Does the motivation to work suffer when unemployment benefits are high?

Some people believe that if unemployment benefits are sufficient, there is no incentive for the unemployed to take up a job. However, salary is not the only reason for unemployed people to take a job. For example, people affected by unemployment experience less esteem from others, have fewer social contacts, often their physical and mental health deteriorates, and their quality of life drops noticeably. Getting back into employment is thus made more difficult, because social contacts in particular help in the search for new employment.

Too little unemployment benefit can also lead to having to accept jobs that do not match the unemployed person's education or qualifications. This is because after just 150 days, the unemployed must accept a job placed with them by the AMS, even if they are actually more highly qualified. Under these tightened conditions, their skills and work experience are devalued. Thus, expertise is lost to the Austrian economy.

Should unemployment benefits to motivate job search decrease over time?

The proposal to introduce a degressive unemployment benefit in Austria has been circulating for some time, and at the beginning of the year it once again caused discussion. A degressive unemployment benefit, i.e. one that decreases over time, is supposed to create higher incentives to take up employment. But such a degression already exists in the current system. In Austria, unemployment benefits are generally only 55 percent of the income previously received. Subsequent unemployment assistance drops to 92 to 95 percent of unemployment benefits. Finally, after a certain period of time (depending on age and how long unemployment insurance contributions were paid), unemployment assistance is capped at the equalization supplement reference rate of 966.65 euros per month (in 2020).

In an international comparison, unemployment insurance in Austria is thus clearly below the standards of comparably developed welfare states. The average daily rate for unemployment benefits is only 32.81 euros and for unemployment assistance 27.01 euros.

A WIFO study on Austrian unemployment insurance also shows that a shorter duration of unemployment benefit hardly has any significant employment effects. How long it takes an unemployed person to find a new job is more related to salary, job quality and education, not to the fact that unemployment benefits become less.

What is to be done?

All these widespread prejudices against unemployed people do not stand up to closer scrutiny. Simplistically attributing unemployment to individual personality traits and to voluntariness distracts from the urgent need for political action. Instead of increasing the pressure on the unemployed, for example by degressive unemployment benefits, which as a consequence mainly strengthens the low-wage sector, the government must finally take responsibility.

The net replacement rate of unemployment insurance must be increased to counteract the impoverishment of unemployed people and their families. In this way, the unemployed would not have to accept jobs with poor working conditions, their employment would be more permanent and their qualifications would be retained by the Austrian economy.

There are simply too few jobs. What is needed, therefore, is the creation of jobs by the state, for example through job guarantees. The idea behind this is that it is better to finance jobs in the public or non-profit sector instead of unemployment benefits. Another starting point is to reduce working hours. The hours freed up can be used to create new jobs. At the same time, employees are relieved, with positive effects on health and work-life balance.

Claudia Spengler is a student of sociology at the University of Vienna.

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"Migrantization" of precarity. Migrant workers in the COVID-19 crisis.

By Johanna Neuhauser

[This article published on March 15, 2021 is translated from the German on the Internet, „Migrantisierung“ von Prekarität - Arbeit&Wirtschaft Blog (awblog.at).]

The COVID-19 crisis has made one thing particularly clear: migrant workers have been and continue to be essential to sustaining health care, supply chains, and agriculture. At the same time, they have been increasingly affected by the disastrous health and economic consequences of the pandemic. However, the social importance of migrant workers is at odds with the lack of recognition of their work in terms of pay, working conditions and social esteem.

Increased Impact of Unemployment and Overwork

If we first look at the quantitative empirical data on the employment of migrants in the COVID 19 crisis, an ambivalent picture emerges: On the one hand, migrants in the COVID 19 crisis are more threatened by unemployment and relative impoverishment. On the other hand, they are affected to an above-average extent by overtime, high stress in work processes and a greater risk of infection. In Austria, current figures show that the increase in unemployment of people without an Austrian passport (39.5 percent) compared to the previous year (Jan.) is significantly higher than that of Austrians (28.1 percent). Migrants are particularly affected by the disastrous consequences of the pandemic on the labor market because they are more likely to have unstable employment relationships. For example, they are disproportionately employed in sectors particularly affected by the economic crisis, such as accommodation and catering (51.7 percent have foreign citizenship in this sector). In addition, border closures and travel restrictions have led to a loss of income for many commuter migrants. However, migrants are also disproportionately involved in so-called systemic employment, where social distancing is often difficult. Initial data show that the risk of contracting COVID-19 is therefore significantly higher for people with a migrant background. Since they are particularly often in insecure employment, many migrants feel compelled to continue working despite the appearance of COVID-19 symptoms out of fear for their jobs.

