UniCredit Bank Austria analysis:
Working time per job in Austria on the decline
- While the number of jobs has increased by around 35 percent since 1995, the volume of working time has only increased by around 18 percent. The average working time per job has dropped from about 32 to currently 27 hours per week
- The reported manpower shortage is therefore also due to a lack of available working time from the labour supply
- The drop in working time per job is offset by a significant rise in productivity. On average, one employee has become one third more productive since 1995
- A further decrease in average working time per job is expected — a growing challenge for prosperity in Austria
"The working time per job in Austria has fallen by around 14 percent since 1995. Nonetheless, a significant rise in productivity and the increase in the number of employees have enabled an increase in added value by around 60 percent in real terms", says UniCredit Bank Austria Chief Economist Stefan Bruckbauer. He adds: "The decrease in the number of hours worked per employee is expected to continue in the coming years. Social and demographic change is becoming a major challenge for the preservation of prosperity in Austria".
Working time per job has been on the decline for a long time, accelerating since COVID-19
By mid-2022, employment in Austria reached a new record high. In total, there were around 4.2 million jobs. This represents an increase of 1.1 million since 1995. The number of jobs has therefore risen by an average of just over one percent per year.
Despite record levels of employment, companies are complaining more and more about an ever tighter labour supply. The number of job seekers, including trainees, fell to around 250,000 in autumn 2022, and well over 100,000 vacancies cannot be filled at present. At 2.0, the average number of applicants for a single position is by far at its lowest in the last three decades.
"Given the record level of employment, working time in Austria is also at an all-time high in the second quarter of 2022, with a seasonally adjusted figure of almost 1.5 billion hours. However, since 1995, the volume of working time has 'only' increased by around 18 percent, while the number of jobs has increased by 35 percent", says UniCredit Bank Austria Economist Walter Pudschedl. The diverging trend between the two time series has only intensified since the pandemic. The number of jobs is currently around 2.5 percent higher than in 2019, while the volume of working time has decreased slightly.
With a seasonally adjusted working time of around 360 hours per job, the average working time per job in the second quarter of 2022 is more than 50 hours lower than the annual average for 1995. This corresponds to a decrease in average working time of around 14 percent. In the first ten years—after initial increases—, the decline in working time per job remained relatively manageable; however, working time dropped significantly from 2005 and has now dropped again compared to the pre-pandemic period. Since 2019 alone, working time per job has fallen by 10 hours (3 percent) per quarter.
"Since 1995, the weekly working time per job has decreased from around 32 to 27 hours, and the pace of the decline is accelerating. The average weekly working time is currently almost one hour lower than before the outbreak of the pandemic. Therefore, the lack of manpower that domestic companies are complaining about also appears to be caused by a lack of available working time from the labour supply", says Pudschedl.
Big differences between sectors
Since 1995, there have been above-average drops in working time per job in the agriculture and forestry, public administration, education, health and social services sectors, as well as in other services and the trade, transport, accommodation and catering sectors, in particular. While there is only a relatively small decrease in working time per job of around 15 hours per quarter in the provision of financial and insurance services and in manufacturing, only the construction industry has maintained a constant working time since 1995.
Compared to 2019, i.e. before the outbreak of the pandemic, the strong economic recovery period from the pandemic has led to an increase in working time per job not only in the construction industry but also in manufacturing. With around 9 hours per quarter, or more than 2 percent, construction saw the largest increase in working time within this relatively short period.
Productivity has risen sharply
"However, the drop in working time per job is offset by a significant increase in productivity. On average, one employee has become around a third more productive since 1995," said Pudschedl. Gross added value per hour worked has doubled from just over 30 euro in 1995 to currently over 60 euro. This corresponds to an inflation-adjusted increase of more than 35 percent since 1995.
"Above-average productivity improvements were achieved in industry, as expected. In manufacturing, output per hour worked has almost doubled. However, productivity development in the service sectors has not been able to keep up with that seen in the production sector," says Pudschedl.
One exception is the provision of financial and insurance services, in which productivity has slightly more than doubled since 1995. While productivity progress has been slightly below average in the information and communication technologies (ICT), real estate, accommodation and catering sectors, other service sectors, such as economic services, show little improvement, and in other services there has even been a decline in labour productivity. In this sector, gross added value per hour worked has decreased by around 2 percent since 1995.
Increase in added value falls short by around 12 percent due to decrease in working time
The rise in productivity has played a major role in an increase in gross added value of almost 60 percent in real terms in Austria since 1995. The increase in productivity alone has resulted in a rise in gross added value of more than 35 percent in real terms. The 1.1 million increase in jobs alone has enabled gross added value (in real terms) to rise by roughly the same level as productivity improvement.
"While the productivity gains and the higher number of employees have contributed almost equally to an increase in added value by around 60 percent since 1995, the fall in the average working time per employee has slowed this increase. If working time had remained unchanged, the gross added value in real terms in Austria would be over 12 percent higher compared to 1995", said Pudschedl.
The average working time has decreased by around 5 hours per week between 1995 and 2022. If the decline had been limited to around 4 hours per week, the working time requirement would be completely covered (in purely mathematical terms) by the just over 100,000 vacancies currently reported in the Austrian economy, as these would account for the additional work of around one hour per week per job. That would correspond exactly with the one hour of work 'lost' since the pandemic. This is a purely mathematical consideration that does not take into account the required qualifications, among other things.
Challenges of social and demographic change on the rise
The decline in available working time per job due to (labour) law and socio-political changes (keywords: marginal employment, part-time work, work-life balance etc.) is expected to continue in the coming years. In addition, Austria is facing a demographic development that suggests a weakening of the growth in labour supply.
"Social and demographic changes present challenges for the prosperity of Austria. Greater efforts to increase employment, improve productivity through innovation and use more efficient provision methods could counteract this. However, in many sectors, especially those offering contact-oriented services, such as accommodation and catering, and in the health sector, this is difficult to achieve without impairing quality or service", concludes Bruckbauer. At the same time, a further decrease in the supply of working time increases the risk of loss of wealth or significantly weakened growth in wealth compared to the past.
Further information can be found on: https://www.bankaustria.at/en/markets-research-analyses.jsp
Analysis "No time for work?", UniCredit Bank Austria, November 2022
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UniCredit Bank Austria Economics & Market Analysis Austria
Walter Pudschedl, tel.: +43 (0) 5 05 05-41957;
Email: walter.pudschedl@unicreditgroup.at