference for Austrian qualifications, unless they correspond to a master degree, which currently hamper the benefits that Austria could reap from its reform. Administrative procedures could be streamlined. Rejection rates are high and migrants and employers appear ill-informed about the requirements. Increasing application fees could help to avoid clearly ineligible applications and the money raised could be used to improve the client-service aspect.

This review of Austria’s labour migration policy is the fifth of a series conducted by the OECD Secretariat as a follow-up to the 2009 High Level Policy Forum on International Migration. The rationale for this initiative was the recent growth in labour migration observed in many countries and the likelihood that recourse to labour migration would increase in the context of demographic ageing. Prior to the 2008-09 economic crisis, many countries had made substantial changes to labour migration policies with a view to facilitating recruitment from abroad. With the introduction of these changes, more prominence was accorded to the question of their effectiveness and more broadly, to the objectives of labour migration policy in general. Although the economic crisis put a damper on labour migration movements, it did not stop them entirely, and interest in labour migration policy is unlikely to diminish in the near future.