Austrian Chamber of Labour

The Austrian Chamber of Labour as an instrument of workers’ interests

Eamon Dyas

[Below is a brief account of the history and purpose of the Austrian Chambers of Labour. It was stimulated by a conversation I had with Florian Wenninger, of the Institut für Historische Sozialforschung at the headquarters of the Arbeiterkammer in Vienna on 1 April last. However, I remain solely responsible for any inaccuracies and opinions.]

On 10 November 1884 The Times newspaper published a letter to the editor which was anonymously signed “A Trade Unionist”. What stirred the author to write to the newspaper was a concern for the plight of the British working class at the time of the economic downturn when the trade union movement was no longer the power it had been a mere ten years earlier. The author highlighted this decline in the following terms:

“I am free to confess that trades unions do not possess the power that they did some years ago. At the Trade Union Congress, 1873, the numbers represented were about 1,200,000, but I regret to say that since that date there has been a steady downward tendency until this year the numbers at the Aberdeen Congress amounted to about 500,000.” (Industrial Depression and Unionism. Letters to the editor, The  Times, 10 November 1884, p,7).

While acknowledging the importance of the trade union movement to the working classes, the anonymous author sought to look beyond the fluctuating strength of that movement and to seek an additional means by which the interests of the working class could be served. 

Consequently, “A Trade Unionist” sought to look beyond the trade union movement for a mechanism that could provide the means of representing working class interests in circumstances where the movement could not. In seeking this mechanism, he cautioned against a reliance on the existing political expressions that had framed the outlook of the working class at this time. Where he did seem to see some possibilities was in the working class developing its own organisation that pressed its interests on the State in a manner similar to those used by the capitalists. He argued that:

“Labour, to do itself any permanent good in the country, must follow the plan of the capitalists, by having a chamber of labour representatives, whose duty shall be to carefully watch over the interests of the workpeople of this country in any future treaties of commerce made between England and any foreign power, and who shall be independent of all political parties, whether Whigs, Radicals, or Tories.”

And,

“The remedies for the present state of things may be various, but, in my opinion, the main one is that the working classes should have a larger share in the profits of industry. Let the country spend more in wages, instead of hoarding money up. Then the working classes will have more to spend on food, clothing, fire, and housing.” (Industrial Depression and Unionism. Letters to the editor, The Times, 10 November 1884, p,7).

This idea of an organisation of the working class “whose duty shall be to carefully watch over the interests of the workpeople of this country” and which was “independent of all political parties” although articulated in a very narrow sense in this letter to The Times was something that was never developed in Britain. Instead, the trade union movement went on to organise its efforts along lines that sought to ensure that working class interests were exclusively invested in trade union activity alongside a political party which sought to exert that influence on the State through the operation of party politics.

Where the idea did develop was in Austria-Hungary and less than five years after “A Trade Unionist” had his letter published in The Times we see the following report in the North British Daily Mail under the heading “Proposed Austrian Chamber of Labour”:

“The Committee of the Lower House of the Austrian Reichsrath on the proposal to establish Chambers of Labour to-day heard evidence of 25 labour experts of all nationalities. The first question put before the experts was whether the Chamber for Labour in the form proposed would adequately represent the business and political interests of the working class. The minority dissented, but the majority replied in the affirmative, provided that the right of voting for Parliamentary representatives was granted to Chambers of Labour. Nearly all the experts demanded universal franchise, declaring they regarded the extension of the right of voting to Chambers of Labour as merely a stopgap, as a system of special interests actually existed in Austria. The hearing of the experts’ evidence will be continued.” (North British Daily Mail, Monday, 25 February 1889, p.5).

In fact the idea of a Chamber of Labour had been around in Austria from the mid-19th century. The idea was that it would provide a counterbalance to the chambers of commerce and trade organisations established by the business community in 1848. It was the liberal bourgeoise who had led that revolution and who since then had used such devices to further their influence on the political process. 