Dependence of the Austrian economy on labor migration

The temporary border closures also highlighted the dependence of the Austrian economy on foreign labor. Agriculture, for example, is one of the sectors in which the share of migrants in employment has increased the most. In addition to agriculture and forestry, employment in private households and accommodation and food services recorded the highest increases. This disproportionate integration of migrants into certain, mainly low-paid, precarious fields of work, which are avoided by Austrian workers even in times of crisis, illustrates the pronounced segmentation of the labor market. The fact that this is associated with extremely precarious working conditions was demonstrated in the summer by the scandals in companies in Marchfeld and elsewhere. A Romanian worker, who went public with the help of the Sezonieri campaign, reported receiving a wage of 4 euros an hour for up to 15 hours of work per day, with money deducted for rent and food. The thesis of replacing migrant labor with so-called native labor in times of crisis, which is repeatedly put forward, must therefore be questioned. If there are displacement effects on the labor market due to migration, then only with respect to migrants who have been resident for a longer period of time, and this in phases of greater labor surplus, such as in the years when the labor market was opened up in the course of the eastward expansion. Overall, the findings point to an increasing "migrantization" of precarious work and employment.

The COVID crisis has also made it particularly clear that care needs cannot be met without workers from abroad - a problem that will become even more virulent in the future as the population ages. By 2030, the need for caregivers will increase by an additional 76,000 people. The importance of the field, which employs over 70 percent women, contrasts with its social recognition. Even before Corona, employees in the care sector complained about work intensification and time pressure. Those areas in which the proportion of foreigners is particularly high, such as 24-hour care, are especially precarious. Since they have officially been independent one-person businesses since 2007, the protective standards of labor law, such as a collectively agreed minimum wage, paid sick leave and union representation, do not apply to them. However, due to the dependence on private placement agencies, self-employment is usually only a pretense.

Multiple precariousness of migrants

In addition to their above-average employment in particularly devalued fields of work, the precariousness of migrants can be further increased by an uncertain residence status. In sectors such as construction, care in private households and gastronomy, undocumented employment due to legal-formal precariousness also occurs time and again in Austria. In addition to working conditions, the often precarious housing and living conditions of migrant workers must also be considered. We can therefore speak of "multiple precariousness", which affects migrants to a particular extent. At the same time, the impact of the COVID crisis on migrants in both directions - i.e. increased unemployment as well as overwork/exploitation - also points to general developments in the labor markets towards the precarization of work and employment. The clusters of infections in postal distribution centers in Vienna and Lower Austria or in an Upper Austrian meat plant make it clear that the working conditions of marginal and core workforces are often subject to double standards, even if not officially, but in practice. In this context, the division of employees in the company increasingly overlaps with ethnic dividing lines. For example, the proportion of temporary workers with an immigrant background has more than doubled in the last 20 years.

Demands for improvement of working conditions and social upgrading

As Thomas Grammelhofer (PRO-GE) emphasizes, there is therefore a need for increased controls in the area of temporary work in order to check compliance with the collective agreement. It must be ensured that there is no hidden hiring out of workers under the guise of so-called "outsourced activities", as is often the case, for example, with packaging activities in warehouses, thus creating second-class workers.

The problem of bogus self-employment, which increasingly affects foreign workers, must also be addressed. Thus, the interest groups of migrant 24-hour caregivers demand, as a first step, increased control of agencies that "place" caregivers and, as a second step, the abolition of bogus self-employment through employment by a state social welfare agency.

Since migrant workers often lack information on labor law, there is also a need to expand multilingual counseling services (e.g. UNDOK and Sezonieri) that provide low-threshold access.

Since employment permits for third-country national seasonal workers - and in rare cases also for asylum seekers - are issued to companies by the AMS, the dependence of this group on exploitative practices of individual companies is particularly high. Trade union initiatives in harvesting work are therefore calling for employment permits to be issued directly to workers rather than to companies.

Beyond these and other concrete demands to improve the working conditions of migrant workers in individual industries, there is an urgent need for a public debate on the importance of migrant labor for our society. Because only if something is changed about how work is distributed and migrant and feminized industries can be upgraded, will the recognition of systemically important workers not fizzle out in a short burst of applause.

Johanna Neuhauser is a researcher at the Department of Sociology at the University of Vienna and conducts research on labor migration and migrant labor, gender and social inequality.