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SOCIAL IMPACTS OF MODERN LABOR MARKETS IN A

NEOLIBERAL ECONOMY

DIPLOMARBEIT

zur Erlangung des akademischen Grades

Mag. rer. soc. oec.

im Diplomstudium Wirtschaftswissenschaften

Eingereicht von: Martin Traunmüller Angefertigt am: Institut für Gesellschafts- und Sozialpolitik BeurteilerIn: Univ.-Prof. Dr. Josef Weidenholzer Mitbetreuung: Mag. Hansjörg Seckauer

Linz, Oktober 2014

Table of Contents II

Eidesstattliche Erklärung

Ich erkläre an Eides statt, dass ich die vorliegende Diplomarbeit selbstständig und ohne

fremde Hilfe verfasst, andere als die angegebenen Quellen und Hilfsmittel nicht benutzt

bzw. die wörtlich oder sinngemäß entnommenen Stellen als solche kenntlich gemacht ha-

be.

Die vorliegende Diplomarbeit ist mit dem elektronisch übermittelten Textdokument iden-

tisch.

Linz, 9. Oktober 2014 Martin Traunmüller

Table of Contents III

Acknowledgement

It is a great honor for me to acknowledge and to express my sincere gratitude to all who

contributed their part to the development of this diploma thesis. First, I would like to thank

my teacher Angelika Somogyi, who has been an example to me, for encouraging my quite

complex and usual idea. In this context, I also highly appreciate Dr. Elisabeth Menschl’s

kindness for supporting me in the initial stage.

Furthermore, I would like to acknowledge the contribution of my two academic advisers,

Prof. Josef Weidenholzer and Mag. Hansjörg Seckauer, for encouraging and guiding me

through such an interesting but also challenging project.

Moreover, I would like to express my sincere gratitude to Mag. Iris Woltran from the Aus-

trian Chamber of Labor in Linz, for the trust she has placed in my project and for her in-

spiring contributions.

Last but not least, I would like to thank my entire family for their endless love, understand-

ing and encouragement during this period. I am very grateful for the support of my friends.

Without the support of all of the above, this diploma thesis would not have been published

in this form or even at all.

October 9, 2014

Table of Contents

TABLE OF CONTENTS .................................................................................................. IV

FIGURES ........................................................................................................................... VI

TABLES ........................................................................................................................... VII

ABBREVIATIONS ......................................................................................................... VIII

ABSTRACT ....................................................................................................................... IX

1 INTRODUCTION .............................................................................................. 10

1.1 Research Question ....................................................................................................................... 11

1.2 Methodology ................................................................................................................................. 12

2 TERMINOLOGY ............................................................................................... 13

2.1 Poverty .......................................................................................................................................... 13

2.1.1 Absolute poverty ........................................................................................................................... 14

2.1.2 Relative poverty ............................................................................................................................. 15

2.2 Deprivation ................................................................................................................................... 16

2.3 Labor Market and Unemployment ............................................................................................ 18

2.4 Modern Economics ...................................................................................................................... 22

2.5 Neoliberal ideology ...................................................................................................................... 25

3 THE GLOBAL WHEEL ................................................................................... 28

3.1 The realignment of capitalism since the 1980s .......................................................................... 30

3.2 Behind the scenes ......................................................................................................................... 34

3.3 The modern state ......................................................................................................................... 38

3.4 The domestic individual .............................................................................................................. 41

3.5 The Impacts on the labor market ............................................................................................... 42

4 THE LABOR MARKET IN A MODERN CAPITALISTIC SOCIETY . ..... 50

4.1 The shift of the labor market equilibrium ................................................................................. 51

4.2 The crises of (paid) work – the undermined male breadwinner ............................................... 55

4.3 Precarious gainful employment .................................................................................................. 58

4.4 New labor market tendencies – arising atypical forms of employment .................................. 65

4.4.1 Part-Time Employment ................................................................................................................. 68

4.4.2 Subcontracted and temporary forms of employment ..................................................................... 70

4.4.3 “Fictitious” Self-employment ........................................................................................................ 73

4.4.4 Fixed-term employment ................................................................................................................ 74

4.4.5 Marginal Employment – “Mini-Jobber" ........................................................................................ 76

4.5 Working poor ............................................................................................................................... 79

4.6 The role of Unemployment in a precarious labor market ........................................................ 82

4.6.1 Long-term unemployment ............................................................................................................. 86

4.6.2 Youth unemployment .................................................................................................................... 87

5 SOCIETAL IMPACTS OF LABOR MARKETS AS A NEOLIBERAL

CAPITALISTIC TOOL .................................................................................................... 90

5.1 The societal and macro-economic impacts of unemployment.................................................. 90

5.2 Collective consequences of contemporary labor market structures ........................................ 91

5.3 Individual consequences of contemporary labor market structures ....................................... 94

5.4 The division of society – decoupling and de-collectivization .................................................. 101

5.5 Monetary de-collectivization – deprivation ............................................................................. 106

5.6 The “invisible ghost of poverty” ............................................................................................... 109

5.7 The role of the welfare state in Austria.................................................................................... 113

6. CONCLUSION AND LOOKING UP INTO THE FUTURE ......... ............. 118

7. REFERENCES ................................................................................................. 122

Figures

Figure 1: OECD Harmonized Youth Unemployment Figures, 15 to 24 years .................. 88

Tables

Table 1: Austrian Labor Force between 1970 and 2013…………………………………..54

Table 2: Comparison of the Austrian and German labor market………………………….63

Table 3: Increase of atypical employment in Austria……………………………………...66

Table 4: Temporary employment in Austria……………………………………………....71

Table 5: Development of self-employment………...……………………………………...73

Table 6: Unemployment growth in Austria between 2013 and 2014……………………...82

Abbreviations VIII

Abbreviations

ADB Asian Development Bank

AMS Public Employment Service Austria (German: Arbeitsmarktservice

Österreich

APA Austria Press Agency (German: Austria Presse Agentur)

BLS U.S. Bureau of Labor Statistics’

BRD Bundesrepublik Deutschland (formerly West Germany)

DDR Deutsche Demokratische Republik (formerly East Germany)

EAPN European Anti-Poverty Network

EOI Export-Oriented Industrialization

EU European Union

EU27 European Union until June 2013

GDP Gross Domestic Product

ILO International Labor Organization

IMF International Monetary Fund

NAFTA North American Free Trade Agreement

NGO Non-Governmental Organization

OECD Organization for Economic Cooperation and Development

ORF Österreichische Rundfunk

SILC Statistics on Income and Living Conditions

SME Small and Medium-sized Enterprises

UK United Kingdom

UN United Nations

UNICEF United Nations Children’s Fund

US United States of America

WKO The Austrian Federal Economic Chamber (German:

Wirtschaftskammer Österreich)

Abstract

Recent years have been marked by a proliferation of new labor market structures – a sig-

nificantly growing fraction of the labor force consists of atypical or precarious employees,

unemployed or underemployed employees in the sense that they are unable to work as

much as they prefer. Yet, it seems as there is no consensus among scholars about whether

growing atypical employment is an alerting signal or defined as normal working condi-

tions.

Detailed analyzes about the role and connection of labor markets with modern economics

including their uncountable excesses, imply the obvious alerting signals of atypical em-

ployment. It seems as if the disease of the global south is continuously affecting the global

north. Although Austria is rated as the 7th or 12th richest nation worldwide its full-time

standard job arrangements are continuously replaced by atypical forms of employment

(Geisberger and Knittler 2010; Statistik Austria 2014b). However, the richest part of west-

ern societies is simultaneously beaming itself into other exorbitant dimensions of monetary

wealth, represented amongst other things, by the growing gap between rich and poor rang-

ing from 1 Euro to 1.7 million Euro hourly wages (Stiglitz 2013; Michalitsch 2006).

According to Willke (2003) the economy as a societal partial system causes tensions and

problems for society as a whole, because of its own logic and the magnitude of the func-

tional difference, which leads to a ruthless behavior at the costs of society. The tangibility

of their impacts on societies or the entire globe is relatively low as well as difficult to

measure. Poverty, deprivation, social exclusion or societal de-collectivization are partly to

the economic excesses connected consequences, whose accumulation with other (new)

societal and economic challenges leads to a total new situation whose tangibility is even

less comprehensible. Economists and sociologists such as Castel (2011), Löwy (2005),

Wichterich (2011) or Michalitsch (2011) emphasize the complexity of the arising situation

through contemporary labor market policies and structures, which threatens not only the

fundament of the global economy but also of the entire modern life.

Introduction Seite 10

1 Introduction

Growing unemployment and poverty figures, a labor market characterized by declining job

qualities as well as the continuous replacement of full-time employment with atypical

mostly precarious job arrangements are meanwhile on the increase in western and industri-

alized economies such as in Western Europe. It seems that the disease of the Global South

is continuously affecting the Global North, but simultaneously the richest part of western

societies is beaming itself into other exorbitant dimensions of monetary wealth, represent-

ed, amongst other things, by the growing gap between rich and poor (Stiglitz 2013;

Michalitsch 2006). The economic capitalistic system promises increasing wealth enabled

by a stable and self-regulating market, and an annually growing economy of at least two

percent. By the year of 2014, this economic model is still representative and shaped by

“neoliberal ideologies” although numerous studies and empirical data prove the contrary.

In 2006/07 the significant economic growth in Germany did not mitigate the gap between

rich and poor, in contrast the gap even grew during this period and the redistribution from

the bottom to the top of society continued as in times of economic crises.

The labor market plays a key role in the economic, political and societal world in terms of

redistribution and is capable of mitigating and enhancing monetary and economic crises.

The promise of full employment is to guarantee wealth within one national economy and

economic growth in order to limit unemployment figures and generate wealth. In this re-

spect, the labor market faces fundamental realignments similar to those of the entire poli-

tic-economic structure. Regarding the continuous replacement of formal and sufficiently

paid job arrangements with informal and underpaid job arrangements, the labor market

adopt the characteristics of just another tool to shift capital from the bottom to the top.

Full-time standard employment literally decreases (Knittler 2013) and atypical employ-

ment, often characterized by precarious working conditions (Castel 2011; Wichterich

2011; Sommer; 2010; Bosch 2012; Brinkmann et al. 2006), already represents one fourth

of the Austrian labor market (Geisberger and Knittler 2010).

The consequences or the unpleasant aspects of the contemporary capitalistic system – pov-

erty, deprivation, de-collectivization or increasing wealth gaps – engender controversial

points of view. At first glance, an economic and societal recovery seems to have happen


within the previous past. This point of view is based on the ignorance of numerous aspects

such as developments in the financial market, ecology, societal tensions, current trends of

the wealth gap and other societal and individual aspects on the one hand and on the other

hand a closer look indicates a dramatically deterioration behind the scenes in terms of soci-

ety and the labor-market related crises including the assumption of figures at least twice as

high as the official statistics with regards to unemployment and poverty, and the relatively

unknown dimensions of precarious and working-poor conditions. Economists and sociolo-

gists such as Castel (2011), Wichterich (2011) or Michalitsch (2011) emphasize numerous

complex consequences and fundamental weaknesses of contemporary labor market poli-

cies and structures, which threaten the basis of the global market and its national econo-

mies in the middle run. In this connection, the excesses of the financial markets are not

seriously considered with their exorbitant high capital turnover rates beyond any economic

feasibility.

1.1 Research Question

The conceptual framework is divided into three main parts – the development and charac-

teristics of contemporary capitalistic structures, the role of the labor market within the cur-

rent politic-economic framework and the impacts of the contemporary labor market situa-

tion. The aim of this diploma thesis is to establish connections between the origin of con-

temporary societal problems and the scope of these problems in Austria, as one welfare-

state example of a western economy. The labor market represents amongst other things the

connections between causes and consequences of collective challenges with the main focus

on deprivation, poverty, social exclusion and similar issues, because it connects society

with capitalism in terms of gainful employment and symbolizes access to consumption

power or societal participation.

The question arises whether the current capitalistic system is only incapable of solving the

global issues of the initiating 21st century or it is even (partly) responsible for such devel-

opments. In other words, it is more likely to be investigated whether the current global

neoliberal capitalism supports the development of poverty or is just incapable to cope seri-

ously such concerns. Before answering this question it is necessary to evaluate these col-

lective challenges, because some neoliberal proponents downplay such issues and thus


talking about social problems refer to different perceived extents, scopes and societal val-

ues.

The following research question analyzes a possible connection between labor-market and

poverty-related developments in Austria, whereas the role of the labor market in a world

capitalistic framework with neoliberal dominance is important in terms of the developing

labor market structures and requirements:

Do flexibilization and casualization of the labor market increase the likelihood of

negative individual and collective results including poverty in Austria?

In this context, the intension of this diploma thesis is to elaborate on the increasingly ap-

pearing phenomenon that the contemporary politic-economic structure is based on the illu-

sion of creating wealth and happiness for our society.

The diploma thesis refers to the accumulation of crises including the phenomenon of pov-

erty, deprivation, de-collectivization and individual as well as collective challenges. Due to

the complex nature of the accumulation of crises this diploma thesis leaves the crises of

financial market, security issues, ecological crises and other major global issues to one

side.

1.2 Methodology

The diploma thesis begins with an intensive research of the available literature on the main

theoretical key aspects including the economic and political realignment since the 1980s,

the contemporary labor market policies, the development and situation of the consequences

of the current politic-economic structure towards poverty and de-collectivization issues.

The main focus of the explorative part is on statistics of the contemporary labor market

situation and its societal consequences including data about deprivation, poverty and indi-

vidual as well as collective aspects.

Terminology Seite 13

2 Terminology

This diploma thesis elaborates the connection between complex economic, political and

societal issues and the excesses of the economy as a subsystem of the overall system socie-

ty including poverty, deprivation, inequality, precarious labor market tendencies or unem-

ployment. The value and definition of such key terms vary between and within nations and

their societies. Consequently, the following Chapter summarizes the most common defini-

tions of the major terms.

2.1 Poverty

The term poverty often appears in context with risk of poverty or social exclusion - poverty

describes the sum of numerous characteristics, which explains an individual’s or house-

hold’s life situation characterized by a lack of essential assets and conditions necessary for

a basic level of well-being as well as for a minimum social participation (EAPN 2009).

Poverty, as a global phenomenon, appears in each part of the world in different dimen-

sions, characteristics, occurrences and manifestations depending on the cultural, geograph-

ic, societal, economics, political and social conditions but also on historical developments,

as poverty has got different scopes these days than 50 years ago in Austria. Poverty espe-

cially in western societies refers primarily to income rates in correlation with consumer

price levels. The significantly higher monetary poverty threshold in Austria than at its

neighbor Slovakia does not reduce the poverty or social exclusion rate in any of these

countries as long as it would not imply increasing opportunities with incomes in one of

these nations (Till-Tentschert 2012).

The World Bank (2001) describes the global phenomenon as a deprivation of well-being –

poverty means in the global context to be confronted with starvation, the lack of shelter

and clothing, the situation of illness without an appropriate care, to be illiterate or not edu-

cated, higher vulnerability of adverse events outside of their control as well as disadvan-

taged treatments of national or societal institutions. Furthermore, poverty exceeds material

deprivation, measured by an appropriate concept of income or consumption threshold, by

including low achievements and poor access to education and health. In addition, poverty


refers to a higher vulnerability and exposures to risk, voicelessness and powerlessness

(World Bank 2001).

Similar to the diverse perceptions and dimensions of poverty, the methods of measurement

of poverty differ between nations and their societies. The World Bank (2011) defines three

parameters to measure poverty – defining welfare measures, choosing and estimating pov-

erty lines and choosing and estimating poverty indicators. The poverty measurement within

the European Union (EU) is dominated by the EU-SILC (Statistics on Income and Living

Conditions) method, which gather data annually of all member states (Buchinger and Kö-

nigstorfer 2012; Statistik Austria 2009). The gained data conduces to the measurement of

income poverty but also to the observation and analyzes of inequality and social participa-

tion in terms of living, education or health. The basis for calculating the risk of poverty in

Austria is according to the EU-SILC the disposable annual net income including social

transfers. In this context, the poverty threshold is 60 percent of the median income – any

individual with lower incomes lives under the risk of poverty (Buchinger and Königstorfer

2012, 7f.; EAPN 2009). In Austria According to the EU-SILC (Statistik Austria 2009) the

poverty threshold for a single-parent household was at 994 Euros per month which is equal

to an annual amount of 11,932 Euros in 2009 (Statistik Austria 2009).

The measurement of poverty provokes an international debate, because of its complex na-

ture. The intensive focus on the disadvantages of material assets, mainstream types of

measurement neglects multiple dimensions of poor life conditions including various forms

of entitlements and opportunities of social participation respectively of social exclusion

(Castell 2011).

2.1.1 Absolute poverty

Absolute or also known as extreme poverty mainly refers to the form of poverty in devel-

oping countries – individuals lack the basic human necessities for their survival and thus

face starving, a lack of clean water, insufficient clothing or medicines and medical treat-

ments, lack of shelter and be struggling to stay alive (EAPN 2009). In other words, abso-

lute poverty is the inability of an individual to attain a minimum standard of living. Ac-

cording to the World Bank (2014), the international absolute poverty threshold is since


2005 at $ 1.25 a day, instead of $ 1.00 as it had been before. In the year of 2010 the World

Bank captured 1.22 billion people under these conditions and 2.4 billion lived in the same

year below the next poverty line of $ 2.00 a day (World Bank 2014).

Absolute poverty is highly linked to starving and hunger. Worldwide die roughly nine mil-

lion people due to starvation. The child rate of starving to death is alarmingly high (Zim-

mering 2012).

2.1.2 Relative poverty

In contrast to absolute poverty relative poverty is the main of poverty in developed coun-

tries, because of the frequent appearance of disadvantages and social exclusion factors in

terms that insufficient incomes cause significantly restricted material, social or cultural

participation within society (Till-Tentschert 2012, 3 f.).

The relative poverty refers to the threshold of 60 percent of the median income within the

EU. In other western societies this threshold varies between 40 and 70 percent of the medi-

an income level – any household with a lower income than this mark is classified at risk of

poverty (EAPN 2009).

Mainstream charts and figures about risk of poverty should be partial carefully interpreted,

because the median income is connected to general economic developments such as eco-

nomic crises, for instance. The global financial crisis 2008/09 lead to a decreasing median

income caused by the decline of the income rates especially in the lower part of the social

ladder due to job loss, for instance, which has led to the compensation of the risk of pov-

erty because of the decreasing poverty threshold. In this context, individuals whose income

was just below the threshold in 2008 lose their risk of poverty status in 2009 although the

income remained equally. However, in reality the monetary situation even additionally

worsened, because of the increasing living prices – inflation.