However, it would take the First World War to create the conditions in which the idea began to assume a reality. The social turmoil created by the mobilisation of civic society was one in which the working class became more assertive in pushing a political agenda which served its interests. The Russian Revolution of 1917 provided a template for the European working class, but that template had emerged from the particular circumstances of Russia and the Austrian working class was faced with different circumstances which meant that it developed a different route to the model based on the Bolshevist concept of the dictatorship of the proletariat. Instead, it was the politics of what became “Red Vienna” that was adopted. This relied on a political perspective that emerged from the dual influence of Christian Socialism and Marxism. Under this influence it was decided that the working class should seek power by legal means and that the capitalist mode should be retained but made to work for the working class. One component of the political architecture put in place to serve this function was the Chamber of Labour. This, alongside the Social Democratic Party and the trade unions was to constitute the three-pronged approach through which the working class interest was to be defended, asserted, and perpetuated. 

It was in 1918 that the Chambers of Labour were established on a meaningful footing. It was this which made the working class movement distinct from other countries. While the functions of the Social Democratic Party and the trade union movement were clear emulations of what was taking place in other countries in Europe, it was the function of the Chambers of Labour which provided a unique element serving the Austrian working class. As Florian Wenninger, Head of the Institut für Historische Sozialgeschichte of the Arbeiterkammer Wien described it:

“The Chamber of Labour would form the core of a counter-elite, a separate knowledge apparatus for the workers’ movement, which would make it possible to take decisions regarding legal issues, but also chiefly to assess the impact of individual political measures, independently of the bourgeois-dominated knowledge apparatuses (universities and ministerial bureaucracies).” (From: Champion of the Working People: a short history of Austria’s Chamber of Labour).

The Chambers of Labour (Arbeiterkammern) were established on a legal footing in 1920 when all the parliamentary groupings in the National Council of Austria voted to pass the Chamber of Labour Act. The legislation made provision for the establishment of Chambers of Labour to represent the interests of employees in the legal and Parliamentary decision making process in the same way that the Chambers of Commerce represented the business interests. This, together with the trade unions, provided the working class with a platform from which their voice would be heard irrespective of which party was in power. Their formation was described in one contemporary account as follows:

“Another important gain [alongside the Works Councils – ED] for the workmen consists of the ‘Workmen’s Chambers.’ This institution, which has not yet reached its full development, constitutes a legal representation of the interests of the workmen, able to meet on equal terms similar bodies representing the employers. The chambers have advisory, not executive, powers. Their objects are ‘to represent the economic interests of the working classes and to encourage effort to better their economic and social situation,’ and to report, advise and mediate in social and economic-political questions, to keep relevant statistics and so on. The sections represent respectively industrial workmen, industrial salariat, and employees in the public services of communications. They are legally empowered to consult with the representatives of the employers and chambers of commerce, and they are certainly among the most important of the too few links in Austria between employer and employee.” (The Social Revolution in Austria, by C.A. Macartney. Published by Cambridge University Press, 1926, pp.157-158)

The author, Carlile Aymler Macartney, was the brother of the Vienna correspondent of The Times and was British vice-consul in Vienna from 1921 to 1925. He was also suspected of being an agent for British intelligence in the city during his stay there. (See: C.A. Macartney and Central Europe, by Miklos Loikó. Published in European Review of History, Vol. 6. No. 1, 1999).

After the establishment of the right-wing government under Engelbert Dollfuss in March 1933 the Chambers of Labour at first continued to function as worker-elected  and self-administered bodies. However, this was ended on 1 January 1934 when government commissioners were appointed in place of worker-elected representatives and administrative commissioners were nominated to replace the elected Executive Board. By these means the Chambers of Labour were integrated into the unified trade union arrangement of the Austrian corporate state. This arrangement was, in 1938, abolished when the Chambers of Labour were dissolved altogether under the Nazi government.

This remained the case for the duration of the Second World War. The Chambers were re-established on 20 July 1945 and in the subsequent decades they helped to develop Austria’s economic and social partnership arrangements which ensured a level of social and economic stability that benefited the working class.

Under the post-war arrangement each of Austria’s nine provinces has a Chamber of Labour. As to membership, every individual in Austria who is not a property or business owner is automatically a member of a Council of Labour with those employed paying 0.5% of their salary or wages to fund the activities of the Chambers. The unemployed or those on social leave (paternity or maternity leave etc.) are exempt from payment. At the last available figure (2017) there were 3.7 million people in Austria who were members. 

