The Economic Impact of Migrants in Austria

The economic impact of migrants in Austria

Amir Darwish

Webster University Vienna

Final Draft

Microeconomics fall 2014 (TTH Class) - Group 1 - Christian Newman

Table of Contents

The economic impact of migrants in Austria 1

1. Introduction 3

2. Migrants in Austria: From the 1960's until today 3

2.1 The Raab-Ohla agreement 3

2.2 Implementation of immigration laws 6

2.3 The status quo of immigrants in Austria 7

3. Evaluating migration 8

4. Purchasing power, wages and standard of living of migrants in Austria 10

5. How Austria benefits from migrants 12

6. Austria without foreigners - an experiment 14

7. Conclusion 15

Bibliography 16

1. Introduction

The following paper is going to deal with how immigration has affected the Austrian economy during the last 50 years. Immigrants have made a transition since their first arrival in the late 60's and early 70's until this day and age. Not only the Austrian society had to deal with the immigrants, who were supposed just to be seasonal workers at the beginning; but also each government during the last couple of decades has had to set new measures to integrate them into public and work life. Nowadays, especially in conservative and right-wing circles, immigrants are regarded as the part of the society which is stealing jobs away from native Austrians and exploiting the social system. Recent unemployment rates have also fuelled this opinion. The paper will reveal that it is undeniable, that immigrants are an important factor of the Austrian economy and that without them the Austrian economy would not be functioning like it does now.

2. Migrants in Austria: From the 1960's until today

2.1 The Raab-Ohla agreement

As one has to deal with immigration in Austria, one has to understand under which circumstances immigrants made their way to Austria. The history of modern immigration began with the agreement between the president of the union in Austria, Franz Olah and the president of the Austrian Federal Economic Chamber on December 26, 1961. (Olah, 1961) The economy witnessed a boom, which was described as the "golden time" in Austrian history and therefore itinerant laborers were desperately needed. The agreement ruled how many workers were needed for the employment market. At the beginning only a few, but later on many more than required entered the market. First it didn't matter how many workers came to Austria, since unemployment was at a historical low. The liberalization of the admission of the Austrian employment market wasn't sufficient, so intergovernmental agreements were set with Turkey in 1964 and with Yugoslavia in 1966. (Gulum, 2011) Potential itinerary workers had to undergo medical and physical tests and had to mention work experience to place them to the corresponding industries. (medienservicestelle, Medien Servicestelle, 2014)

At that time Austria, like other Western European countries, needed cheap workers because there was a high demand in the low-pay sector. The demand for workers was mainly in the textile-, metal- and construction industries, and also in the service industry. Jobs that natives mainly refused to do, some examples were employment on the weekend or during the night, work that is exposed to dirt or auxiliary activity that is low paid. Approximately two thirds of the itinerary workers lived in substandard apartments and had to pay more rent than native Austrians. Itinerary workers were supposed to stay just a couple of years since they were only seasonal workers and therefore accepted this way of working and living. The Austrian government implemented a rotation principle for every itinerary worker, with a working permit from spring to autumn. Austria expected them to leave at some point and even the workers didn't have the intention to stay forever. Their plan was to save as much money as possible and to support their families back in their home countries. (Gulum, 2011)

The positive atmosphere towards immigrants began to turn during the oil crisis in 1973, which led to a ban on recruitment. At this time the peak of itinerary workers reached approximately 230,000, and in the following years the quantity of workers began to decrease, due to that seasonal workers weren't permitted to enter Austria. In 1982 only 182,000 non-Austrian citizens had a work permit, but the amount of foreigners began to increase due to family reunifications. (medienservicestelle, Medien Servicestelle, 2011) Figure 1 shows the amount of foreigners entering Austria, since the first intergovernmental agreement between Austria and Turkey was set up in 1964 until 1982. (Bundesministerium, 1985)

Years Annual average of foreigners in AUT First applications Departures

1964 26,100 37,329 -

1965 37,300 54,894 21,815

1966 51,500 69,707 50,100

1967 66,200 70,987 56,206

1968 67,500 67,328 62,601

1969 87,700 92,763 59,842

1970 111,715 109,549 76,128

1971 150,216 125,848 112,567

1972 187,065 152,531 142,128

1973 226,801 166,102 159,723

1974 222,327 92,854 105,697

1975 191,011 51,602 59,773

1976 171,673 47,278 50,437

1977 188,863 52,721 52,001

1978 176,709 34,493 37,791

1979 170,592 36,186 37,367