Individuals live in relative poor conditions if their income and resources differ significantly

to the societal standard which causes a lack of possibilities of acceptable living standards

within one society or even social exclusion. Consequently these people struggle to live in


regularly considered living conditions or in increasing cases to secure one’s livelihood.

Their situation gets aggravated by multiple crises or the accumulation of multiple societal

disadvantages including unemployment, atypical or precarious jobs, low incomes, poor

living conditions, insufficient health care and barriers to lifelong learning, cultural partici-

pation, sportive activities and recreational opportunities (EAPN 2009).

The status of poverty in western societies such as Austria is mainly captured by income

rates and thus partial lacks the observation of individual living situations and cost struc-

tures of households, which provokes, for instance, different levels of monthly fixed costs.

The economic assumption that individuals economize with their disposable incomes in

equal conditions is undermined by spreading individual factors including different re-

quirements – the needs of unemployed versus employees, or young families versus elderly

people, different cost structures between city or country living conditions as well as finally

basic circumstances such as rental apartments versus own properties. Consequently, varied

conducts of life exist independent of income rates and thus the risk of poverty got ampli-

fied in 2004 with analyzes of deprivation (EAPN 2009; Till-Tentschert 2012).

2.2 Deprivation

The World Bank (2011) defines poverty occasionally as “deprivation of wellbeing” and the

lack of societal participation due to insufficient resources or as Lamei and Till-Tentschert

(2005) defines deprivation as the relative participation within societies. Deprivation

measures the non-monetary indicators as the part of the multiple dimensions of poverty in

order to deeper analyze actual standards of living as well as the disposable resources for an

adequate living standard within one society. Similar to poverty and social exclusion depri-

vation tries to describe the multidimensional phenomenon of poverty (EAPN 2009; Lamei

and Till-Tentschert 2005, 3 f.). In this context, seven areas of social disadvantage respec-

tively exclusion including occur:

1. basic needs such as food, clothing and basic consumption goods

2. living environment

3. education

4. health


5. social relations

6. social participation

7. financial burdens in one household (Lamei and Till-Tentschert 2005, 4 f.)

Apart from these seven areas, it gets differentiated between primary disadvantages versus

secondary disadvantages within the conduct of life. The primary disadvantages include the

lack of basic need including an annual holiday, to keep the living environment adequate

warm, to purchase clothing if needed, eat fish or meat once every two days, to cope unex-

pected expenses or to avoid arrears with payments within households. The forced renuncia-

tion of desirable classified or common goods belongs to the secondary disadvantage within

the conduct of life. It affects the following long-life goods such as PC, Mobil phones, in-

ternet-access, DVD-player, dishwasher or car (Lamei and Till-Tentschert 2005, 5 f.) as

well as disadvantages in terms of fundamental health issues in form of chronic diseases or

bad health conditions and issues within living such as noise, air or water pollution caused

by traffic or industry emissions or crime, vandalism and violence in living environments –

secondary deprivations. People are said to be living in deprivation if at least three problems

appearing in one of these five areas except concerning health and living, where two issues

are sufficient (Grausgruber 2012).

Finally, it gets differentiated between objective deprivation, which analyzes the deprivation

with common indicators such as capita income, and relative deprivation or subjective dep-

rivation, which compares individuals by unmeasured aspects such as political participation

opportunities or social opportunities (Griffin 1988).

The analyses of deprivation as a limited access to certain areas of life, goods or social ex-

clusion, which does not automatically only refer to monetary dimensions such as the mar-

ginalization of as necessary classified societal areas (Lamei and Till-Tentschert 2005, 4f.).

Inequality and vulnerability refer to the entire situation which is related to the disposable

resources of disadvantaged individuals. These terms tend to complete the definition of the

multidimensional phenomenon known as poverty and its very complex nature.


Poverty is not only the result of too little resources within the globalized society, as it more

likely refers to the distribution of resources and thus the creation or downsizing of ine-

quality. “Poverty and Wealth have to be studied together (EAPN 2009)”. The data of ine-

quality is vital in order to measure poverty in its entirety, because the entire distribution of

resources within one society, population, region or country affects the rise and decrease of

poverty thresholds and rates. Furthermore, countries with high levels of inequality also

tend to have higher levels poverty and invert.

Finally, the aggravated interdependence between poor individuals and their environment

enhances their vulnerability to multiple stressors, shocks or even crises, including aggra-

vated social exclusion, personal health issues and environmental hazards. Vulnerability

becomes a threat to individuals, households or organizations in cases of their inability to

withstand the effects of hostile environments. The causation of these multiple stressors or

crises may occur at the micro level of households in form of chronic illnesses or psycho-

somatic disturbances and at the macro level within communities, for instance, in form of

riots or pollution or macroeconomic economic shocks (World Bank 2011b; Chapter 5).

2.3 Labor Market and Unemployment

The term labor market determines the interaction and the cooperation between labor sup-

pliers – the employees and the demand of labor – the employers. In reality the labor market

is structured by a multiplicity of submarkets are highly linked with each other through mo-

bility. The three main sectors differentiate themselves by geographical areas, occupations

and industry, corresponding with the three major forms of labor mobility categories –

higher occupations mainly in international markets, middle and lower work-arrangements

dominated national markets and manual workers primarily in local markets. Already in the

1970s the dynamic and movement of labor between geographical areas, industries and oc-

cupations has been seen as untenable. Labor markets differentiate themselves from other

goods or commodity markets through the animate nature of their employees who might

influence their output and the use of their services. In addition, workers cannot be separat-

ed from the services they offer. Consequently, labor market can be seen as one of the most

heterogeneous markets in all commodity-markets, because of its qualitative differences and

also between occupational sectors (Goodman 1970).


This point of view of the 1970s (Goodman 1970s) enhances the understanding of the fun-

damental principles of labor markets, but also lost the actuality of current labor circum-

stances regarding the developments of the atypical labor sector, for instance. Labor market

premises of that time such as full employment or formal employments got under pressure

of the neoliberal dictation of flexibilization, informalization, global competition of loca-

tions and deregulation.

European labor markets including the German and Austrian markets face an on-going trend

away from full-time standard forms of employment towards part-time or informal work

arrangements (Brinkmann et al. 2006; Bosch 2012; Knittler 2013). The arising atypical

forms of employment should solve mass-unemployment and increase or maintain the com-

petitiveness of the European economies on the global market (Dahme 2006) by saving la-

bor costs and creating labor flexibility. Consequently, the proportion of insecure, informal,

poor or precarious employment relationships continuously increased in the previous dec-

ades. In 2013 worked nearly every forth worker in Europe in an part-time job (Hinterseer

2013). Between 2012 and 2013 full-time employment decreased by 1.5 percent whereas

atypical employment increased by 3.4 percent (Table 3).

In this connection, precarious employment appears as a multidimensional approach and is

the sum of two or more of the following work conditions: temporary or non-permanent

employment, undeclared work, low wage and income rates, in combination with several

hybrid forms of employment uniting aspects of waged employment and self-employment

and economically dependent work (European Commission 2005). Individuals who live

under the risk of poverty although they work are known as working poor or in work pov-

erty. These individuals face significantly lower wages, which is below the poverty thresh-

old even including a possible income compensation of relatives or social transfers. Conse-

quently, working poor are not able to secure their livelihood through their jobs and addi-

tional resources (Till-Tentschert 2012).

The specialized labor market literature often refer to the crisis of gainful employment,

which implies apart from the lack of full-time job arrangements, the substitution of formal


by informal job arrangements, which aggravates the societal participation ore the security

of one’s livelihood (Wichterich 2011, 131 f.). Chapter 4 analyzes the shift of the bargain-

ing power between employers and employees, the undermining “male bread winner mod-

el” and their impacts including those of labor market deregulations such as jobless growth,

informalization tendencies or the establishment of precarious labor sectors.

Labor market developments are apart from the increasing atypical employment tendencies

characterized by the omnipresent challenge of unemployment (Kieselbach 1994). The sta-

tus of unemployment refers to individuals obtaining certain criteria, which are relatively

equally in European nations and determined in the labor-force concept of the International

Labor Organization (ILO) (D-Statis – Statistisches Bundesamt 2014). The key figure – the

unemployment figure, determines the number of unemployed individuals who follow cer-

tain criteria compared to the size of the entire labor force within one closed economy. The

Eurostat – the Statistical Office of the European Communities – defines unemployed peo-

ple as individuals between the age of 15, in some member nations 16, and 74 years, who

lack a job but are available to the labor force (able to start working within two weeks) and

were actively looking for a job within the previous four weeks of the preceding survey. In

the US reading job advertisements is not considered as active job search whereas in the EU

these individuals are in the active job searching pool. In this respect, unemployment fig-

ures of the EU and US lack to capture full-time students, retired individuals, youth or any

individuals who are not actively looking for a job within the previous four weeks of the

preceding survey. In addition, individuals are considered as employed by working at least

one paid hour during the reference weeks, worked without any payment for at least 15

hours or more in a family businesses, worked in their own business such as farm or were

temporarily away from their jobs due to illnesses, vacation, parental leave or job training

(Bradbury 2006, 1-6).

The measurement of unemployment is due to its complexity divided into three main cate-

gories – frictional unemployment, cyclical unemployment and structural unemployment.

Temporary transitions which are fulfilled by employees and employers are constant phe-

nomenon and lead to frictional unemployment. Failing firms, poor job performances, out-

dated skills or workers quitting their jobs in order to move forward in their careers or move


to other locations are common reasons for frictional unemployment, which is especially in

terms of failing firms highly linked to the dynamics of the economy and consequently it is

closely related to structural unemployment. This category of unemployment is defined by

the mismatch between the demand of jobs and the disposability of jobs due to dynamic

changes within one economy and to the needs of the economy. Technological progress and

changes in market conditions, for instance, may turn skills into obsolete skills, which ag-

gravate unemployment. The third main category – cyclical unemployment – refers to the

consequences of labor market modifications caused by the economic contractions. In times

of economic recessions unemployment levels rise because of the shrinking job capacities

combined with the stable demand for jobs (Experimental Economics Center 2006). Apart

from the three main categories seasonal unemployment and long-term unemployment are

important forms of unemployment.

Seasonal unemployment is a common phenomenon in the tourism and construction indus-

try where the demand for labor force is seasonally oriented. In general, individuals are con-

sidered as long-term unemployed if their period of unemployment exceeds one year’s time.

Since 2008 individuals who worked only a few days within their unemployment period,

individuals facing longer than six weeks long disease or persons who preceded an ad-

vanced educational or a labor political program, loose their long-term unemployment sta-

tus1 (Oschmiansky 2011). Long-term unemployed or individuals who are not actively seek-

ing employment are also known as discouraged workers. These people gave up on looking

for employment because they found no (suitable) job offers or were not successful in their

applications.

Any individuals, eligible for the work pool, but not in a job arrangements or not searching

for a job within the previous four weeks of the preceding survey and neither attend the civil

or army service nor are in any public institutions such as prisons or mental hospitals, are

considered to be out of the labor force or inactive (Bradbury 2006, 2-6). The labor force is

extended by the silent reserve, which defines inactive individuals who are neither em-

ployed nor unemployed because they participate a labor political activity (advanced train-

1 The modification of the long-term unemployment measurement in 2008 made the comparison of the long-

term unemployment figures before and after that inadequate (Oschmiansky 2011).


ing or further education) or are due to difficult cyclical economic situations, not available

for the labor market unless the employment and economic situation has improved. The

inactive labor force is also defined as out of the labor force or the hidden unemployment

(Oschmiansky 2011).

The marginal line between the unemployed and the inactive is a subject of much debate,

because the distinction between those is characterized by an arbitrary nature. The measured

unemployment rate might not concern individuals who are out of the labor force and be-

have similarly to the unemployed or miss some signals of the labor market tightness. In

other words, individuals out of the labor force could behave similarly to the unemployed

regarding job searching patterns. Several recent papers describe groups of individuals clas-

sified as not in the labor force, to be considered similar to the unemployed, because they

are involved in the labor force in several different aspects. Bradbury (2006) describes the

heterogeneity within the ranks of unemployed and those out of labor force and emphasizes

that some marginally attached categories have higher transition rates into employment than

certain categories of the unemployed (Bradbury 2006, 3-7).

The unemployment rate plays an essential role within societies, economies and politics

(Chapter 5.1). It significantly affects political, financial and societal decisions both in the

microeconomic level and in macroeconomic dimensions. In order to prevent contortions

research authors demand a more inclusively definition and measurement of unemployment

figures (Bradbury 2006, 3-7). Additional phenomenon of underestimating the unemploy-

ment in its entirety through under-employment is, for instance, discussed in Chapter 4.6.

2.4 Modern Economics

The term economics originally comes from the ancient Greek and defines “rules of the

household” (Harper 2001). In Europe the term of economics is an abbreviation of economic

science, with the subject to analyze the interaction and behavior of economic subjects and

the efficiency of economies, which is divided into microeconomics and macroeconomics.

While microeconomics examines the individual behavior of economic subjects including

households, organizations and other market players, macroeconomics analyses the entire


economy as a subject by focusing on its correlations such as unemployment, inflation and

economic growth.

The complex nature of economic science makes it difficult to define their subjects by a

standardized one-dimensional description. Backhouse and Medema (2009) elaborated a

broadly shared definition, which covers the most important aspects of this subject. “Eco-

nomics are seen as

� the study of economies, at both level of individuals and of society as a whole.

� the study of how human beings coordinate their wants and desires, given the deci-

sion-making mechanisms, social customs, and political realities of society.

� the study of how society manages its scarce resources.

� the social science that studies the choices that individuals, businesses, governments,

and entire societies make as they cope with scarcity.

� the study of human behavior, with a particular focus on human decision making.”

Economics are apparently the study of society in multidimensional ways such as coordinat-

ing processes, the effects of scarcity, the science of choice and a detailed study of human

behavior.

Capitalistic oriented modern economies are shaped by numerous developments of the pre-

vious decades including noticeable increases of the world trade and global interconnection,

international capital movements and the establishment of a global financial market, which

results into a tendency towards a global economy (Schachner 2001, 35-42). Proponents

extol it as the cure for economies as well as societal issues and for others globalization is

responsible for various forms of worldwide economic excesses such as inequality and pov-

erty. Globalization describes the understanding, the measurement of the intensity and the

increase of the world-economic linkage caused by international trade and the movement of

capital, goods, labor force and know-how (NAFTA or EU) (Schachner 2001, 35-37). Ac-

cording to Rossow (2011, 63-68) the term comprises five manners – internationalization,

liberalization, universalization, westernization and deterritorialization.


Globalization is seen as an increasing worldwide interconnectedness of individuals, socie-

ties and organizations which occur in numerous societal subsystems such as economy,

ecology, politic and media.

In addition, it refers to the diversity of connections and interconnections between states

and societies including substantial consequences caused by decisions, activities and occur-

rences in one part of the world, valid for individuals and societies of other parts of the

world. In other words, Schachner (2001, 35-42) emphasizes the inevitable development in

which financial and economic global networks get a never before existing form of power

over millions of individuals around the world. Globalization shapes different economic and

societal dimensions such as financial markets, goods markets, technologies, sciences and

labor market as well as beyond economic linkages fundamental cultural and societal fac-

tors gets shaped by global tendencies including cultural aspects of human living and con-

sumer behavior, political consolidation, personal perception and awareness and ecological

awareness (Schachner 2001, 35-42).

Furthermore, Rossow (2011, 65-78) leans on one of the main interpretations of globaliza-

tion by Nederveen Pieterse, who defines the term as a process in which the world is getting

more uniform and standardized according to western principles through commercial, tech-

nological and cultural synchronization or also known as Americanization. Western players

and interest groups develop new rules and policies of a global cohabitation, with the focus

on integrating and encouraging western dominated global markets, neglecting the needs of

people and countries beyond those markets – the process of concentrating and shifting

power to few players as well as marginalizing poor countries and its populations. The ab-

sences of international controlling mechanisms such as controlling desks or boards of di-

rectors accelerate the development of the indeterminate and self-propelled nature of world

affairs (Rossow 2011, 65-78). Consequently, the impacts on political, economic and socie-

tal sub-systems of globalization are only far in the future noticeable in their entirety

(Schachner 2001).


2.5 Neoliberal ideology

“The market will take care of everything,” they tell us…. But here’s the problem: it

doesn’t work. It has never worked. It didn’t work when it was tried in the decade

before the Great Depression. It’s not what led to the incredible postwar booms of

the ’50s and ’60s. And it didn’t work when we tried it during the last decade. I

mean, understand, it’s not as if we haven’t tried this theory. (President Barack

Obama, Osawatomie, Kansas, December 6, 2011 cited in Otteson 2012.)”

The global economic and financial crises of the 1970s and 1980s were related to crisis of

the Keynesianism respectively Fordism – economies struggled due to constant high unem-

ployment figures and the highest stagflation since the 1930s. This was the beginning for a

politic-economic realignment in western societies. It began with salient decision of the

U.S. Federal Reserve Board to allow the rise of interest rates as much as it seemed to be

necessary to cope the high inflation rates. The consequences of this decision were the re-

constitution of the most violent features of capitalism with the target of a resurgent and

unprettified capitalism (Duménil and Lévy 2004).

The transformation of technologies, markets, international institutions and social power

relations in combination with the global linkage and the transformation of the market struc-

tures from supply- to demand-oriented dynamic markets with short term goods enhanced

the establishment of the contemporary politic-economic structure, which is known as post-

Fordism or neoliberalism. The global and neoliberal reorganization implies a political-

economic transformation in form of denationalization, deregulation of national economies,

reinforced concentration of international economic collaborations and the key role of mul-

tinational organizations as well as the erosion of the welfare state. National states lose con-

tinuously autonomy because of the intensive linkage between national economies via su-

pra- and international mechanisms and sovereignty as well as through privatization. Supply

governance in markets gets replaced by flexibilization, encouragement of innovation and

research, the indemnity of private properties subsidies and tax reductions for organizations.

Economic and social competences of national states get in judge of politically independent

and little legitimated markets as well as private and international institutions. The en-

forcement of the neoliberal ideology was possible by manufacturing of a consensus with-


out agreement supplied and promoted by the media which itself represents economic em-

pires. The concept of the neoliberal consensus without agreement signifies the governance

of reigning against the willingness and interests of the reigned, at observing democratic

principles (Michalitsch 2006, 48 f.). The fact that an ideology dominates entire societies

and successfully distributes its policies which follows the interests of a percentage and

contrasts the interests of the broad population refers to the complexity of the modification

process, which took place in the previous decades.