In terms of the administrative arrangement of the Chambers:

“The General Assembly (parliament) is made up of elected members. They elect the Executive Board and President of the chamber in each province. The Chamber Office provides support to the regional chambers in carrying out their political work, and is managed by a directorate. The umbrella organisation for the chambers in the federal provinces is the Federal Chamber of Labour. Its activities are carried out by the Vienna Chamber of Labour.” (AK Wien, Publicity Article no. 103, October 2018)

The ballots are secret and take place every five years. The main political groups that furnish candidates for these elections come from:

The Social Democratic Trade Unionists.

The Austrian Federation of Workers and Employees.

The Freedom Workers.

The Alternative and Green Trade Unionists.

In practical terms the Chambers provide various levels of support to their members in the area of legal support for actions against employers and landlords, educational provision, consumer law advice. In 2017 they provided two million consultations by telephone, e-mail and face-to-face. In that year the legal provisions supplied by the Chambers won 507 million euros for their members. In terms of training and education the chambers provide financial assistance in the form of Labour training vouchers to assist the training and development needs of the individual members. As well as that they work with the trade unions to invest in the training of shop floor representatives to make them more effective worker representatives.

Another important aspect of their work is in the collation and interpretation of social and economic data and statistics as well as reports that can be used to underpin trade union arguments during the collective agreement negotiations with employers.

The Chamber of Labour as a component of the Economic and Social Partnership.

The Chamber of Labour is just one component in the economic and social partnership which has underpinned the Austrian political system. The components that make up the Economic and Social Partnership are as follows:

The Austrian Trade Union Association (Österreichischer Gewerkschaftsbund – ÖGB).

The Federal Chamber of Labour (Bundes-Arbeiterkammer – BAK)

The Austrian Federal Chamber of Commerce (Wirtschaftskammer Österreich – WKÖ).

The Austrian Chambers of Agriculture (Präsidentenkonferenz der Landwirtschaftskammern Österreichs)

In negotiating with these other bodies the main goal of the Chamber of Labour is to ensure good working conditions and living standards for its members. This goal is measured over five main areas:

Employees must be paid fairly for their work.

Measures must be taken to combat unemployment.

Training and development must be open to all.

The taxation system must be fair.

Housing must be affordable.

However, in terms of the overall remit of the Chamber of Labour, while it covers advice and support for employees, training and education, and conducting research into economic and social policy issues, the first one listed in its explanation of its remit is, “Playing an active role in the legislative process.” It goes on to say:

“The Chamber of Labour plays an active role in the creation of laws. On behalf of our members, we assert their claims, undertake initiatives and address decision-makers. We examine proposed legislation to check that it serves the interests of our members. We develop recommendations for improvements and contribute to the law-making process through participation in advisory committees.” (AK Wien, Publicity Article no. 103, October 2018).

Among the successes its publicity points to as examples of the way in which the Chamber protects its members interests is the fact that “Pensions in Austria are now significantly higher than in Germany because we successfully opposed many regressive changes when the last pension reform was pushed through.” (Ibid.) 

The challenges faced by the Austrian system of social partnership

In common with other countries, Austria was not immune to the cold winds of neo-liberal economics that swept the western world after the collapse of the Soviet Union. An early indication of how that wind was blowing came at the beginning of the 1990s when the Social Democratic Party of Austria (SPÖ) was the main partner in a coalition government with the People’s Party (ÖVP).

“After 1992, the budget deficit increased from 2% to 5% of GDP within only two years (OECD 2001). This development coincided with Austria’s aspirations to join the EMU, which necessitated a quick and substantial reduction of the public deficit. At the same time, employment in the business sector deteriorated rapidly. Against this background, an increase of pension contribution rates would have further aggravated the problematic situation on the labour market.” (The Reform of the Bismarckian Pensions Systems: a comparison of pension politics in Austria, France, Germany and Italy, by Martin Schludi. Published by Amsterdam University Press, 2005, pp.167-168).

In 1994 the Social Democratic Party (SPÖ) sought to meet the requirements demanded by membership of the European Monetary Union through the introduction of a very tight fiscal policy, part of which required significant reforms of the pension system. In the formulation of this programme the government ignored the consultation process required under the traditional social partnership arrangements. At the same time the SPÖ Federal Chancellor, Franz Vranitzky, made it clear that he was prepared to push his reforms through in the face of trade union and workers opposition. The result was a predictable response from the trade unions and the Chamber of Labour who argued that the main weight of the emergency budget would fall on the wage-earners and vulnerable. The Austrian Trade Union Association (ÖGB) was particularly critical of the Social Democratic Party for restricting the proposals to party discussions and excluding the other components of the social partnership arrangement.