“The belief in the economic rationality determines the new world religion, with missionary

diligence announced the neoliberal cure model (Michalitsch 2006, 48)”. The aim of neolib-

eral “insistent awareness-rising” is to enforce the discursive access to cognitive capacities

and cultural meanings of societies, for instance, by creating dogmas such as social misuse,

public saving debates and international competition of economic locations. Neoliberalism

replaces kind of welfare state structures by promoting and emphasizing the value of self-

responsibility and individual performance (Chapter 5.7). Negative societal issues and soci-

etal problems are no longer hidden but seen as immutable or desirable and are no longer

seen as collective issues but more likely individual problems – the individualization of

collective problems such as unemployment. Margaret Thatcher’s famous theorem “There

is no alternative” implies the coerciveness of neoliberal formation and after the era of the

real socialism, the illusionary character of alternatives and alternative systems (Michalitsch

2006, 50 f.). In this respect, Robert Castel (2011, 66-67) emphasizes the collective situa-

tion of de-collectivization of individuals. In other words, nobody inclusive the “socially

excluded” exists beyond society.

The neoliberal ideology obliges the “volunteer” subjugation under controlling and without

any alterative accepted conditions. According to Michalitsch (2006, 48 f.) the “neoliberal

access” to individuals happens in cognitive, emotional and social dimensions. Neoliberal-

ism enhances uniform thinking – the cognitive dimension – by promoting euphemistically

paroles and tabooing terms such as profit, capital, class conflict or power relations, dedif-

ferentiation of thoughts and blinding out real contractions and societal conflicts. In addi-

tion, the neoliberal ideology forces emotional aspects in individuals such as decreasing

euphoric emotions or an increasing emotions of aggressiveness, social exclusion, competi-


tions and desolidarization caused by resignation, fears of the future, carelessness and un-

certainty because of the missing connection between negative sensitivities and issues of

individuals and societal circumstances. Furthermore, the social dimensions replace produc-

tive aspects of individuals by consumptive aspects, because of conservative mass-

consciousness based on the premises to consume happiness. The myth of the “free market”

and the rational, efficient and “fair competition” without regarding the negative social con-

sequence is seemingly unresisting popularized (Michalitsch 2006).

The hegemonies power shift in a neoliberal dominated economies from national mono-

poles to supranational organizations, which take over the sovereignty of their economies as

well as social and cultural decisions is enhanced by open borders. Freedom refers in this

context to the freedom of this modernized concentration of power (Michalitsch 2006, 50

f.).

The global Wheel Seite 28

3 The global Wheel

The contemporary global capitalistic economy is shaped by vast social, political and eco-

nomic upheavals such as the collapse of the communism, the increasing supranational eco-

nomic coordination and the emerging markets. Even though, economic data implies certain

economic recovery, capitalism faces currently the deepest crises since the Second World

War and remains despite all measures in unstable conditions. It is driven by the societal

subsystem financial markets, which follows its own logics of gambling. This form of

logics confuses and distorts societies, because of the lack of the orientation on these logics,

which gets enhanced by their unfair nature (Seckauer and Weidenholzer 2014). The socie-

tal circumstances are very complex respectively far-reaching from ecological impacts over

exorbitant income or wealth gaps, which implies societal divisions, mass-unemployment,

high poverty to fundamental individual issues including psychosomatic disturbances, de-

pressions or loss of perspectives (e.g. Butterwegge 2009; Michalitsch 2006; Castel 2011;

Wichterich 2011).

To begin with, the economic and social effects of contemporary capitalistic structures are

apart from poverty, unemployment figures, only partly tangible in terms of inequality – the

exorbitant income and wealth gaps. In this context, the current stage of the inequality in

US is mentionable which is characterized by strong increasing tendency. In terms of the

monetary wealth, the American population was once divided into one third and two third

and further in the second half of the 20th century into 80 percent and 20 percent. Mean-

while, the division in the US achieved the magnitude of one versus 99 percent. In 2007, the

same percent had an average income of 1.3 million US-Dollars whereas the bottom 20 per-

cent earned 17,800 US-Dollars in average. The top one percent received in one week

around 40 percent more than the bottom fifth a year and the top 0.1 percent earned in one

and a half days the same amount as the bottom 90 percent per year, while the earnings of

the richest 20 percent after tax exceeds the accumulated income of the bottom 80 percent.

Even shortly after the previous financial crisis in 2008 the disparity grew dramatically, as

between 2009 and 2010, 93 percent of the additional income flew to the top one percent.

Whereas people lost their homes during housing crisis in 2008, top-managers defended

their wages remarkable and received additionally bonuses for releasing parts of their work

force to reduce personnel expenditures for overcoming the crisis. Around 57 percent of


capital incomes shift to the top one percent of wage earners. The growing income gap re-

fers apart from the fast growing earning rates of the rich significantly to the declining in-

come rates of the bottom wage earners. The income rates of the majority remained either

equally within the previous decades or even dropped. Consequently, the accretion of the

rich is made among others at the costs of the poor or the majority (Stiglitz 2013, 25 f.).

The inequality is not only characterized by fast growing income gaps but also by the

alarming stage of the property inequality in the US. The richest one percent owned more

than one third of the entire national wealth in 2007. Even after the stock crash the richest

one percent owned 225 times more than the average American citizen. Similar to the peri-

od before the economic crisis in the 1930s, the current unusually high inequality leads into

an alarming stage of economic instability (Stiglitz 2013, 26 f.).

Although Austria is according to the GDP per capita the third richest country of the EU

and the 7th or 12th richest country worldwide, the inequality of income distribution and

wealth has achieved alarming dimensions. The bottom tenth in terms of income earned

maximum 11,630 Euro annually compared to at least 39,379 Euro of the top income tenth.

The top five percent of households possess nearly half of the entire gross national wealth,

whereas the bottom half does not even have four percent at its disposal. The bottom half

dispose on average over 11,000 Euros in contrast to the top five percent with a median net

wealth of € 1.7 million (Fabris 2014). As far as these figures about inequality are con-

cerned, it should emphasized that they only partly describe the entire situation because of

the methods of measurements and especially for the top five percent labor incomes do not

represent the entire magnitude of their wealth-accumulation.

In the scientific, economic and political debate about the origins and causes for contempo-

rary global, social, economic issues appear numerous models, ideologies or frameworks,

whose particular responsibility is hard to judge. In this respect, it might be less important

which economic model or premise such as neoliberalism, globalization, imperialism, inter-

nationalization, liberalization, universalization or any other enhances in particular which

economic, political or societal problem worldwide. The collective process of problem solv-

ing should not only focus on the consequences and intention of certain models but also on


the lack of measures in order to solve social issues such as poverty. It would be more im-

portant to detect and solve the roots of such social problems, instead of focusing too much

on the premises of particular ideologies. Apart from the complex nature of these ideolo-

gies, they are somehow interwoven and consequently the match between certain impacts

and ideologies gets aggravated through processes of relativization. The term neoliberalism

occurred frequently as one of the current economic hegemonies ideology, but which loses,

for instance, its hegemonies character through its multiple connections with other ideolo-

gies – the market economy, the neoconservatism, the warfare-oriented state intervention-

ism and the Christian fundamentalism. This form of “linkage” between ideologies makes it

difficult for opponents to criticize their impacts. Furthermore, the transparency that a num-

ber of ideologies follow the interest of reorganizing the capital sovereignty obfuscates. The

relative nature caused by this network of societal drafts gets intensified by their mechani-

cal, punctual and superficial nature, which results often in fast dissolving connections be-

tween these ideologies (Butterwegge et al. 2008, 20-23).

3.1 The realignment of capitalism since the 1980s

The belief in the economic rationality – “the neoliberal doctrine of salvation” – shapes the

contemporary politic-economic framework, which has established itself respectively de-

veloped from the edge to a central hegemonies position after the eroding classical liberal-

ism. The neoliberal doctrine of salvation extols the institution of the market above state,

politics and society. Furthermore the competences of the modern states move from the

economic to the security area (Michalitsch 2006, 48 f.; Castel 2011; Willke 2003).

The establishment of the neoliberal societal drafts has manifested its international after the

“failure” of the Keynesianism or postwar liberalism in the 1980s. Permanent high inflation

rates in the 1970s and the economic crises in 1974/75 and 1981/82 resulted in the highest

stagflation since the economic crisis of the 1930s (Stiglitz 2013) and thus initiated a politi-

cal, economic and ideological realignment in western industrialized economies, because of

the apparent incompetence of national states to regulate the economy in terms of the

Keynesian politics of full employment for instance. Neoliberal proponents emphasize due

to the complex national control task, the government failure in economic or business af-

fairs. They refer to the illusion that government measures would lead to the meant effects,


because apparently lead such interferences to opposite results – instead of increasing em-

ployment rates emerge structural unemployment or instead of an anticyclical economic

management arise pro-cyclical impacts on economic booms and downturns (Willke 2003,

84 f.).

The neoliberal era of capitalism signifies that national monopoles lose their sovereignty to

transnational organizations, which get the representative force of the economy. The with-

drawal of nation state strengthens the position of markets, which continuously take over

more social competences including the distribution of incomes, while welfare politics gets

based on individual self-responsibility and willingness to perform. The Keynesian welfare

state, which regulated and reallocated the excess of markets, gets replaced by the market

forces subordinating competition state, which cares for a minimum of social cohesion and

the management of political conflicts (Michalitsch 2006, 52 f.). Neoliberal proponents re-

fer to the importance of the state – Adam Smith, for instance, emphasizes that only a well

governed society is the precondition for the economic development and for the societal

wealth, which is also noticeable for the lower social classes. Milton Freedman describes

the state as a referee for economic rules, but economic growth and employment requires

low regulations and burdens of the economic subjects. The neoliberal ideology represents a

late-capitalistic stage, which is determined by the stigma of market economic attitude fol-

lowing the principles of competition, maximization of profits, performance principle, prof-

itability, deregulation, flexibilization, avoidance of justice, capital and financial markets,

globalization, international and transnational organizations and competition between states

(Willke 2003, 84 f.).

The impacts of the contemporary neoliberal dominated politic-economic structure such as

mass-unemployment or high poverty did not initially occur with the crises of the post-war

liberalism in 1970s or current global form of capitalism, more likely they existed before

but with a different status. The western postwar liberal consensus in Western Europe and

North America showed apparently similar social and economic values than today, as ac-

cording to Butterwegge (2009, 96-106), the minister of economics of the former BRD

Ludwig Erhard mentioned in a public discussion in 1951, that West-Germany was at that

time a paradise for the wealthy and the hell for the poor population. He propagated to


overcome the up and downs of the economic cycle, to guarantee full employment, to max-

imize the private wealth through a continuous economic growth without the requirement of

the welfare redistribution within society but with the premises of private initiatives, self-

responsibility and self-provision. Ludwig Erhard criticized the characteristics of the Bis-

marck welfare state such as the labor compulsory insurance, because a system of social

security would destroy the national economy as it represents a contradiction to the eco-

nomic liberty and would encourage inflation. Due to the economic competition between

the planned economy and market economy after the Second World War, West-Germany

realized the importance of pension benefits. In this respect, modern capitalism underlined

once more its advance to the planned economy, because apart from the technological and

economic superiority of the market economy used to seem more generously in social trans-

fers, which supposed to strengthen higher loyalty to the system and permanent solidity

(Butterwegge 2009, 96-106).

The liberal concepts of reforming societies and of generating a politico-economic structure

traces back to the first third of the 20th century – in 1938 as the journalist Walter Lippmann

founded The Good Society foundation and the Mont-Pèlerin Society in 1947, which initiat-

ed the crusade against the “Marxist and Keynesian totalitarianism” with the aim to promote

the importance of the market. The subsequent arising international network of foundations,

institutions, research centers, public-relations-agencies, scientists and authors promoted

neoliberal thinking. The successful neoliberal experiment in Chile, so called “libertad

económica” strengthened neoliberal politics, which witnessed the breakthrough in the UK

with the Thatcher-politics strengthened by the scientific Adam-Smith institute and in the

US with the Reagan’s era, which was heavily supported in terms of economic science by

the Heritage-Foundation in the late 1980s. The breakthrough of neoliberal thoughts in eco-

nomic sciences refers to the initially conferred Nobel Prizes for economics, which is en-

dowed by the Swedish national bank to the commemoration to the Swedish chemist Alfred

Nobel. Since 1969, numerous neoliberal economists were renowned with a Nobel Price

such as Samuelson in 1970, Hicks and Arrow in 1972, Hayek in 1974, Friedman in 1976

and Becker in 1992. In this context, the Mont-Pèlerin Society was an important network, as

seven of its members received a Nobel Price between 1974 and 1992. In addition, Erik

Lundberg was a longstanding president of the Nobel Prize-committee for economics and


simultaneously a member of the Mont-Pèlerin Society. The scientific character of econom-

ics got acknowledged by the awarding of Nobel Prizes, because these were initially only

awarded to fields of sciences such as physics, chemistry or medicine (Michalitsch 2006, 49

f.).

The role of the supply-economy model – the substantial role of the entrepreneurship and

organizations – in modern economics is a fundamental principle in the political-economic

realignment. According to Michalitsch (2006, 75 f.) proponents of the supply-economy

refer to the connection between higher individual performance commitment and increased

production, growth and employment through additional income and thus additional con-

sumption. Thus the role of entrepreneurship and the development and promotion of entre-

preneurial thoughts and affairs gets priority, because of its impacts to economic growth as

entrepreneurs create new markets and needs by launching new products, services and

goods. In this context, the supply-economy defines the reduction of taxes, charges and so-

cial contribution for enterprises, the reduction of government expenditure except for na-

tional security affairs and the reduction of national deficit as high priority, because the

funding of the national deficit and the economic lawful regulations are seen as an obstruc-

tion for financial markets and organizations. The programmatic priority refers to the de-

regulation of the public sector in order to support the private initiative and to strengthen the

global position of companies and national markets (Michalitsch 2006, 75 f.).

Michalitsch (2006, 75 f.) refers to the model of Joseph Schumpeter, who significantly af-

fected the modern and globalized capitalism with his theories about the economic devel-

opment published in 1911. Joseph Schumpeter defines the entrepreneurs as the “revolu-

tionaries of economics”, because the innovative pioneer-entrepreneur creates new goods

and thus new markets, which are driven less likely by ideas or inventions, but more likely

by competitive pressures of competition. Investment activities of entrepreneurs play im-

portant roles in terms of economic growth and the supply-economic model refers to the

enlargement of entrepreneurial leeway by minimizing the obstructions of labor representa-

tives and governmental interventions, because a weakening of labor unions enforces the

“moderation” of income rates as well as the destruction of governmental impediments for


investments such as occupational safety, worker protection or environmental compatibility

(Michalitsch 2006, 75 f.).

3.2 Behind the scenes

Perceptions of both individuals and entire societies play an essential role in modern eco-

nomics and contemporary hegemonial structures, because they shape reality and have it

always done. In this context, Stiglitz (2013, 183-233) refers to the underestimation of ine-

quality by many or more likely by the majority within western societies. In addition, their

members tend to significantly underestimate the situation of inequality within their socie-

ties, underestimate its effects on political, societal and economic affairs, underestimate the

ability of governments to take measures against inequalities and overestimate the collective

costs of inequality measurements for instance. According to several studies an inverse cor-

relation between trends of inequality and the perception of fairness and inequality appears

along western nations. Some might argue that larger inequalities within industrialized soci-

eties are less noticeable, because individuals are separated in different income and social

stages and tend to live within like-minded, instead of interacting with other social classes

and thus create their own “parallel world”. However, independent of the probability of this

explanation, these forms of perception are driven by certain groups of interests – the rich-

est percent in the US as well as in the European societies broadens its interests through

politics and other societal fields and institutions to the other 99 percent. Consequently the

reality of the majority of industrialized societies gets unconsciously driven by a small

powerful group. The monetary investments of certain interest groups for winning political

elections are, for instance, enormous, but their returns are substantially higher than other

types of investments and partly essential for the current politic-economic structure. The

inequality rate as one social and economic indicator affects, for instance, significantly po-

litical and economic affairs and policies (Stiglitz 2013, 183-233).

The America economist, Nobel Prize winner in economic science in 2001, former senior

vice president and chief economist of the World Bank and former Chairman of the Council

of Economic Advisers Joseph Stiglitz (2013, 183-233) emphasizes in his literature several

times diverse forms of conviction of the richest percent beyond monetary forms in order to

share the same interests, which are in reality not only equal to those of the elite, but even


heavily contradict those of the broad mass. The economist emphasizes the successful shape

of the public perception which is testified by the malleability of beliefs. The beliefs and

perceptions about societal terms of fairness and efficiency, the strengths and weaknesses of

markets or governments and as mentioned above about key social issues such as inequality

or poverty have been successfully shaped by a handful of individuals. Equal or similar be-

havior of less powerful groups of interests representing societal unpopular opinions against

economic or cultural structures would, for instance, be determined as “brainwashing”,

“conspiracy” or “propaganda”. Multinational organizations significantly benefit out of ad-

vances in psychology and economics which enlarge the understanding about the shape and

manipulation of preferences, perception and beliefs as well as of inducing individuals to

consumption and living unpleasant lifestyles. Consequently, the access to information,

knowledge, tools as well as resources for shaping perceptions, beliefs and thus preferences

grows continuously (Stiglitz 2013, 183-233). The interests of the 99 percent gets addition-

ally adjusted to those of the one percent through the establishment and formation of beliefs

of fairness, inequality, performance, self-responsibility and efficiency, democratic policies,

the role and power of national states and economic terms about the role of market.

In contradistinction to the reality of shaping perception and beliefs, mainstream economists

still assert the well-determined preferences and fully rational nature of expectations and

perceptions which individuals have. In other words, individuals are well known about their

needs and preferences. In case of the assumption of mainstream economics, there would be

little success for advertising or marketing in general. Marketing and behavioral economics

testify the shape of behavior as one of their key aspects. In order to understand and affect

the stimulation of consumer behaviors, the economy invests lots of resources to understand

these determinations of consumer buying decisions as well as to shape perceptions rather

than convey objective information – a key object of advertising (Stiglitz 2013, 183-233).

Famous examples such as the red bull “athletes”2 or the “Marlboro man” confirm that these

perceptions are grounded in reality and that they do affect consumer’s behavior. Marlboro

kind of connotes with its “Marlboro man” numerous positive aspects such as freedom or

certain social status of a strong person – cowboy – and stimulates the aspiration of adapt-

2 Red bull athletes enjoy a distorted promotion, because their success is in contrast to the case of their death

highly promoted.


ing such positive features into the own life. In reality cigarettes are famous for harming

health and wellbeing – they support kind of contrary lifestyles.

The political and economic policies endeavor for the interests of the richest percent of the

society. Modern politics are characterized beyond the mobilization and battle over obtain-

ing voters, through discouraging those to vote who would not certainly vote the own party,

because of the different interests for instance. It refers to the mindset of two centuries ago,

when the voting franchise was heavily restricted, as the former census voting right in Aus-

tria. In both cases, elites feared to lose their power, wealth and privileges by a broad voting

behavior (Stiglitz 2013, 183-233). The dwindling middle class implies in a way the hol-

lowing out of political voting, because the middle class is seen as the backbone of the

western democracy. The poor tend to be alienated to politics and thus are less likely inter-

ested in voting and in contrast the rich who shape laws according their interests and thus do

not support democratic principles. Although the middle class is mostly likely to understand

the importance of voting in a democracy and the fair configuration of law is necessary for

the economy and society, the middle class itself is disillusioned with politics that obviously

not serve the needs and interests of its members and voters (Stiglitz 2013, 148-182).

In addition, contemporary political structures are characterized by political alienation and a

sense of disempowerment and disillusionment caused by the perception of unfairness

through the reinforcement of political supports for the disproportionate power of economic

elites. Disempowerment and disillusionment experienced by the less privileged is caused

through myriad dimensions of engagement with public authorities and governments. A

milestone in the disempowerment of citizens of the US was, for instance, several decisions

of the Supreme Court, which approved unbridled corporate campaign spending. Conse-

quently, due to the fact, that corporation possess many millions times the resources of the

broad population, the decision lead to the potential of creating a class of super-wealthy

political campaigners heading their unilateral interests of enhancing their profits (Stiglitz

2013, 148-182).

Another very important issue within modern politics and economics is the collective signif-

icance and dealing with knowledge, information and education – the marketplace of ideas,


which is perceived as distorted. Objective decisions of voters are based on the access to the

requisite information. Apart from the assumption of a biased media, citizens of western

societies are coined of the perception that the disclosed information of their governments

might not be. Anyway the western societies are far away from truly competitive media.

The compliance of competitive policies, strengthen policing of antitrust laws and the more

intensive vigilance about attempting control of newspapers, TV and radios by media cor-

porations in combination with a public support for diversity would defuse the situation

enormously. The impact of media in western societies exceeds the advertising market,

which stimulates needs and desires – the entire market of ideas is concerned. A well in-

formed public with an active and diverse media is the fundament for a well-functioning

democracy. Currently, the media is in the upper hand of the one percent. Similar to politi-

cal investments, these investments yield higher private returns than others also beyond

monetary dimensions. In this aspect, another element of creating distrust and disillusion-

ment is the political and economic system, because there is even a missing trust in the pro-

vided information about political and economic affairs and circumstances (Stiglitz 2013,

148-182).

In the previous decades, western societies face an evisceration of its democracy in which

the political rhetoric mainly focuses on the middle class according to the standard political

theory, but the outcome of modern politics less reflects the median voter’s interests. The

vast majority did not win, for instance, the battle over financial regulatory reforms about

tighter regulations against few international banks in Europe and America (Stiglitz 2013,

148-182). In addition to the new form of democracy, the political-economic realignment in

western societies has significantly developed from the economic regulation and supply

governments and societies towards to the hegemonies position of the market representing

few transnational corporation and banks. The role of the politics and national state in terms

of regulating and affecting the economy and thus creating the balance between economy

and society is getting continuously undermined and the politics lose their position above

the market and society to the market as it is “capable of regulating itself” and represents a

neoliberal paradigm started to manifest itself above society and politics.


3.3 The modern state

Geographical distances shrank with modern transport routes, low costs of transportation as

well as with new technologies of communication. Financial markets were already long ago

linked to one global financial market. Furthermore, the intensity of capital and knowledge

through computer-technology, telecommunication, microelectronics and gen- and biotech-

nologies encourage the worldwide cooperation between groups of interests of economic,

politics and science. The liberalization of markets, transnational organizations and the re-

gional economic integration through supranational institutions and agreements such as EU

or NAFTA characterize the increasing economic internationalization or establishment of a

“world economy”. This form of global realignment implies denationalization and the de-

regulation of national economies as well as the erosion of the nation-states through the

compression of international economic linkage in order to form a new integral structure of

politics and economy. In the ending 20th century and initiating 21st century nation states

need to submit modernization process in terms of their functions, competences and effec-

tiveness (Michalitsch 2006, 51 f.). In order to point out the international value, the World

Bank mentioned in its World Development Report of 1997 the importance of new modern-

ized states. In particular developing countries hold massive developing potentials by creat-

ing an efficient state through comprehensive state reforms. Nation-states represent key

roles for the economic and social development of one society, not as a direct economic

player but as partner, catalyzer and supporter for the national and global economy. Propo-

nents of the “minimal state” model also agree that national states are also in the future re-

sponsible for crime fighting, legislation and judicature (Dehnhard 1999, 11-25).

The nation state loses increasingly sovereignty, national political-economic scope shrinks

and due to the opening of national economies its autonomy declines as well. Keynesian

political instruments of demand management get replaced by new structures which support

and secure flexibilization, supply of innovative capacities, technical competences and the

subsidy and the rate reliefs for corporations form new governmental priorities. Modernized

states in neoliberal economic policies illustrate the stage of capitalism in which national

monopolies get replaced by transnational corporations as the representative force of the

economy. The erosion of national states characterizes in terms of the hegemonic shift to


global players the precondition as well as the consequence of this politic-economic rea-

lignment (Michalitsch 2006, 52-54).

Neoliberal proponents emphasize the importance of the state in the contemporary politic-

economic structure. According to Willke (2003, 84 f.), Milton Friedman defines the nation

state as a kind of referee who determines and supervises economic rules. Neoliberal propo-

nents define the duty of the nation states that they focus on the fields of their true compe-

tences instead of causing government failure through misguided economic interventions.

Economic growth and employment requires a low regulation and economic burden for the

economic subjects and organizations, because too much state in the form of taxes and con-

tributions would limit the room for economic maneuvering of markets and individuals. A

limited degree of intervention at the national level would enable full-employment and is

seen as the best form of welfare politics, which should emerge from the market instead of

Keynesian principles. The task of the market is to create frameworks in which its economic

subjects may follow its targets independently. Nation states are required to civilize market

activities, ensuring legal peace, ownership and contractual freedom. The duty of nation

states is to care about laws and order, the compliance of private contracts as well as to sup-

port their competing markets. Furthermore, nation states are required to take on duties

which would be too difficult or expensive for individuals or areas in which the market only

functions partially or not at all (Willke 2003, 86 f.).

The modernized politic-economic structure leads to new political-institutional structures.

The executive obtains priority at the expense of parliamentary institutions. Ministries with

intra-societal orientations, which are responsible for labor, education, social and cultural

affairs, lose continuously autonomy; in contrast to world market oriented ministries such as

finance, economy, technology and science define the new priority. In addition, the signifi-

cance of little legitimized organizations such as the European central bank or the media

increases, whereby social integrative organizations such as labor unions and parliaments

get undermined. Economic and social competences transfer to the duty of the market, in-

ternational independent institutions or individuals. The European project of integration

approves itself as an example of depoliticization of the economy and the reconstruction of

welfare to competition states, as economic and social functions and competences drift to


the market and from political pressure protected international institutions which enhance

the supranational coordination of national political areas and the intensified involvement of

private stakeholders. Finally, governmental interventions against markets are undermined

through authority-repressive forms of regulations and disunited ideologies (Michalitsch

2006, 53 f.).

Willke (2003) refers to the arising tensions through the economy as a societal partial sys-

tem for the overall society, because of its own logic and the magnitude of the functional

differences, which leads to a ruthless behavior at the costs of entire societies. This leads to

a permanent voltage ratio between the requirements of the society and the differed interests

of the subsystem economy. The task of the nation states is to mitigate these tensions to

secure law and order in case of unacceptable dimensions of these tensions (Willke 2003,

88). Neoliberal proponents demand a slim welfare state, whose savings partly move to ad-

ditional costs of the security state (Castell 2011; Dehnhard 1999 1-25). The role of security

measures increased significantly in the western societies within the previous years as well

as their expenses such as the installation and maintenance of the nearly six million closed-

circuit television cameras in Great Britain (Barrett 2010).

Moreover, modern states are characterized by another neoliberal foundation pillar – privat-

ization (Zerowsky 2005, 15), whose target is to hand off national duties and properties to

the responsibility and authority of private enterprises or households (Michalitsch 2006).

Privatization is for a well-functioning market important, because national organization

would distort competition and hold unjustified monopoly positions such as in the education

or health sector. Any societal sector should be market-based organized in order to cope the

little market failures with market regulated institutions (Zerowsky 2005, 16). Consequenc-

es of these shifts are that existential societal concerns are continuously solved by “private”

instances, which operate without any societal responsibility, undermine national legisla-

tives and reduce the scope of influences and participation possibilities for labor unions,

welfare institutions as well as the population itself. The possibility for the political partici-

pation of the population through democratic institutions gets more difficult and is not de-

sired. Neoliberalism enhances the “anti-political versions of politics” (Michalitsch 2006,

53 f.).


The positions of nation states in the contemporary politic-economic framework are addi-

tionally weakened, because states need to maximize its efficiency according to zero deficit

standards on the one hand and shrinking income opportunities through privatization and

reducing tax incomes on the other hand. In the US for instance, the maximum tax rate of

incomes decreased during Reagan’s era from 70 to 28 percent (Stiglitz 2013, 84-105).

However, as mentioned above, processes of privatization and deregulation are not connect-

ed with reducing national activities and thus not less national expenses. To sum it up, ac-

cording to the neoliberal ideology the state represents an important economic key partner

with all its expenses and duties, but loses at the same time the legislative power about pub-

lic concerns and a vast of its income opportunities. This form of development is for the

dominating position of the market very essential and results into a growing hegemonic

power of markets and their elite.

3.4 The domestic individual

The extension of market mechanisms to the entire life world and the emergence of judicial

policies enabling unlimited competition and the potential of self-organizing collective life

are desired features of the contemporary and neoliberal form of capitalism. Economics

transformed into political and societal projects, as from Lippmann to Thatcher’s famous

paroles “Economics are the method, but the object is to change the soul”. People need to be

adapted to a world of generalized competition (Hilgers 2012, 80-91). This form of compe-

tition between individuals do not remain in the economic field, as members of western

societies face every day the competition about societal status, privileges, occupations,

friendships, within the monetary distribution and the within the allocation of scarce re-

sources in general.

The contemporary competitive form of capitalism is characterized by the economization of

individuals into entrepreneurs. The welfare state coverage gets systematically substituted

by the increasingly important, economic and new role of individuals (Chapter 5.7). Socie-

tal issues are no longer hidden but get converted from collective into individual problems

such as unemployment refers to the lack of motivation instead of structural or economic

reasons. Furthermore, the inequality as a measure of equity converted to a positive phe-


nomenon, because it stimulates the commitment to performance through competition. So-

cial justice is not any longer required and replaced by competition in order to enhance pri-

vate initiatives and the commitment to performance. The economic competition is seen as a

precondition for entrepreneurial thinking or behavior of individuals as well as organiza-

tions and thus it is seen as an important factor for the current capitalistic system and its

need for a continuous economic growth (Michalitsch 2006, 88 f.).

According to Michalitsch (2006, 88f.) Gary S. Becker is a proponent of the universaliza-

tion of economics including the subjugation of all areas of life under the logic of the eco-

nomic optimization and individual utility maximization. The rational cost-benefit calcula-

tion gets to the foundation of human behavior. In this respect, decisions are not only felled

consciously – strong emotions are not excluded. Family, marriage, the number of children,

criminality and politics convert to objects of economic analyzes. Becker defines the mar-

riage, for instance, as a two-person company with the objective of producing children. In-

dividuals invest into themselves depending on their expecting profitability – the monetary

and physically return on investments. The investments into human capital include apart

from education and On-the-Job-Training, the improvements of emotional and physical

health. Individuals are considered as economic units with the alignment of the entire exist-

ence to the economy beyond the consumption factor and labor market participation. Indi-

vidual can be considered as entrepreneurs following the logics of the market including any

monetary possibility and self-reliance in terms of having the willingness to perform in or-

der to achieve monetary wealth instead of requiring social security benefits (Michalitsch

2006, 89-91).

3.5 The Impacts on the labor market

Entire societies and their individuals align their priorities and perspectives to universal the

concept of the economy. A collective indignation is shared about the human turpitude

within the market system whose merciless competition is driven by pure egoism and profit

seeking. The repulsive materialistic lifestyle, which is demanded and practiced in the mar-

ket economy, enhances the criminal ambition for self-interestedness in form of materialis-

tic pleasure (Willke 2003). The one versus 99 percent society of the United States of

America illustrates the excesses of these modern capital ambitions ruthless development of


the income and wealth gap – in the previous 30 years the lower 90 percent of the American

earners achieved 15 percent higher incomes in contrast to the top one percent with 150

percent higher income rates and the top 0.1 percent multiplied its income with over 300

percent. Pure egoism in form of profit seeking is represented in the accumulation of

wealth, as the richest one percent of the American population possesses one third of the

entire national property. The economic situation of the U.S. is very relevant for the Euro-

pean, because in the years before the previous financial crises in 2008, Europeans looked

to the American economic model as a paragon for their economic performance (Stiglitz

2013, 1-35).

The contemporary form of capitalism is characterized through globalization, which shapes

entire modern societies, its national economies and individual life courses in particular

after the falling iron curtain and the arising Asian emerging markets. The emergence of a

single worldwide market led to an intensified global competition with the effect, that larger

international connected markets spawn more international specialization of labor and trans-

form traditional industries and occupational frameworks significantly faster. Consequently,

the possibility of market turbulences, the volatility of economic developments and the rate

of technological progress in the (global) economy has significantly increased, because of

the intensified linkage between (financial) markets. Furthermore, the increasing mobility of

production factors beyond national borders, in particular within the financial market, leads

to rising business tax competition among nation states and governments, which get increas-

ingly under pressure to deregulate, privatize and liberalize their economies structures and

policies or even transfer economic responsibilities to the markets (Buchholz et. al 2011, 3-

24).

Global dynamic markets push technological improvements in an extraordinary manner, in

form of important scientific discoveries such as new and better materials and improved

methods of production as well as product innovations and consumer fashions. This results

in increasing unprecedented interdependences caused by the growing linkage of the

world’s economic community. Consequently, global markets are less predictable and more

risky than local markets which lead to a higher vulnerability through external shocks such

as major political, financial or economic crises, wars or technological inventions of other


parts of the globe. In this context, organizations face additional uncertainty of their social

and economic environment, which causes allegedly higher needs to more flexible working

structures for responding faster to these changes, because they need to be increasingly able

to adapt their workforce and its size to the demand of global circumstances. This means for

the employees to basically accept the decisions of the stronger negotiation party – employ-

ers. Globalization enhances the development of low wage or working poor labor market

segments in western societies especially in the lower skilled labor sector. Income rates of

middle work forces initially increased until the enforcement of deskilling and outsourcing

which caused similar developments of unskilled labor force for the broad mass. As a con-

sequence, western labor markets face an increased polarization. The entire western econo-

my might benefit in the short term at the costs of the majority of the labor market especial-

ly the released and downgraded work force (Stiglitz 2013, 60-82).

The basic idea of trade globalization is to substitute the movements of individuals by the

movement of goods around the world. Austria, for instance, as a developed nation, imports

by unskilled workers produced goods from abroad, which leads to the declining demand in

this labor sector in Austria by the amount of workers needed to produce the imported

goods. Consequently, income rates of unskilled workers decline, because of their decreas-

ing demand and they need to compete by accepting lower wages or poorer working condi-

tions. This effect of globalization would rise independent of the globalized framework pol-

icies, as long as the international trade increases. However, the policies and structure of

globalization aggravate wage underbidding and international labor market competitions,

because they hollow out the workers’ bargaining power. Due to the conditions of low tar-

iffs between the nations and high capital mobility, organizations simply argue in front of

their employees that in terms neglecting lower wages or worse working conditions the pro-

duction site or the entire company “needs” to move to foreign countries with lower income

rates and social standards. In order to emphasize the consequences of asymmetric globali-

zation policies in terms of bargaining power, contrary global policies, which imply free

mobility of labor force and in contrast no mobility of capital would significantly change

global business affairs. Consequently, countries would attract their employees in order to

acquire capital. Locations would be promoted with good schools, healthy and well-

functioning environments and even low taxes on their wages. Nations would finance them-


selves through higher taxation on capital. In the reality, the one percent is not interested in

such conditions and thus the other 99 percent follows the necessity in believing to share the

same interests (Stiglitz 2013, 60-82).

Current globalization policies enhance global competition for all its members – small and

medium-sized enterprises (SME), transnational corporations, its employees and its nation

states. Also cities need to adopt the structure of competition between each other for getting

and protecting their jobs for instance. In the period between 1995 and 2001 developed the

number of jobs in European cities in different scopes, as city Dublin gained 37.5 percent,

in contrast to Vienna which created only two percent more jobs and Berlin with even a

decline of 3.6 percent. These developments are characterized by the entire economic situa-

tion resulting in regional development and location policies of the cities. The framework of

economic activities in certain regions are heavily influenced and affected by the country-

specific particularity, the politics of taxation and investments and the amount of payroll

taxes – differing significantly between the EU-members (Bräuninger and Stiller 2006, 260-

265).

Moreover, after national governments successful confirmed and overtook global policies,

corporations enhanced their bargaining power against politics in order to demand lower tax

duties and regulations. Organizations do not only threaten their employees but also entire

nations to remove their company production sites or headquarters in case their taxes would

not decrease. The U.S. corporation Nike for instance relocated its production to Indonesia.

The organization employs mainly young women or female teenagers for a minimum wage

under the national settled minimum wage. The production costs of one pair of shoes are

just $ 0.12 compared to the final selling price of at least $ 88 (Afheldt 2005, 175). Fur-

thermore, the multinational cooperation Medtronic transferred its corporate headquarters to

Ireland, because of the lower income taxes of 12.5 percent instead of 35 percent in the

United States (Thieme KG 2014). Consequently, western countries face an enrichment of

its organizations at the expenses of its employees and even entire societies, but the promo-

tion of globalization refers to that all will benefit and witness wealth. This contention is

built on two fundamental arguments. Globalization will increase the country’s overall out-


put measured by the GDP3 and leads to the automatic tickle-down effects of the increased

GDP which ensures the distribution of the wealth to the entire society. Meanwhile, experi-

ences prove that neither any argument has established itself. In case of well-functioning

markets free trade would allow people to move from protected and (potentially) less profit-

able sectors to more efficient unprotected export sectors – which might result in an in-

crease in the GDP. As unemployment rates in western societies illustrate, markets are often

not working according to this theory (Stiglitz 2013, 60-82).