Nonetheless, recognising the dilemma of the Government and the deficit-reducing demands being made as a condition of membership of the European Monetary Union, the trade unions advanced alternative measures that would raise state revenue as a means of reducing that deficit.

However, the trade unions were not alone in mounting a criticism of the proposed measures. Inside the Austrian Parliament the right-wing Austrian Freedom Party (FPÖ), under Jörg Haider, led the opposition. At this time the FPÖ represented 22.5% of the voters and its popularity, having taken votes from both the Social Democrats and the People’s Party, was on the crest of a wave. Sensing the unpopularity of the pensions proposals it came out against the Government’s budget proposals. But it wasn’t merely the FPÖ parliamentary opposition that the Government had to contend with. Even within its own ranks and that of the ranks of the People’s Party there were trade unionist members of parliament who threatened to vote against the proposed budget. At this time the trade unionist presence in the Austrian Parliament was significant enough to make a difference to what the Government hoped to achieve.

It soon became obvious that the coalition government of the socialist SPÖ and the bourgeois ÖVP was confronted by a significant combination of a coherent parliamentary opposition and a protest-orientated opposition outside Parliament. As a result of this opposition the Government succumbed and made several concessions to the trade unions Among the concessions was a withdrawal of the planned reductions for early retirement pensions and a replacement of the plan to use cuts to reduce the deficit with elements of the trade union proposals to instead increase government revenues. This revised package was adopted in the Spring of 1995 only to be abandoned a few months later with the Government claiming that it was not working as a means of addressing the deficit and so the issue returned to the political spotlight with the Government continuing to seek a solution.

“This time, however, the government embarked on a more cooperative strategy vis-à-vis the social partners. At a very early stage, the social partners were asked to participate in the formulation of savings measures. In doing so, the government sought to avoid another clash with the trade unions, which had seriously disturbed the traditionally strong ties between the SPÖ and the ÖGB and eventually caused the failure of the previous Sparpaket (emergency budget). Now, the social partners themselves were asked to put forward proposals for a primarily expenditure-related reduction of the public deficit.

“After protracted negotiations the social partners achieved a compromise and presented a joint report, which contained a catalogue of budgetary proposals. With respect to pensions, the ÖGB (Trade Union Association) was initially able to avert a number of benefit cuts proposed by the WKÖ (Chamber of Commerce), such as an increase of the legal retirement age or actuarial deductions for beneficiaries of early retirement pensions. In return, the ÖGB abandoned its demands for the introduction of a solidarity tax and an increase of capital taxes. Instead, the social partners agreed on a number of measures aimed at improving incentives for people to work longer.  (Schludi, pp.170-171)

But the proposals were not deemed convincing enough for the People’s Party to accept. The result was an early general election in December 1995. As a result of the election the Social Democrats gained a higher share of the vote as, to a smaller extent, did the People’s Party while the vote for the Freedom Party showed a slight decrease. Overall, however, the election meant that the Social Democrats still required the People’s Party in order to form another coalition Government, but this time the People’s Party insisted on a prior agreement for the 1996 and 1997 budgets before agreeing to enter government with the Social Democrats. During the negotiations between the two parties, while not acting as official participants in the formulation of the budgets the social partners were consulted informally. In the end the volume of cuts in the area of pensions and social security that emerged in the 1996 austerity package went beyond that which had previously been agreed in consultation with the social partnership in the Spring of 1995. But, given that the trade unions were also committed to Austria joining the European Monetary Union they could not ignore the demands that went with membership of that body and so, at the end of the day, this time it was they and not the Government that succumbed: 