Despite all these developments, modern life focuses on different values and kind of ne-

glects such contradictions against the capitalistic sovereignty, whose power creates for

both individual and collective subjects a common course, which is shaped after the unre-

lenting logic and dynamic of the accumulation and circulation of capital. The capitalistic

ethos of production leans on economic growth, competition and maximization of profits

and thus leans on the basic interconnected principles of growth and acceleration. Any capi-

talistic society of any historical period or beyond all cultural or geographical differences

was and is above any other collective concern and thus the industrialized states, modern

3 The GDP is a world reference for numerous economic analyses and serves as a guideline for economic,

political and scientific actions and decisions. The GDP defines the total value of all final produced goods and

services within a certain economic units (i.e. cities, regions or countries) during the period of one month,

quarter or year for instance. The GDP represents a certain economic model followed by certain assumptions,

rules and policies, which get continuously more under criticism.

Anything that can be sold and is characterized by an aggregate monetary value increases the GDP and thus

the economic growth. This represents increased individual and collective well-being, but in many times the

reality occurs differently. It positively records, for instance, any form of destruction including accidents,

progression of illnesses caused from food insecurity, pollution and many more. Furthermore, it positively

measures our resource-intensive capitalistic economy. Using 15 percent more gas in order to produce the

same amount of goods within one corporation due to logistical issues represents an economic growth.

Only in monetary value paid goods and services are measured in the GDP and the care economy is signifi-

cantly underestimated. The precondition that parents of young children or children of elderly ill individuals

may attempt their jobs is that these duties of care are done by other individuals. This household labor is unac-

counted (made by relatives or neighbors) or it is significantly undervalued and thus do not affect the GDP

properly but the care economy carries our society and is the precondition for the entire economy. Other for-

gotten contributions of the care economy are volunteer work and various forms of communities.

The GDP measures rather the increase of environmental pollution caused by wasting additional fossil fuels

than the collective or individual well-being in times of illnesses and when relatives invest time that the ef-

fected person is soon capable of continue to work. These are only few factors why the measurement of the

economic growth differs from reality.


states and its governments share all the same point of view that every imaginable process

must be done in order to boost economic growth – to increase incessantly its GDP, not

because the contemporary level of wealth is not enough, more likely because it prevents

the system to collapse as well as societies accelerate their individual and collective life-

styles not because the former was to slowly, more likely because it is the precondition to

remain in the global competition. The resulting growth compulsion detaches from material

needs and is endless independent of the size of the GDP. The increasing production curve

is based on previous economic growths and thus almost an exponentially curve. Capital-

istic subjects get forced to increase their production, consumption and the entire capital

circulation independent of how this increase might be achieved, but certainly with a lower

value of the individual joy of the added value (Rosa 2009, 87-125).

Numerous sociologists as well as economists (e.g. Rosa 2009; Michalitsch 2006; Castel

2011; Wichterich 2011) mention apart from the ruthless accumulation of goods caused by

economic growth pressures, the acceleration of the modern capitalistic life. Economic

growth and acceleration of modern life increase reciprocally with each other – time is mon-

ey. Time in form of working hours represents a production factor and thus time saving

leads to competitive advantages – higher outputs per working hour. Consequently, western

societies face faster turnover of capital and thus the speed of production, circulation of

goods and consumption, which is similar to the economic growth an indispensable feature

of capitalistic economies (Rosa 2009, 87-125).

Furthermore, economic growth is argued that the entire society would benefit due to tickle-

down effects. As far as the labor market is, for instance, concerned, mainstream econo-

mists argue that the annual economic growth of at least two percent is necessary to create

new jobs, increase the wealth and reduce unemployment. The recent past proved that alt-

hough the unemployment figures decreased from 11.3 percent in July 2005 to 8.1 percent

in January 2008 in Germany, for instance, the continuous shift of the wealth from the bot-

tom to the top, however, advanced. Germany recorded in this period an economic boom

with an annual economic growth up to seven percent (Halver 2014). The net income rates

of German workers decreased within the same period and was in 2007/08 five percent low-

er than in 2000 (adjusted for inflation) (Querschuesse 2011). This is only a fraction of the


empirical data which prove the empty promises of economic growth premises or an estab-

lishing modern atypical labor market, which in reality enhances poor working conditions.

It seems as the labor disease of the global south advances to the global north including es-

tablished economies and welfare states such as Germany and Austria (Chapter 4).

Finally, the alignment of tax policies in western societies aggravates the international com-

petition of labor markets as well as strengthens the societal and general position of multi-

national corporations, because these organizations dispose over the resources to evaluate

and settle its production units in the most convenient and valuable locations (i.e. as far as

the labor taxation of its workers is concerned), because they are capable to afford special-

ists and departments in finding the best international locations for each production process,

to analyze taxation policies to reduce their taxes and even specialists who work very close-

ly together with legislatives in terms of creating new business taxes policies.

The labor taxation in Austria increases, for instance, the gap with emerging markets in

terms of labor force expenses and thus aggravates the international competitive position of

the Austrian economy. The vulnerability of the Austrian SMEs is in this context signifi-

cantly high, because of their higher alignment to Austria as far as their occupational struc-

ture is concerned, compared to multinational organizations. Thus these firms pay the ma-

jority of their business taxes such as labor taxes, revenue taxes and corporate income taxes

in Austria. In the IT-sector, for instance, an Austrian average programmer costs at least

4,000 to 5,000 Euros per month for five days and 38.5 hours week and additionally em-

ployers face costs of social protection, five weeks paid holidays per year and numerous

motivational incentives. The same work can be done by an Indian programmer who works

for Austrian Multinational Corporation, for instance, but costs including the extra costs in

average between 300 to 700 Euros for longer working hours and barely any work protec-

tions or employment benefits.

Forms of labor taxation in Europe4 enhance significantly the international labor market

competition and additionally supply the power shift from the societies, SMEs5 and national

4 Labor taxation as well as the sales tax enhances a form of tax structure which favors the rich at costs of the

poor. The corporate tax in Germany, for instance, dropped form 53 percent to 15 percent at the beginning of


economies towards multinational corporations. A shift of the business taxation focus from

labor force to capital flows would increase enormously governmental incomes, mitigate

international labor competition factors and enhance the monetary position of the broad

labor force in western societies. A taxation shift from labor taxes towards income taxes

would strengthen the international business competition position of European firms – espe-

cially SMEs – and it would partly correlate with the point of view of economists who in-

cessantly promote labor flexibilization, lower income rates and atypical working condi-

tions in order to reduce the high enterprising costs for labor forces in Europe.

Due to the high labor costs in Europe, SMEs argue for their requirement of job flexibiliza-

tion in order to keep competitive versus powerful multinational corporations, which adopt

these arguments for their own purpose and thus heavily promote in several forms flexibili-

zation, casualization and other processes. As a result both employees and entire societies

including its governments are hollowed out. According to neoliberal thinking, it seems as it

is the single solution to solve the contemporary global economic challenges and thus it gets

promoted as the only economic doctrine of salvation for economic and financial crises and

global disparities. However, previously discussed economic determinants and global struc-

tures are outside of the possible approach of problem solving, because they are regarded as

untouchable, the fundamental precondition of successful economics and as “natural laws”.

this century. In addition, Helmut Kohl abolished the stock exchange tax in Germany. On the contrary, the

sale tax in Germany rose from 16 to 19 percent. This tax and the income tax need to be paid by every citizen

including the individuals living close to the poverty threshold or below. 5 In 2013, the Small and medium enterprises (in this case enterprises with up to 249 employees) employed in

Austria 60.5 percent of the Austrian employed population and thus possess an important role in labor market

and economy (WKO, 2013).

The labor market in a modern capitalistic society Seite 50

4 The labor market in a modern capitalistic society

This Chapter explores the apparent fundamental realignment of the labor market in western

societies on the basis of the Austrian labor market. This complex process is constrained by

the shift of the labor market equilibrium – job-immigration, the role of unemployment in

this respect, feminization of labor, offshoring and technological advancements – and the

crises of gainful employment or the “male bread winner model” as well as the emerging

forms of atypical employment and the precarious labor market. As far as the figures of

atypical employment are concerned, the Austrian atypical labor market is compared with

the German market because of the extent of deregulation in Germany, as a welfare state

oriented economy. Consequently, German labor markets are characterized by atypical and

precarious conditions, which would not exist in comparable nations such as France, Austria

or Belgium (Bosch 2012). Furthermore, the data on atypical forms of employment is partly

seen as rough values, because real figures are hard to measure on the one hand and on the

other hand it is difficult to evaluate the role of the atypical job – if the person works in two

or more jobs; this form of employment represents an additional income or the main in-

come; additional earnings for students or causes precarious living conditions. Due to the

change of the method of measuring some of the data shows similar figures as in previous

years, whereas the actual figures increased. Consequently, this paper elaborates on the de-

velopment of atypical employment turning the previous decade or in some cases an ex-

tended development.

Brinkmann et al. (2006) describe the major reasons for the contemporary labor market in

its current form in the recently dispersed complex political-economic structures, which is

maximally enhanced by collectively known constructs such as the transition of the modern

society into a postindustrial service society or the feminization of employment. Forms of

capital accumulation include not only the accretion of investments funds or rooms of pro-

duction but also the extension of private-capitalistic relations of production to undeveloped

regions and societal areas, realized by the power of focal corporations over their suppliers,

subcontractors and purchaser as well as flexibilization and casualization of labor forces.

Brinkmann et al. (2006) refer to one of the key points which is that economic dynamics are

significantly encouraged through deregulation, flexibilization and casualization of labor

markets. Financial markets obtain central economic significances in terms of the determi-


nation of investment alignments. Global financial and economic players are motivated to

fulfill fundamental changes within the system of corporate governance which influences

the merges of corporations, the reorganization of enterprises and the management of con-

sumption. The tensions between the economy as a subsystem and the entire system – socie-

ty need to be mitigated not just by nation states but also by work forces whose working

conditions serve as lubricant for the economic and financial excesses. Thus flexible and

cheap labor developed as a consequence of contemporary capitalism into the precondition

of its current existence (Brinkmann et al. 2006).

4.1 The shift of the labor market equilibrium

The term labor market refers to principles of market mechanisms which are based on the

equilibrium between demand and supply – voluntary contractual agreements between em-

ployers and employees with agreeable labor conditions for both parties. During the previ-

ous decades western labor markets face a shift of the negotiating power towards employ-

ers, due to global and economic policies, which is an important strategy in terms of spread-

ing poor and precarious working conditions, with the purpose of profit maximization for

employers, corporations, their shareholders and owners at the cost of the broad labor force

and society.

The bargaining power shift within the labor market refers to a constantly increasing labor

supply versus a continuously decreasing demand for labor. Declining labor force demands

in Austria and other developed nations are significantly shaped by automatization of eco-

nomic processes since the initiating industrial revolution. Automation engineering replaces

step by step human work force and decouples productivity and human effort, because of

the increasing productivity and working periods. Automatized systems enable revolutioniz-

ing features in modern economics that the realignment of productivity through temporal

decoupling of human and mechanic productivity (de Gruyter 1993) which simultaneously

hollows out the human work force. Automatization has numerous consequences for the

size of work forces, which can be categorized into five main groups of

1. Unemployment

2. re-education of the workers


3. collective bargaining agreement essentially

4. monopolization tendencies

5. relocation processes of enterprises

The first consequence is the most relevant in terms of labor market equilibrium develop-

ments, because investments into fully automatic machines are only profitable in combina-

tion with savings in labor costs through significant labor force cutbacks.

Furthermore, another factor enhances the bargaining power shift to employers through ad-

ditional losses of workplaces in industrialized national economies – offshoring or also

known as offshore outsourcing (Levine 2012) and outsourcing within the own economies.

A rough scope of the outsourcing tendencies within western economies can only be partly

quantified occasionally in employment statistics of subcontracted labor or temporary work

(Bosch 2012, p. 14 f.) and thus detailed information about developments in this sector will

be elaborated in the Chapter 4.4.2.Subcontracted and temporary forms of labor. The term

offshoring appeared initially more than a decade ago in the US and describes the relocation

of work processes mainly within multinational organizations located in the United States or

Western Europe beyond national borders that usually could have been made by in-house

employees, for instance, computer programmers, systems designer or operators in call cen-

ters. The phenomenon of offshoring – also known as job migration – initially began to

boom during the 1970s and 1980s, as multinational western organizations opened facilities

abroad (Levine 2012). However, the process of offshoring started in western societies sig-

nificantly earlier – Germany, for instance, lost over 400,000 jobs between 1955 and 1980

in the textile industry (Braun 2003, 9 f.).

No database provides comprehensive facts and figures about the loss of jobs through off-

shoring within western societies. According to Levine (2012), the U.S. Bureau of Labor

Statistics’ (BLS) provides the only data on jobs which were lost because of out-of-country

relocations6 and not surprisingly the BLS estimates constant job losses due to offshoring to

6 Since 2004, BLS analyzed enterprises with at least 50 employees and that sent minimum of 50 workers in

layoffs with the duration of more than 31 days, but without to consider whether the laid-off workers’ jobs left

the national borders.


be less than one percent. Levine (2012) presents a forecast study of Forrester Research

Inc., perhaps the first and most commonly cited statistics on offshoring, which came to the

conclusion that around 3.4 million jobs within the service sector are likely to be moved

abroad between 2003 and 2015 whereby the first half is estimated to be relocated within

the first seven years and the second half in the remaining five years. Levine also found out

that around 30 million jobs were offshorable in the US in 2007. This means they have at-

tributes that would allow them to go overseas, for example no in-person customer service

required, IT-enabled work processes that can be accomplished via telecommunication; and

jobs that can be routinized (Levine 2012).

According to a study of the Austrian Press Agency (APA) the relocation of multinational

organizations out of Austria caused the loss of 70,000 jobs between 2008 and 2012 which

led to tax losses of 1.26 billion Euros (News 2013; derStandard 2013; Salzburger Na-

chrichten 2013; Wirtschaftsblatt 2013). It is interesting to compare these numbers with

those of the Austrian news agency ORF (2014), which publicized 6,872 jobs lost within the

previous eleven years. It should be emphasized that these job losses refer only to the relo-

cation of entire organizations without taking offshoring of organizational departments or

single positions into consideration. Thus, these numbers do not cover the entire reality, as

it is, for instance, hard to prove whether employees are fired due to offshoring measures or

bankruptcy. ORF (2014) reports about 94 recorded organizational closures in Austria in the

previous eleven years divided into 33 bankruptcies, 32 shutdowns and 25 relocations. The

question arises whether the bankruptcies were caused indirectly by former offshores of

competitive international organizations to developing countries.

The recent case, in which a multinational technology and industrial commodities organiza-

tion with a strong focus on steel – the Voestalpine in Linz – threatens the Austrian gov-

ernment to relocate with its approximately 46,000 jobs to the US, emphasizes the topicality

of this subject matter (Techt 2014). As mentioned before, although the term offshoring was

only coined in recent years, the phenomenon is well known in Europe and the US. In 1950

around 700,000 people worked in the entire textile sector in Germany whereas the number

decreased to 160,000 in 2006. According to a study of the Austrian Chamber of Labor

(German: Arbeiterkammer) the textile industry lost 87,500 jobs in total between 1970 and


2004 in Austria, whereas the demand for textile commodities is nowadays much higher

than in 1970 or before, because of the greater population in Austria and higher standard of

living (Böhm and Lahodynsky 2014, 40 f.).

Table 1: Austrian Labor Force between 1970 and 2013

Year Austrian Work force Index

1970 2,386,5877 100

1994 3,654,200 153

2013 4,175,200 175

Source: Statistik Austria 2014

Figure 1 illustrates the constantly decreasing number of jobs meets a steadily growing need

for jobs – labor demand. In 2013 the working population in Austria was determined to be

4,175,200 individuals, 521,000 more than in 1994 with 3,654,200 employees (Statistik

Austria 2014). The difference between 2013 and 1970 is significantly higher with

4,175,200 in 2013 versus 2,386,587 workers in 1970 who worked in dependent work rela-

tionships. At that time the number of self-employed individuals was very low. The accu-

mulation of numerous labor supply trends such as job-immigration, encouraging female

employment, demographic developments and new work time structures increase the

growth of the total labor force significantly. The OECD (1982) report The Challenge of

Unemployment already emphasized similar developments in terms of unemployment and

increasing labor supply in 1982. This report was addressed to labor ministers of OECD

countries in order to manage unpleasant labor market developments such as the rising un-

employment figures or the consequences of job immigration and feminization in combina-

tion with stagflation within to the OECD area in that period. Even though, the subject mat-

ter of the consequences of the increasing labor supply matters the OECD countries since

decades, the labor supply still worsened through the incessantly propagation of job-

immigrations and the role of the female activity rates during the previous years.

The following Chapters analyze the impact of the labor market equilibrium shift with the

resulting decreasing bargaining power for employees. There are hardly any employees who

7 Depended Labor force.


benefit from this labor market development, because the shift of the labor market equilibri-

um leads to a decreasing bargaining power for the employees and thus enhancing low-

wage sectors and poor working conditions.

4.2 The crises of (paid) work – the undermined male breadwinner

The feminization or (female) immigration of employment led to a paradigmatic flexibiliza-

tion of the gender norm, because the increasing demand for gainful employment and inter-

nal as well as transnational mobility lead to the continuous erosion of standard employ-

ment model of the traditional “male breadwinner” – job arrangements which enable the

secure of one’s livelihood, while at the same time women adopt the monetarized support

role within their household instead of working in so called bread-earning job arrangements

at appropriate wages. In other words, there is a contradiction between the process of eman-

cipation of women in labor markets and their unequal and paradox integration into em-

ployment. Securing the livelihood and taking social responsibility shapes the feminization

which leads to a decrease of income and deterioration working conditions for the entire

labor supply, because of the increasing labor supply (Wichterich 2011).

The expansion of the paid work force through globalization and the enhancement of the

female participation on labor markets have led to the debate on labor market crises and

even to debates about the end of the labor society. In this context, experts mention the con-

sequences of the advancing technologization of labor – the decoupling of the increase in

productivity and efficiency, economy of scale and material welfare from the mass use of

human workforce. The crisis of (paid) work, which is occasionally visible in terms of job-

less growth and caused by the globalized competition of economies, leads to the inherent

necessity of the adoption of humans and markets as well as labor market structures to

adopt globalized competition of undercutting through flexibilization, cost cutting and so-

cial downsizing. The deregulation of the labor market – the erosion of collective bargain-

ing law, dismissal protection, maternity protection, et cetera – and the reduction of labor

costs – wage-dumping, establishment of the low-wage sector and mini-jobs, informaliza-

tion and flexibilization – implies the end of standard employments, of the fully-employed

white male bread winner in the western industrialized nations in the middle run, which


characterized the labor market in the Keynesian welfare state form of capitalism (Wichter-

ich 2011).

Women play an essential role in terms of the formation of precarious markets with their

underpaid work as well as in the neoliberal transformation of nation states. The cut backs

of public household budgets contribute to worsening certain conditions in social areas such

as the shortage of nurses in hospitals, the lack of places in kindergartens or personnel for

the care of the elderly. Not only in developed countries with overextension of public health

facilities and structures, but also in western welfare states with a tighter public supply,

mainly women as individuals have taken over care duties and social responsibility8 in pri-

vate households or in collective volunteer groups. Through their additional work effort

women mitigate social tensions in terms of the transformation of giving more control to the

market and less to the state9 (Wichterich 2011).

The crises of (paid) work refer to the decrease in terms of formal standard employment

while jobs in the informal sector are on the increase and not only that jobs in industrialized

societies run out. In Germany the latest increases of female jobs were mainly in mini-Jobs,

1-Euro jobs, part-time jobs and self-employment while the figure of women in standard

employment decreased to 1.4 million. Twice as many women compared to men are mar-

ginally employed and more than 80 percent of the part-time jobs are occupied by women

(Wichterich 2011).

8 In order to relieve public households and to fill empty public coffers, the responsibility and duty of social

services shift to private households and local communities –privatization of the care economy and care work

apart from the privatization of infrastructure. 9 The resulting transnational shift of the supply chain has become apart from the results of the kind of privati-

zation of the care economy to the precondition of many national economies. The supply chain always goes

from poor to wealthy households or countries, which hollows out the care economy in the poor household or

country and creates an emergency situation. The lack caused by the emigration of skilled employees from

South Africa to Great Britain gets balanced through the recruitment of skilled employees of Zimbabwe and

Cuba. The gaps of supply, caused by the emigration in Poland, get filled by Ukrainians. The migrants within

these transnational chains of supply leave the care of the own children or parents their sisters or for few cents

their neighbors, while they care for foreign children in foreign countries. Meanwhile, the temporary emigra-

tion of women got a political promoted survival strategy of developing or poor states, because through the

export of socio-emotional capacities the national governments of the migrants receive retransfers (Wichterich

2011).


In the previous sixty years the female employment figure in Austria rose significantly from

1.3 million women, which was 39 percent of the 3.347 million large labor force in 1951, to

1.879 million, which was 46 percent of the Austrian labor force in 2006. The overall em-

ployment figure of people between the age of 15 and 64 was at 64 percent of the women

and 77 percent within men in 2006. The female employment rate calculated from the resi-

dential population doubled from 19 to 38 percent between 1951 and 2006, which can be

explained with the significant expansion of part-time employment (Statistic Austria). Nev-

ertheless, 44 percent of Austrian women work in atypical forms of employment.

In addition, the incessantly propagation of job immigration affects the labor market equi-

librium – additional employees from other countries enlarge the labor supply. Consequent-

ly, employees who just moved to developed economies work very often in precarious or

informal job arrangements, because they increase the number of employees, which hollows

out their job conditions and those of the entire labor supply within the certain labor sector

as well as in the long term major parts of the entire Austrian labor market, through the

principle of substitution – several unemployed meet one vacant job. According to Sara

Lemos (2008) this form of labor inflows is part of the explanation for high unemployment

figures or depressed wages.

It is not the target of these analyses to undermine the achievements of our contemporary

modern society in terms of female equalization or freedom of mobility and (im-) migration,

but it is important to illustrate the consequences of such developments, especially when

these measures should solve western labor issues, but in reality mainly serve the needs of

cheap labor by mostly multinational organizations and aggravate the situation of society in

the emigrating and immigrating countries.

As far as job migrants are concerned, the question arises whether job migrants voluntarily

leave their home country, travel to their workplaces in foreign countries and live half of

their life several hundreds of kilometer, or if they are forced because of political, environ-

mental, economic or social issues in their home country. How many individuals would

emigrate, if they would live in agreeable conditions in their home countries? As western

societies face negative consequences of high job-immigration, measures should be made at


the right point. Instead looking for a solution in western societies, counteract measure-

ments through international supply for the development of the affected countries of the

migrants would help both sides, in case of solving the imminent shortage of skilled work-

ers seriously in Austria.

The emigration of the (skilled) labor force makes their home countries even poorer and the

only “winners” are the organizations through additional relatively cheap labor, which is

heavily promoted with the shortage of skilled workers. Recent developments such as the

abolition of the last labor market barriers for Romanians and Bulgarians who are able to

work within the entire EU since January 2014 (Schmaler 2014), illustrate international

alignments of labor markets politics. The benefits for Rumania and Bulgaria of their EU

participation may convert to disadvantages caused by factors such as migration of skilled

labor forces i.e. doctors or programmers to foreign countries. Both societies of migration

and immigration countries would benefit from a better international cooperation between

societies or at least the possibility of a neutral development of developing countries with-

out the intensive western interference.

The contemporary global politic-economic structure shapes the labor market demand at the

disadvantage of the employees and at the advantage of the employers – mainly of multina-

tional organizations, which implies that employees accept precarious or poor working ar-

rangements against their will more easily, because in many cases unemployment or job

offers with even worse working conditions represent the only alternative.

4.3 Precarious gainful employment

The reputable French sociologist Robert Castel elaborated the contemporary division of the

labor force in his much-observed study Les métamorphoses de la question sociale. The

shrinking “zone of normality” comprises of the short-term market uncertainties independ-

ent employment relationships which enable a stabile societal existence, including social

security guaranteed by labor policies and additional (lawful) labor structures. The opposite

labor zone is according to Castel determined as the “zone of the decoupling” embracing

those of the labor force who are temporarily or even totally considered as dispensable be-

cause of (long-time) inoccupation. The third zone has established itself between these two


poles of the labor market as the “zone of precarity”, which defines a variety of flexible and

atypical forms of employment with precarious aspects such as time- and contract work,

fixed-term employment, marginal employment or fictitious self-employment, employment

based on projects or full-time employment in the low-wage sector. Processes of disintegra-

tion occur both in forms of external social consequences such as unemployment and inter-

nal consequences such as the formation of a low-wage, precarious, flexible, deregulated

and insecure labor market (Kraemer and Speidel 2004).

Precarity refers to job arrangements in which employees earn significantly less, face a lack

of employment securities and social integration compared to standard full-time employ-

ment. Precarious employment lead to subjective losses of meanings, lacks of recognition,

planning uncertainty, forced political apathy tendencies and societal isolation within the

affected individual. Precarity affects the life conditions beyond gainful employment such

as to live under the risk of poverty, because individuals face precarity if their working ben-

efits are insufficient to secure ones’ livelihood or enable a minimum of cultural and socie-

tal participation or standards. Consequently, such working conditions lead to increasing

deprivation and poverty, because precarious forms of employment cause the preclusion of

equal integration in social networks within organizations as well as at social networks out-

side enterprises (Brinkmann et al. 2006). Moreover, individuals lack in the participation of

collective standards of society such as the usage of public means of transportation, the us-

age of cultural goods such as theatres, the purchase of goods such as clothes or the repair

of fundamental goods for living such as refrigerators. However, this form of societal exclu-

sion exceeds monetary dimensions (Chapter 5).

In addition, precarious employment is characterized by the lack of institutional grounded

social and employment rights. In general, minimum tariffs, opportunities for workplace

codetermination, operating agreements and social rights of protection such as dismissal

protection or pension benefits pertain in their entirety only for standard full-time employ-

ment. Furthermore, precarious workers do not obtain a collectively acknowledged position

and it is even very likely for them to struggle with social contempt through their “minor

occupational status”. Finally, precarious employment is also characterized through the oc-

cupational range of duty. It includes forms of employment which lead to a permanent loss


of meaning or the opposite consequence of a pathological over identification with the job,

visible in forms of work mania, burn-out syndrome, inability to relax or the loss of private

values (Brinkmann et al. 2006).

According to Kraemer and Speidel (2004) the relation between characteristics of precari-

ous and regular forms of employment is also important to determine precarious working

and living conditions. However, nowadays precarity take over dimensions in which the

relation to standard employment is no longer relevant to determine precarious living stand-

ards. In Germany the lowest hourly wage, for instance, has been observed by the labor un-

ion ver.di as 89 Cents. Such income level is not only insufficient in order to secure one’s

livelihood in Germany but also in any developing country. In general, standard employ-

ment shape with their characteristics the median standard of employment within a certain

society or economy and thus affect the characteristics of precarious job arrangements –

whether sufficient resources can be generated through gainful employment in order to live

in acceptable conditions within the particular society.

Regular forms of employment were at least for a long time connected with specific safety

guarantees, employment benefits and legal entitlements to ensure the employees’ societal

status. The requirements and norms of standard employments are significantly influenced

by collective expectations and perceptions. In Austria and Germany the main collective

expectations can be summarized, for instance, in four core-aspects

1. the as obligatory considered permanent employment contract and agreement which

plays an important role in enabling the employees’ occupational and biographic

planning certainty

2. structures of working hours, which are based on full time standards, distributed

consistently to the weekly workdays

3. a stable and appropriate remuneration for the work performance that guarantees a

certain occupational and domestic status

4. a certain standard of social and labor law-related protection and benefits, which is

obligatory in order to earn the subsistence to secure their livelihood (Kraemer and

Speidel 2004)


These kind of minimum employment standards enable statutory protection measures for

employees, collective minimum wage and company benefit rates such as partnerships with

other enterprises or institutions, firms’ pension benefits in less welfare-oriented economies

and finally qualification measures. In this context, standard employment still characterize

the reality of a large part of western labor communities, although its normative validity is

put under significant pressure by the societal elite represented in economy, politics and

science – the establishment and promotion of atypical and precarious forms of employ-

ment. The gradually realized realignment of labor market policies in Germany as well as in

Austria refers to the shrinking self-evident normative valuation standards of dependent

gainful employment.

In the 1980s, this realignment initiated, for instance, through marginal employment poli-

cies of 1971 in Germany with the purpose of including the wives into the labor market,

with the intention of adjusting atypical employment characteristics to the social standards

of full-time employment and an almost frictionless reintegration of the unemployed to the

labor market. However, reality has shown quite opposite dynamics. In this context, Ger-

many realized numerous legal foundations for the strengthening of atypical and flexible

forms of employment through the amendment and publishing among others of the law of

employment promotion (German: Beschäftigungsförderungsgesetz) in 1985, the law on

working hours (German: Arbeitszeitgesetz) in 1994, the growth- and employment promo-

tion law (German: Wachstums- und Beschäftigungsförderungsgesetz) 1996 and the “Hartz”

policies for modern services on the German labor markets since 2003. In addition, further

political settlements concerning social and labor market standards have undermined the

normative model of employment such as the lowering of minimum standards in employ-

ment contracts, the deregulation of dismissal protections as well as cutbacks of benefits

within medical insurances and lawful pension standards. Finally, the pressure of dissemi-

nation of low-protected atypical forms of employment with partly poor working conditions

including inadequate remuneration is enhanced by the reduction and cutbacks of unem-

ployed benefits as well as through the raising limits of reasonableness within the employ-

ment distribution (Kraemer and Speidel 2004).


The Austrian labor market policies are integrated in the European employment strategies

and show similar tendencies as in Germany. It is interesting to perceive the objectives of

the European employment strategy in terms of labor market problem solving, for instance,

increasing the European employment rate to up to 75 percent for individuals between the

age of 20 and 64; reducing the rate of school-dropouts to less than ten percent; achieving of

at least a 40 percent rate of the European youth in higher education or equivalent vocation-

al forms of education; and finally reducing the number of people living in or at risk of pov-

erty and social exclusion by at least 20 million by 2020 (European Commission 2010).

These aims are intended to be achieved with additional reforms to enhance flexibility pro-

moted in connection with flexicurity10, but without the consideration of minimum viable

income rates, the connection of people and their skills for the new but decreasing number

of jobs and without the consideration of adequate job qualities for guaranteeing better re-

spectively acceptable working conditions without harming organizational positions.

A comparison of Austrian and German labor market policies and structures illustrates dif-

ferent dimensions and impacts of labor market deregulations in quite similar economic

structures. The deregulation of German labor markets is occasionally characterized through

the lack of a broad hourly minimum wage. Consequently, the low-wage labor market sec-

tor in Germany is characterized by a wide spread of its (very) low hourly wages. In 2010,

the gross salary per hour was below the of the German labor union demanded minimum

wage of 8.50 Euros for 6.8 million out of 40.37 million employees in the German labor

market and 2.5 million individuals – who represent more than 50 percent of the Austrian

labor force – earned even less than 6.00 Euros per hour (Bosch 2012). Furthermore, Ger-

many is infamous for its “One-Euro Jobs”. Current data about exact numbers of “One-Euro

jobbers” is difficult to obtain. According to Stegemann (2009) in 2009 around 750,000

individuals worked for a gross salary of one Euro per hour11, and furthermore only 15 per-

10 The term flexicurity appeared approximately in the year 2005 and enhances flexible jobs relationships

through the communication to connect them with security. It seemed as the term promoted initially flexible

job relationships, because it nearly disappeared from public concern in previous years as well as the increas-

ing amount of uncertain job relationships regulated partly to couple of month and significantly under remu-

nerated – “One-Euro Jobs”. 11 The easiest and most common method of determining the employment quality is the wage per hour. Fur-

thermore it enables to compare forms of employment, enterprises, industries, countries and developments and


cent of the men and eight percent of women got the possibility to continue in full-time em-

ployment conditions afterwards12. Such low wages do not exist in other western countries

with minimum wage standards such as Austria, France, Belgium, Denmark or Sweden.

In Germany the number of employees in the low-wage sector increased from 5.6 million

(17.7 percent of the German labor force) in 1995 to 7.9 million (23.1 percent) in 2010. Fur-

thermore, between 2000 and 2010 the actual wage of the lowest 30 percent of the income

labor force dropped significantly by 10.6 percent. The lowest ten percent of the German

labor force, for instance, faced an inflation-adjusted income reduction per hour from 5.63

to 5.03 Euro. Only the top 20 percent of the earners could achieve higher incomes (Bosch

2012, p. 8 f.). One-Euro jobs represent one extreme of the significant income inequality,

which faces the opposite income pole with wages of several millions such as the bank

manager Josef Ackermann with an income of 14 million Euros in 2010. Experts emphasize

a never before existing income inequality in human history. For instance the American

hedge-fund manager John Paulson earns Ackermann’s annual income each workday and

achieves annual wages of around four billion Euros.

Table 2: Comparison of the Austrian and German labor market

Austria Germany

Total labor force in 2013 4,175,200 42,380,000

Eurostat unemployment figure 2014 4.9 % 5.1 %

Unemployment figure of national

statistics 2014

7.6 % 6.6 %

Unemployment figures 281,555 2,970,000

Source: Statistik Austria 2014; Statista 2014b; Eurostat 2014; Putz 2014; Hierländer 2014; Statis-

ta 2014a

stages on the timeline. Due to rising prices – known as inflation – the consuming power distinguishes be-

tween nations and consequently the wage per hour compares relative values (Bosch 2012). 12 In 2005, the German government introduced the Basic Income Support for Job-Seekers. The workfare

program called “One-Euro Jobs” was part of this reform. These are temporary, mainly part-time jobs with the

main target of integrating unemployed into the work force. As One-Euro Jobs are no regular forms of em-

ployment there is no need of labor contracts (Piekarz 2014).


The comparison of the labor market figures between Austria and Germany (Table 2) refer

to similar unemployment tendencies, even though the deregulated magnitude of German

labor markets. This questions the by the neoliberal proponents promised impacts of de-

regulated labor markets, which would encourage employment and reduce unemployment.

It seems as these measures are at the charge of the affected low-wage or precarious em-

ployees without significant improvements of unemployment.

The literature differs between objective processes of casualization and subjective anxiety of

casualization. The numbers of employees13, who are affected with objective precarious

working conditions including the phenomenon as described above, can be extended with

those of subjective anxiety of casualization – individuals who currently work in standard

employments and might easily drop into precarious job arrangements. These forms of anx-

ieties are often characterized by a latent nature, because careers can turn into precarious

realities literally overnight. Such labor realignments may occur after the acquisition of en-

terprises from competitive organizations in combination with the undermining of achieved

company safety measures and legal rights, if internal organizational realignments and reor-

ganizations weaken labor position in terms of the status hierarchy; if workplaces are substi-

tuted with external work forces through outsourcing; or if private financial long term plans

such as personal pension plans or mortgage loans for house building or purchasing cause

financial disasters in case of sudden unemployment.

The labor market in Austria was affected by inequality, precarity and high employment

insecurity relatively late compared to other labor markets in western economies. The ten-

dency towards social exclusion and casualization of parts of the work force developed it-

self because of the arising and relatively fast expanding low-wage and atypical labor mar-

ket sectors. The disease of low-wage and poor-working conditions appears to exceed the

borders of the global south and reaches the global north initially especially France, Italy

13 It can be assumed that this statistical number is not capable of capturing all individuals who work under

precarious conditions, because many forms of precarious employment do not imply precarious conditions or

these people are working unofficial and thus lack social securities and pension coverage. In addition, the

standard employment is characterized by the supply of labor unions or similar interest groups which capture

poor working conditions. Precarious job relationships lack these interest groups. Therefore analyzes of cap-

turing precarious labor force get aggravated.


and the United States and subsequently welfare-state orientated economies such as Germa-

ny and Austria.

4.4 New labor market tendencies – arising atypical forms of employment

Atypical employment is meanwhile a common phenomenon, as a sectorial transition to

service society and increasing female labor participation lead to a meanwhile new labor

world, instead of the predominant male industrial society of the 1970s. A wide range of

atypical respectively non-standard job arrangements emerged, which are partly hard to

differentiate. Similar to precarious job arrangements, atypical forms of employment distin-

guish themselves from standard employment with the difference that lacks the analyses

whether the job arrangement secures ones’ livelihood or not. In this context, standard em-

ployment refers to full-time job arrangement (Chapter 4.3) which fulfills the particular

collective expectations (Wagner 2013).

Precarious and low-wage job arrangements mainly occur in atypical forms of employment,

but not all non-standard forms of employment are precarious, perceived as precarious or in

the low-wage sector. Most of atypical or non-standard forms of employment contain, how-

ever, potentials of precarity. Especially legal precarity is connected to almost any non-

standard form of employment (Brinkmann et al. 2006, p. 19).