“The inclusion of the social partners in the [1996 -ED] reform process (at least at an informal level) helped to sustain the political acceptance and thereby the political feasibility of welfare retrenchment. This becomes particularly evident if we compare the two austerity packages launched in the mid-1990s with respect to the role of trade unions played in the policy formation process. In both cases, the trade unions had the same fundamental interest in Austria joining the European Monetary Union. Moreover, in 1996, they had agreed on a consolidation package that was tougher than the governmental savings proposals which they had vociferously opposed one-and-a-half years earlier. As Scharpf (2000:121a) has pointed out, trade union opposition to the first attempt of unilateral retrenchment was not primarily driven by disagreement over the substance of the government’s policy proposals but by their institutional self-interest in maintaining their corporatist control over the economic and social policy choices of the government. Therefore, the government failed in its effort to impose an austerity package without concertation of the social partners. By contrast, in preparing the 1996 austerity package, the government asked the social partners to put forward their own proposals for a drastic consolidation of the public budget. The measures proposed in the social partners’ report were subsequently specified and substantially extended at the government level. These amendments, however, were still made in permanent consultation with the social partners’ associations. Throughout this process, the SPÖ leadership successfully mastered the delicate task of mediating between the interests of the ÖGB (and thereby large sections of its own party) on the one hand, and the more comprehensive policy positions of its conservative coalition partner on the other.” (Schludi, pp. 173-174)

These events were experienced against the background where the trade unions, in common with other participants in the social partnership arrangement, were in favour of joining the European Monetary Union. The terms of that membership, which essentially meant that Austria cede control over its sovereign right to run budget deficits alongside an insistence on the State withdrawing from swathes of the domestic economy, had the effect of weakening the social partnership arrangement. This was because, with the State no longer in control over such areas, the previous points of contact between the State and people’s lives were drastically reduced as the areas of State control which had previously been up for negotiation was forced to give way to market capriciousness which was not. In such a situation, the capacity of the social partnership arrangement to improve people’s lives is reduced and its relevance inevitably weakened. This is the danger that continues to threaten the continued importance of the Chamber of Labour and the social partnership arrangement in Austria. It is a situation that is made more dangerous on account of the tendency which has been concurrent with the advance of the neo-liberal free market influence across Europe – the decline in the strength of the traditional last line of defence of workers – the trade union movement. That decline is not only manifest in the numbers of workers who are members of trade unions but in the influence they have inside the parliamentary decision-making process – something that has been evident in Britain for many years as Members of Parliament who had trade union experience are now almost non-existent.  A similar trend can be seen in the following table with regards to Austria:

Share of trade union functionaries in the Austrian Parliament

    SPÖ ÖVP FPÖTotal
Number %Number%Number%Number%
1987 33 41.3 % 13 16.9 % 46 25.1 %
1991 30 37.5 % 7 11.7 % 13.0 % 38 21.0 %
1998 19 26.8 % 1 1.9 % 24.8 % 22 12.2 %
2000 12 18.5 % 1 1.9 % 11.9 % 14 7.3 %

                  (Source: Tálos and Kittel 2001:73. Quoted in Schludi, op. cit., p.168)

Social Democratic Party of Austria (SPÖ), People’s Party (ÖVP), Austrian Freedom Party (FPÖ).

It was the presence of a trade union block inside the Austrian parliament that helped to provide an additional guarantee that the government of the day kept to the social partnership arrangement. As Schludi observed:

“Given the numerical strength of the trade unionists in the Austrian parliament, in particular within the SPÖ parliamentary group, the union threat potential was extraordinarily strong.” (Schludi, p.170)

The loss of that block is incalculable but identifiable in terms of what Austrian Governments now feel capable of doing in defiance of the traditional social partnership. Since the 2013 election the Social Democrats have not been in government and their replacements have not had the same traditional affinity with the social partnership arrangement. The dilemma for the Austrian left and trade union movement is summed up in the following statement which is published in the “Guide to Industrial Relations in Austria”, published by Zeiler Floyd Zadkovich, an international commercial law firm that produces in-depth reports on all aspects of industrial relations that impact on commercial considerations.

“In September 2018, the government in the composition ÖVP/FPÖ introduced amendments to the working time law while bypassing consultation at the social partnership level. It remains to be seen how long this shift of power away from the social partnership will last and what this will mean for the social peace in Austria as the unions have already announced initial industrial action. Under the current government, which consists of the ÖVP and the Green Party (“Die Grünen”), the role of the social partnership may be strengthened again.”

I understand that the threat posed by the ÖVP/FPÖ coalition has passed and the current ÖVP/Die Grünen coalition Government is sensitive to the continuing need for the social partnerships. However, the underlying conditions that laid the basis for the insecurity of the arrangement remain and because of that the question mark about its future has, unfortunately, not gone away.

Note on the image above: the letters AK stand for Arbeiterkammer, Chamber of Labour.

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