According to Eichhorst et al. (2010) non-standard or atypical forms of employment refer to

employment agreements, whose content significantly differs from labor market standards

of the particular economy by containing single or several of the following aspects:

1. Temporary forms of employments, which lack a general dismissal protection;

2. Paid employment in terms of temporary work;

3. Work, which is done beneath common social insurance protection such as marginal

employment;

4. Self-employment, especially in case of an quasi-job relationship with socially insuf-

ficiently secured employment conditions hidden behind, for instance, fictitious self-

employment;

5. Job relationships with monthly or hourly (very) low income (Eichhorst et al. 2010).


Atypical employment, which do not correspond to legal norms of standard employment,

may occur in several forms of job arrangements. In Austria as well as in other European

nations the most common part-time employment are, (fictitious) self-employment, infor-

mal work (black or grey economy), home-work or telework, (sub-) contract or temporary

work and marginal employment also known as mini-jobs. These forms of employment

except part-time employment differ from regular standards especially in terms of the re-

muneration rates and occupational standards or protections such as dismissal protection

(Bosch 2012, p. 16). Wagner (2013) emphasizes that atypical employment do not automat-

ically refer to part-time employment and thus also appears in full-time job arrangements. In

the first quarter of 2013, 530,300 full-time employees – 20 percent of the Austrian labor

force – worked in All-in arrangements. This high share implies that this form of employ-

ment exists beyond in employees independent of their occupational status (Wagner 2013).

Table 3: Increase of atypical employment in Austria

Period Form of employment Growth Growth

Rate

Percentage of

the work force

in 2012

Data in

2012

2000 – 2012 Austrian Labor force + 498,000 + 13.5 % 100 4,184,000

2000 – 2012 Full-time employ-

ment

+ 28,000 – 0.9 % 68.8 3,052,000

2000 – 2012 Fully-employed

women

– 16,800 + 1.5 % 25.6 1,071,300

2000 – 2012 Fully-employed men + 44,800 + 2.2 % 48.7 2,038,700

2000 – 2012 Atypical employ-

ment

+ 470,100 + 77.9 25.7 1,073,800

2012 – 2013 Austrian Labor force – 8,600 – 0.2 % 99.8 4,175,200

2012 – 2013 Full-time employ-

ment

– 45,000 – 1.5 % 73.3 3,064,900

2012 – 2013 Atypical employ-

ment

+ 36,500 + 3.4 % 26.5 1,110,300

Source: Wagner 2013; Statistik Austria 2014b


Experts argue that due to the modified contemporary economic structure, the development

of atypical forms of employment is enhanced in the previous years. Nevertheless, before

the economic crisis of 2008, the Austrian labor market was also shaped by structural

movements towards higher rates of atypical employment and growing income inequalities

(Geisberger und Knittler 2010). Between 2000 and 2012, the Austrian labor force in-

creased by 498,000 which is equal to 13.5 percent – from 3,686,000 to 4,184,000 individu-

als. The increase of the full-time job arrangements referred to the share of 5.6 percent –

28,000 jobs in that period. The number of fully-employed women even decreased in this

period by 16,800 individuals (Wagner 2013) and the number of full-time job arrangements

even declined in 2009 (Geisberger and Knittler 2010). Moreover, between 2012 and 2013

decreased the entire Austrian labor force by 0.2 percent, although the atypical employment

rate increased by 3.4 percent (Statistik Austria 2014b). In general, the rate of atypical em-

ployment increased between 2004 and 2012 from 26.1 percent to 31.2 percent – in 2012

1,132,000 individuals worked in atypical job arrangements, of which 76.9 percent were

women (Wagner 2013).

Empirical evidence proves that people in non-standard forms of employment face low-

wage job relationships significantly more frequently than those in standard forms of em-

ployment. According to the Structure of Earnings Survey 2006 of the Statistics Austria 27

percent of atypical employment and 8.7 of standard employment (results to at total rate of

14.7 percent) were in the production and services sector in organizations with a minimum

of ten employees characterized by gross wages below the low-wage threshold14 of 7.65

Euro per hour (Geisberger and Knittler 2010). Furthermore, in 2011, 79 percent of the

Austrian working poor worked in non-standard forms of employment as far as working

time is concerned (Matt et al. 2011).

14 Wage compare relative values, because of the varying consumer power as a result of inflation rates in dif-

ferent national economies. Consequently, according to standards of numerous reputable international studies,

the low-wage threshold is two third of the median wage (Geisberger and Knittler 2010; Bosch 2012, p. 8).

This leads to an hourly low wage threshold of 7.65 Euro in Austria which would lead to a monthly gross

income of 1,325 Euro (Geisberger and Knittler 2010) and which is 9.15 Euros per hour in Germany (Bosch

2012).


In general, the increasing atypical employment rates in western societies are a subject of

much debate, because their societal and individual impacts are mostly hardly tangible.

Common and well-known consequences of atypical employment for employees (Chapter

5) refer to the lack of minimum wages, dismissal protection, social protection or workplace

safety measures, which get heavily criticized in combination with the decline of the entire

labor-conditions. Nevertheless atypical employment is incessantly promoted also at em-

ployees as the modern form of employment characterized with more leisure time and flexi-

bility for employees (Mest 2003). According to Mest (2003) part-time job arrangements

become continuously more attractive and interesting for men and thus convert to a societal

trend, because this form of employment is associated with additional leisure times, flexibil-

ities and its compatibility with careers possibilities. Furthermore, proponents of atypical

employment promote these job arrangements, because their numerous additional ad-

vantages including lower tax and insurance rates due to lower incomes and thus higher net

hourly wages compared to full-time employment, the possibilities of further education and

training, the numerous new job offers in the atypical labor market sector and the increasing

competences in case of self-employment – to be your “own boss”. In reality, numerous

employees do not work in atypical job arrangements because of the fictitious advantages,

but more likely because of the lacking standard job offers.

4.4.1 Part-Time Employment

In Austria, part-time employment is considered as any working arrangement with fewer

than 35 weekly working hours according to the most common classification, whereas since

2004, self-evaluations are more frequently used (Hinterseer 2013). The classifications vary

between countries in terms of the weekly working hours, for example in France part-time

employments covers between 20 to 30 hours per week or in the Netherlands the term refers

to up to 25 working hours per week. In Austria part-timers work under labor law regula-

tions and are fully included into the social system, which means they are socially insured in

case of accidents, diseases and unemployment as well as have access to pension benefits

(Hinterseer 2013).

The reality of part-time employment shapes a continuously increasing part of the labor

force in Austria. According to Statistik Austria (2014e) in 2003, 710,100 individuals out of


the 3,793,500 comprehensive Austrian labor force worked in part-time job arrangements.

In the previous six years the number increased to 1,002,800 part-time employees out of the

total dependent labor force of 4,077,700. Between 2012 and 2013, the number of part-time

employees increased by 45,100 to 1,110,300 part-time workers out of 4,175,200 Austrian

employees which equals to a part-time rate of 26.5 percent. Part-time employment is a fe-

male dominated labor market sector. In 2013, 887,500 women in contrast to 222,700 men

worked in part-time job relationships (Statistik Austria 2014e). Moreover, in 2012 44.9

percent of the female labor force worked in Austria in part-time work arrangements com-

pared to 9 percent of the male labor force. These rates were 12 years earlier 32.3 percent

among women and 4 percent among men (Wagner 2013). Hence, part-time employment

enhances labor opportunities for women in general, but their transition probabilities into

full-time job arrangements are considerably lower than for men (Brinkmann et al. 2006, 32

f.).

In this connection, actual advantages of part-time employment only occurs if individuals

explicitly choose part-time jobs rather than full-time employment because of, for instance,

additional spare time or private flexibility. Part-time employments has ever since been

problematic for those who strive for a full-time job arrangement, because income and so-

cial entitlement of part-time employment does not cover subsistence needs without exter-

nal supply (Brinkmann et al. 2006, 33) – underemployment which is also known as part-

time unemployment (Ek and Holmlund 2014; Chapter 4.6). Studies in Germany report

about up to 51 percent of women who in particular want to move into full-time employ-

ment or increase their salaries trough additional working hours (Hinterseer 2013; Brink-

mann et al. 2006, 32 f.; Booth and van Ours 2011).

The fact that 34 percent of the part-time employees view their job as a “workaround” and

up to half of the employees would definitely prefer to work more implies that part-time

employment is characterized by being a preferred arrangement under special circumstances

rather than as a permanent status. These forms of employment are frequently socially se-

cured and are classified as atypical which does not automatically refer to precarious condi-

tions. Nevertheless, problems occurring with regard to part-time work include lower hourly

wages than in full-time jobs in combination with lack of career advancement opportunities


and lower job securities. Part-time employees often struggle with unfavorable working

times and are seen as peripheral workers. Data of the Statistik Austria proves a connection

between lower occupational qualifications and higher part-time rates (Hinterseer 2013).

The future of the part-time workforce occasionally depends in particular on investments in

childcare facilities, on the acceptance of part-time work in higher positions as well as on

longer life expectancies in combination with improved health conditions of the elderly,

who will work more during their retirement due to these new aspects and thus have an im-

pact on the part-time workforce. According to former and current trends of part-time de-

velopments part-time rates of over one third are likely to occur in Austria by 2020. The

growth of the people working part-time of previous years was statistically related to a de-

crease in full-time employment. Statistics have proven that the rise in employment in Aus-

tria since 1995 stems from the growth in part-time employment (Hinterseer 2013).

From the entrepreneurial point of view especially part-time structures with variable loca-

tions and working times appear as very attractive. Miscellaneous labor organizational

models enable adaptations of labor inputs to short-term fluctuations of market-demands or

within order situations. Moreover, part-time employment contributes significantly to in-

creasing labor productivity through the optimization of the usage of productive factors. In

addition to this work time compression, employers expect productivity-enhancing motiva-

tion by their employees due to the shorter working times. Moreover, cost-intensive over-

time premiums can be avoided, because they only arise after the standard weekly full-time

working time of 40 hours (Schulmeister 2004, 30 f.). The benefits of part-time employment

for enterprises vary significantly between branches (Mazal et al. 2011).

4.4.2 Subcontracted and temporary forms of employment

Subcontracted and temporary forms of employment represent the most dynamic forms of

atypical employment (Brinkmann et al. 2006, 22). In general, subcontracted labor is char-

acterized by a triangular arrangement between employees, companies that wish to “bor-

row” the employees and temporary employment agencies. This form of arrangement in-

creases the flexibility and reduces the duties of the “borrowers” company (Sommer 2010,

40 f.).


Table 4: Temporary employment in Austria

Year Temporary employed Index

2000 30,000 100

2008 68,000 227

2009 57,000 190

2010 78,414 261

Source: Wagner 2013

Between 2000 and 2008 the number of temporarily employed increased continuously from

30,000 to 68,000, whereas this number decreased down to 57,000 in 2009 due to the eco-

nomic crisis of 2008. With the economic recovery in 2010 the temporarily employed in-

creased up to the peak of 78,414 in 2012 (Wagner 2013). According to Eichhorst et al.

(2010, 21) the rate of temporary workers increased within the Austrian labor market supply

from 0.8 to 1.5 percent between 2000 and 2007. The number of contract employees dou-

bled between 1995 and 2002 from 0.6 percent to 1.5 percent of the German labor force

which corresponded to 400,000 contract employees in 2003 (Brinkmann et al. 2006, 22).

The economic slowdown caused significant cutbacks in the numbers of contract employees

in Germany – from 800,000 to 580,000 within several months in April 2009. Temporary or

contract workers also represent working time accounts, limited labor and short-time crisis

buffers within organizations (Bosch 2012, 18 f.).

To begin with, temporary labor is characterized by significantly lower employment stabili-

ties than of those in standard employments, because employment agencies tend to “hire

and fire” faster (Sommer 2010, 40). In the temporary labor market sector half of all em-

ployment arrangements last a maximum of 89 days. Temporary employment agencies pass

the risk of financing periods in which their personnel is not being leased out on to their

employees and thus contract workers face a four times greater risk of being unemployed

compared to the regular labor force (Bosch 2012, 20).

Moreover, subcontracted labor forces are confronted with significant wage gaps compared

to the labor market standards in order that the salaries within subcontracted labor segment


are barely enough to secure one’s livelihood. Within the previous years the commitment of

collective bargaining agreements increased in the temporary employment sector, however,

investigations prove that any starting salaries in the temporary sector refer to the low-wage

sector (Sommer 2010, 40 f.). According to Bosch (2012) the extensive rating of wages

within this sector did not result to adjustments of the wages of contract workers, however,

it leads to even bigger wage gaps. The average monthly income of temporary worker is

nearly below the half of the entire average labor market income. The enormous wage gaps

are independent to the different qualifications, because significant wage gaps appear con-

sistently in all qualification levels. In 2010, the average monthly income of the German

labor market was, for instance, 2,702 Euro compared to 1,419 Euro within the temporary

sector (Bosch 2012, 20 f.). According to Brinkmann et al. (2006) it can be assumed that the

contract labor market segments contain huge poverty and descent potentials. Furthermore,

Bosch (2012) refers to studies that prove higher psychological disorders and enduring

stress situations within the temporary sectors, occasionally due to dissatisfactions about

low wages and consistent job uncertainties.

Finally, temporary employment witnesses functional changes that some organizations use

their contract workers also in the long term as part of their core workforce, instead of as a

bridging of their temporary personnel shortages. As a consequence the debate arises

whether subcontracted labor hollow out permanent employment. Detailed numbers of these

forms of substitution are not known (Bosch 2012, 18 f.). However, the bridging aspect of

contract work to standard employment approved as significantly lower than expected –

only seven percent get undertaken from their employment agency. In addition, chances for

agency employees to work after their contract work in standard employments are relatively

low – 80 percent remain in this sector. Consequently, temporary employment functions

less likely as a bridge to regular standard employment, but more likely it is the beginning

of temporary employment careers, also because of lacking incentives for companies to take

over contract employees, due to the enormous flexibility and for employers attractive low

income rates of temporary employment (Bosch 2012, 20 f.).


4.4.3 “Fictitious” Self-employment

In the previous years enterprises cooperate more frequently with single-self-employed

(German: Solo-Selbstständige) who work depend and are bound by instructions, instead of

with permanent direct employees (Bosch 2012, 25).

Table 5: Development of self-employment

Year Figure Percentage of workforce

Self-employed in Austria 2000 99,513 2.7



Freelancers 2000 23,184 0.6

Freelancers 2012 44,191 1.1

Self-employed EU 15 2013 25,408,700 13.2

Self-employed Germany 2013 4,337,900 10.2

Source: Eichhorst et al. 2010;Statisitk Austria 2014b; Statistik Austria 2014e; Wagner 2013; WKO

2014b

The Austrian labor force rate of self-employed increased between 2001 and 2008 from 2.7

to 4.3 percent (Eichhorst et al. 2010). According to Statistik Austria (2014e) 476,900 self-

employed individuals was the annual average of 2013 which represents 8.8 percent15 of the

labor force. Furthermore, the amount of freelancers – self-employed without business li-

censes – increased from 23,184 in 2000 to 44,191 in 2012 (Wagner 2013). In 2013,

25,408,700 self-employed worked in the EU (15) which represents 13.2 percent16 of the

entire labor force. In the same year the German rate of self-employed was 10.2 percent17

which is equal to 4,337,900 individuals (WKO 2014b). The amount of companies which

use contracts to produce a work (German: Werkvertrag) increased between 2002 and 2011

from slightly over four percent to slightly over seven percent (Bosch 2012, 25 f.).

15 The numbers are excluding the self-employed of the agriculture which would increase the rate to 11.4

percent. 16 Excluding the self-employed of agriculture. 17 Excluding the self-employed of agriculture.


The share of contracts to produce a work, which are also known as sham contracts or as

fictitious self-employed work arrangements, is compared to other depend atypical forms of

employment only very difficult to quantify (Wagner 2013), because it is hard to distinguish

from real contracts between two independent business partners. Business surveys in Ger-

man enterprises about freelance members reveal that the share of contracts to produce a

work increased from one to almost two percent between 2002 and 2010, which corre-

sponds to a development from 350,000 to 600,000 employees. Numerous case studies and

industry surveys prove an increase of the abusive use of contracts to produce a work, with

advanced examples in the meat industry, where the line work is divided in self-employed

activities, or how the construction industry circumvent minimum-wages with through

complex subcontractor structures. Recently, employment law experts described and offered

the legally certain formulation of contracts for cost-cutting and protection against dismissal

reduction purposes for enterprises. This does not only imply the increased demand but also

the official alignments of labor markets. The development of outsourcing of activities

within the own company is according to experts worrisome, because companies with inte-

grate production and service systems may be fragmented in numerous small legal entities

characterized with each different labor standards. Management experts emphasize in this

context the decrease of efficiencies within enterprises due to losses of know-how and in-

ternal communication characterized by mistrust (Bosch 2012).

Apart from the misuse of fictitious self-employment actual self-employment contains as-

pects which may easily get underestimated by individuals and thus might easily lead to

traps of poverty. Eichhorst et al. (2010, 27) refer to a study in which one fifth of the re-

spondents underestimated the costs of social coverage. This leads to certain information

deficits and current need for consultation. According to Ostermann (2009) 20 percent of all

founded businesses become insolvent within the first three years in Austria.

4.4.4 Fixed-term employment

Fixed-term contracts contain already at the beginning of job arrangement its termination.

After that period the employment expires without the requirement of dismissal measures

(Sommer 2010, 39). This form of atypical employment gained significantly importance

within the previous past in Austria. The statistic Austria captured fixed-term employed


firstly in 2004. Between 2005 and 2012 the number of fixed-term employees increased

continuously by 29,000 individuals and achieved 333,700 employees (Wagner 2013).

In Germany the share of fixed-term contracts has compared to the overall figure of em-

ployment doubled itself from six percent in 1995 to 12.2 percent which corresponds to 6.5

million employees in 2003. At the same time 6.6 percent of the Austrian labor force

worked in fixed-term forms of employment compared to the overall average of the EU of

12.8 percent (Brinkmann et al. 2006, 25 f.). In 2011 9 million employees worked in fixed-

term contracts (Bosch 2012, 24).

According to Bosch (2012, 24) the majority of the increase of fixed-term employment re-

fers to younger employees. Within the age group of 25 and 34 the share of fixed-term con-

tracts increased from 8.2 percent in 1991 to 18.8 percent in 2011. 35 percent of dependent

employees with the age of below 20 years worked in a fixed-term job arrangement in 2003

compared to 21 percent in 1991 (Brinkmann et al. 2006, 24). Recent developments of

fixed-term employment is even more obviously regarding job recruitments – the rate of

fixed-term contracts rose between 2001 and 2007 from 32 to 45 percent. This implies an

increasing entrance into the occupational life via fixed-term job arrangements (Sommer

2010, 39).

The “two-tier society” of the labor market manifests itself mainly in bigger and interna-

tional organizations, as the rate of fixed-term contracts refers to 59 percent in organizations

employing between 50 and 249 employees and enterprises with over 250 employees em-

ploy 62 percent of its labor force with fixed-term contracts (Bosch 2012, 24 f.).

The transition into regular forms of employment after fixed-term job arrangements is rela-

tively low, as in reality only one fourth of fixed-term employees, however, achieve indeed

standard forms of employment after their fixed-term periods, because of once again flexi-

bility and labor costs reasons for enterprise. Apart from higher rates of fixed-term person-

nel in multinational organizations the opportunities of takeovers into regular forms of em-

ployment are lower than in small companies. Recent studies prove that fixed-term forms of


employment lead to higher risks of overtaking further fixed-term employment contracts

(Bosch 2012, 25).

According to Sommer (2010, 39) fixed-term employment are inherent with certain levels

of precarity. Fixed-term employees face higher risks of unemployment than permanent

personnel, because of constant possibilities of broken transitional periods between current

and further mostly non-permanent forms of employment. In general, fixed-term employ-

ment undermines the negotiation position of the labor force with the consequences of com-

paratively unsecure job careers as well as lower income opportunities and poorer working

conditions. Brinkmann et al. (2006, 26) mention the linkage between tariff and lawful ser-

vices such as compensation payments, dismissal protection, supplementary retirement ben-

efits or awards on the one side and occasionally minimum-period employments on the oth-

er side. Furthermore, Brinkmann et al. (2006, 26 f.) emphasize linkages between fixed-

term employments and increased health and security risks. Research results of several Eu-

ropean Countries prove that health and security risks decrease with longer periods of em-

ployments as well as the connection between non-permanent forms of employment and

occupational accidents due to consequences of stress, pressure and insufficient experiences

or training. Between 1993 and 1998, four times more accidents happened at non-permanent

employees than permanent employees, because of the employment types of casual employ-

ees as well as due to the lack of information about occupational risks and required protec-

tion measures. Finally, up to present days numerous labor unions take subordinate attention

to fixed-term employees and in general these employees are significant less organized

(Brinkmann et al. 2006, 27).

4.4.5 Marginal Employment – “Mini-Jobber"

Marginal Employment appeared once as secondary income possibilities, initially with the

working limit of 15 hours per week, for married households such as in Germany in 1971,

which is determined in the social security statute book (German: Sozialgesetzbuch). In

contrast to part-time employment with its higher numbers of working hours and thus long-

term economic and social hedging, marginal employment is also known as marginal part-

time employment, characterized by minor working hours as well as lower gross hourly

wages. In Austria marginal employment includes any form of employment with a lower


monthly remuneration of 395.31 Euro18 in 2014 (386.80 in 2013) independent of the week-

ly working hours or monthly work effort. In Germany, marginal employment refers addi-

tionally to short-term employments19. Within marginal forms of employment, employees

benefit automatically of an accident insurance but lack health insurances and public pen-

sion hedging. Tax and duty exemptions of marginal employment, which exist since 1999 in

Germany, lead frequently to a shift of the cost advantages to the employers and conse-

quently to an increasing share of mini-job arrangements in labor markets with low gross

hourly wages (Eichhorst et al. 2010, 24 f.).

Marginal employment witnessed exploitive growth rates since the 1980s, because this form

of employment is a welcoming opportunity to discharge organizations. Between 2000 and

2012, the number of marginally employed, also known as mini-jobber, increased by 57.8

percent from 181,500 to 286,500 individuals in Austria (Wagner 2013). Furthermore, the

marginally employed labor force has nearly doubled itself between 1987 and 2011 in Aus-

tria. According to the ORF (2013) 316,510 mini-jobbers worked in average in 2012. Since

2005 the number of individuals with side jobs is relatively stable – roughly 150,000 em-

ployees, however, how many of them work in marginal forms of employment is unknown.

The significant segmentation of the labor market in Austria since the 1990s and the dec-

ades-long trend for this form of employment imply forecasts and prospective developments

of constant growing trends of this form of employment (ORF 2013). Eichhorst et al. (2010,

25) emphasized the decreasing number of side jobs by 0.6 percent in Austria.

According to Brinkman et al. (2006, 30) the rate of marginally employed increased from

six percent in 1980 to roughly 13 percent in 1995 in Germany. Currently, nearly every fifth

job is a mini-job – Bosch (2012, 22) mentions in his report of 7,507,417 marginally em-

ployed in Germany in 2011 of those 4,908,771 individuals were exclusively marginally

employed (mini-jobbers) compared to 5,987,807 marginally employed and 4,183,791 mini-

jobbers in 2002. This represents an increase of nearly 1.6 million in nine years. The majori-

ty of mini-jobbers work in the growing service sector (Bosch 2012, 22 f.).

18 The marginal wage threshold in Germany has been since the 01.01.2013 increased from 400 to 450 Euro. 19 A short-term employment in terms of marginal employment refers to job relationships of maximum 50

workdays or two month per calendar year (Eichhorst et al. (2012, 12).


Although marginal employment as a form of part-time employment refers to the principles

of equal treatments, mini-jobbers are frequently confronted with significant lower wages.

In Germany, the average hourly wage of mini-jobbers refers to 8.98 Euro compared to

18.04 Euro average hourly wage of the average labor market. This evaluation does not

consider students, pupils, pensioners and side jobs which are usually worse paid. In 2010,

86 percent of the mini-jobbers worked for low-wage conditions in Germany, which is nine

percent more than in 1995 (Bosch 2012, 23).

In addition, marginally employed are confronted with labor law-related disadvantages,

because of the lack of health and pension insurances for instance. For slightly over 50 Eu-

ro, mini-jobbers may insure themselves, which is used by roughly 15 percent (ORF 2013).

In case of exceeding the marginal employment threshold, health insurance contributions

initiates with 22 percent of the income which is the same rate as with an income of 4,000

Euro. In this case the net income of 400 Euro gets achieved at minimum gross income of

540 Euro (Bosch 2012, 23). Moreover, mini-jobbers are entitled to holiday pay, sickness

benefits as well as the 13th and 14th monthly salary like employees of standard employ-

ments. In reality, marginally employed get hardly any special payments and are in threats

of losing their jobs in case of longer periods of sicknesses (ORF 2013). According to

Bosch (2012, 23) salary charges are passed on the employees in form of paying only actual

work and neither the remuneration of sicknesses or holidays. Frequent reasons for these

working conditions are the lack of knowledge.

Apprehensions of the previous decades about the substitution of standardized job arrange-

ments through marginal jobs are continuously more present according to recent empirical

studies. While the number of marginal employment rose significantly within the previous

years, the number of employees paying mandatory social security contributions decreased

(Brinkmann et al. 2010, 30). According to the expert of the chamber of labor (German:

Arbeiterkammer) in Austria Gernot Mitter the number of mini-jobbers increases, because

this instrument of part-time employment is used by employers to employ several employ-

ees instead of one full-time work force (ORF 2013). In other words, already existing full-

time jobs are converted to marginal employments (Brinkmann et al. 2010, 30). Further-


more, according to Gernot Mitter marginally employment contains rarely any bridging

function, because employers benefit in several ways such as through lower gross salaries

and labor costs as well as higher “flexibility-services”. Employees agree to work in many

cases in marginal job arrangements because of pure necessity (ORF 2013). In addition, a

board member of the German Federation of Trade Unions – Annelie Buntebach emphasiz-

es that mini-jobs are more likely traps to fall into the low-wage sector rather than any sup-

port20 (derStandard 2011).

Finally, the growths of marginal employment lead to a progressive undermine of the fi-

nance of the social security system and thus enhance its problems instead of reduce its fi-

nancial burden (Eichhorst et al. 2010, 25).

4.5 Working poor

The term working poor characterizes individuals who live in structural poverty even

though they work occasionally in full-time job arrangements. Within the scientific and

political discourse diverse points of views and definitions shape the term working poor

(Matt et al. 2011, 6 f.). The Austrian Chamber of Labor classifies individuals between the

age of 18 and 64 as working poor if their entire household income including possible social

benefits is in spite of their active working status below the poverty threshold, which is cur-

rently in Austria a net income of 1,066 Euro divided into 12 remunerations (which is equal

to 914 Euro in 14 paid month).

Major reasons for poverty despite employment statuses might refer to generally too low

incomes, part-time employments, impermanent employment or if earners face difficult

budgetary situations such as to secure the livelihood of several individuals. In return, low

incomes do not automatically lead to poverty in case of income compensations through

other family members for instance. Working poor is the result of the accumulation of nu-

merous factors – conjunctions of labor markets, social-political factors, household struc-

tures and individual job prospectives (Austrian Chamber of Labor 2013). According to the 20 In Germany, the labor market policies for additional incomes for Hartz-IV receivers get heavily criticized,

because of significant disincentives. The state promotes additional marginal additional incomes to Hartz-IV

salaries which result in higher attractiveness to extend Hartz-IV salaries with marginal legal incomes instead

of searching full-time jobs (derStandard 2011).


International Labor Organization (ILO) individuals who are employed but earn less than

one 1 US-Dollar or 2 US-Dollars per day live under the status of working poor.

Although working poor shapes since longer periods the reality of numerous Austrian indi-

viduals and households, it is only little discussed in scientific discourses (Statistik Austria

2009; Matt et al. 2011, 6 f.). Between 2005 and 2012 the number of working poor in-

creased from 257,000 to 298,500 individuals, which is equal to 8.2 percent of the entire

Austrian labor force, divided into 60 percent – 179,000 – men and 40 percent – 119,000

women (Austrian Chamber of Labor 2014). Since 2011, a reform of income inquiries after

EU-SILC led to the gathering of income data on the basis of administrative data instead of

surveys as it was before. Consequently, the number of working poor decreased between

2011 and 2012 for roughly 100,000 persons – 198,000 individuals worked according to

surveys in 2011 under working poor conditions which is equal to five percent of the Aus-

trian labor force. Around 171,000 children and 101,000 adults’ relatives are affected of

working poor within their households in Austria which leads to 471,000 individuals who

lived in risks of poverty households in 2011 due to working poor conditions according to

the former method of measurement (Austrian Chamber of Labor 2013). Due to the usage

of new data to measure the total in-work poverty the rate of the EU27 increased from eight

percent in 2007 to 18 percent in 2009 (Eurofound 2010, 2 f.). Currently exact numbers and

rates of working poor within the EU are hard to find.

An indicator for the advancing low-wage labor market sector is the high number of all-year

(minimum 11 month per year) full-time employees of 158,400, which represent 53 percent

of all working poor, compared to 66,000 or 22 percent working poor who worked all-year

but in part-time job arrangements and 63,000 or 25 percent who were only employed some

periods instead of the entire year 2012. In addition, the rate of working poor varies be-

tween several personal characteristics such as the origin – seven percent of the Austrian

citizens are affected of working poor compared to 19 percent of individuals without Euro-

pean citizenships. In general, younger individuals are more frequently affected than elder-

ly, which makes it more difficult for labor market entrants to find jobs with sufficient sala-

ries (Austrian Labor Chamber 2013). Another individual characteristic is education, as

nearly three quarter of the working poor lack a high school certificate and only six percent


of the university graduates are affected (Austrian Chamber of Labor 2014, 3f.). One fifth

of the working poor work below the poverty threshold of 8.36 Euro per hour (is equal to

two third of the average hourly wage in Austria) in 2013. In this context, women are higher

affected by low-wage employment and atypical forms of employment with lower opportu-

nities of advancing into higher remunerated full-time employment. Around one quarter of

the working poor work under precarious conditions – unstable forms of employment and

low-wage jobs with monthly incomes below 1,000 Euro or 5.77 Euro gross per hour (Aus-

trian Chamber of Labor 2013, 3f.).

The reason why the working poor rate did not significantly grew between 2004 (253,000)

and 2011 (each time around 200,000) is not imperatively due to positive labor advance-

ments, but 38,000 former working poor lost because of poor employment situations their

jobs (Austrian Chamber of Labor 2013, 5 f.). A comprehensive study of the Austrian

Chamber of Labor (Matt et al. 2011, 25 f.) about the working poor situation in Vienna

elaborated the reasons of the termination of working poor job arrangements. The majority

of employees with 59 percent lost its jobs through a dismissal by the employers, argued by

economic reasons such as weak order volumes or operational reorganization with person-

nel reduction, followed by temporary discontinuities with 14 percent. Another 14 percent

resigned their jobs because of health reasons as well as further 11 percent quitted their job

arrangements due to other reasons mainly wage issues – too low remuneration or incom-

plete pay of wage – as well as mobbing or physical complaints, not compatible work

schedules and dissatisfaction with required night work (Matt et al. 2011, 26 f.). In general,

atypical employment rather aggravates poverty on the labor market and enhances recurring

stages of unemployment (Eichhorst et al. 2010).


4.6 The role of Unemployment in a precarious labor market

Table 6: Unemployment growth in Austria between 2013 and 2014

Unemployment growth Figure Growth Rate

Unemployment growth 29,234 11.1 %

Men 17,628 12.7 %

Women 11,616 9.3 %

In Vienna 17,487 21.3 %

In Upper Austria 5,508 20.8 %

Foreign individuals 15,698 29.1 %

Austrian citizens 23,626 12.5 %

Source: Putz 2014

In June 2014, 281,555 employees out of the 3,528,000 comprehensive dependent Austrian

labor forces were unemployed. The unemployment figure grew between 2013 and 2014 by

16.2 percent, which equals to 39,324 individuals and can be divided into additional 17,628

men (increase of 12.7 percent) and 11,616 women (increase of 9.3 percent). The increase

of the unemployment was over average in Vienna with 17,487 additional unemployed or

21.3 percent, followed by Upper Austria with 5,508 additional unemployed or 20.8 per-

cent. Between June 2013 and June 2014 the growth of unemployment was significantly

visible in the service sector (tourism excluded) with additional 29,361 unemployed (15.6

percent) to 217,764 registered unemployed in this sector. The growth of the unemployment

figure was significantly higher within foreign unemployed persons with 29.1 percent

(which equals to 15,698 individuals and results to a total of 69,628) compared to the in-

crease within the Austrian citizens of 23,626 individuals (12.5 percent) (Putz 2014).

In June 2014, the national unemployment figure of the Public Employment Service Austria

(AMS) was around 7.6 percent compared to the Austrian unemployment figure of Eurostat

of 4.7 percent based on data of surveys including seasonally adjusted figures. 31,914 addi-

tional versus 35,025 less vacant jobs lead to 28,987 registered available jobs in this period.

The unemployment dwell time – the average period of time between the beginning and end


of the unemployment status – was 106 days in June 2014 which is eight days longer than

one year before. In the previous year, the number of apprenticeships decreased by 121 (4.3

percent) to 2,704 immediately disposable apprentice positions compared to 6,389 appren-

ticeship searches which are 2,023 more than in June 2013. Finally, the number of occupa-

tional training participants grew by 908 (1.5 percent) to 73,073 individuals in June 2014

(Putz 2014).

In Austria the current unemployment figure achieved according to the media to record lev-

els (Sileitsch-Parzer 2014; Format 2013; Statistik Austria 2014e; News 2014; ORF 2014b;

Hierländer 2014). In 2013 the Austrian labor force achieved the maximum size of 3.48

million dependent employees, the number of unemployed reached even though simultane-

ously the record level of 428,143 individuals registered as unemployed or in further educa-

tions. The reason for the simultaneous growth of jobs and unemployment refers to the in-

creasing labor demand within the Austrian labor markets (Chapter 4.1). Measures such as

the difficult access to disability pensions decrease the pressure of the pension scheme but

thereby encumber the labor markets. Consequently, it is significantly more difficult to find

jobs for elderly people and even worse for disabled individuals with low qualifications,

whose unemployment figure refers to 47 percent. In addition, the complete EU-labor mar-

ket opening for Rumania and Bulgaria will affect the Austrian labor market in contrast to

Rudolf Hundstorfer’s estimation of low amounts of job seekers, because many high quali-

fied Rumanians and Bulgarians would be already in Austria (Sileitsch-Parzer 2014).

According to the Public Employment Service Austria (AMS) the unemployment figure is

7.6 percent which is according to Sileitsch-Parzer (2014) the second highest rate since the

Second World War – only in 1953 was the rate higher with 8.7 percent. The growth of the

unemployment figure affects in particular elderly individuals with a growth rate of 23 per-

cent to 88,287 individuals, disabled individuals with additional roughly 28 percent as well

as foreign persons with around 18.6 percent (Sileitsch-Parzer 2014; News 2014; ORF

2014c).

According to economic and social experts (e.g. Butterwegge 2009; Ek and Holmlund 2014;

Hierländer 2014; Sileitsch-Parzer 2014; Format 2013), unemployment calculations do not


capture the entire unemployed labor force respectively do not illustrate the entire magni-

tude (Chapter 2.4) and thus lack hidden unemployment. Conventional measures of unem-

ployment do not capture all dimensions of joblessness – individuals who quit the job

searches due to lack of perspectives or those who were sent in early retirements instead of

to the Public Employment Service Austria as well as any participants in further educations.

In fact, the actual unemployment figure is roughly twice as high as those of the main

stream measurements rates of the European Union and at least between 60 percent (Hi-

erländer 2014) and 100 percent (Format 2013) higher than the AMS statistics. Austria pur-

chases his premium rank within the European unemployment statistics with expensive ear-

ly retirements and further training programs. Taking the mentioned hidden unemployed

into consideration, the unemployment figure of the previous year was neither 7.6 percent

according to the AMS nor five percent according to the Eurostat more likely 10.2 percent

(Hierländer 2014).

In addition, apart from absolute unemployment figures exist several additional expressive

indicators in this context. In 2012, 1,000,000 million individuals were unemployed for at

least one day, but the annual average reported of 260,000. The significant difference be-

tween the entry and the stock of unemployed is the result of the short average duration of

unemployment of 96 days. Another obscure factor within unemployment represents the

youth, because young people seeking apprenticeships are not considered as unemployed. In

contrast to, active apprentices belong to the employed labor force (Schweighofer 2013).

Labor market information about unemployment completely neglects the data of underem-

ployment respectively part-time unemployment (Ek and Holmlund 2014; Sileitsch-Parzer

2014). Part-time unemployment refers to individuals who work in part-time or atypical job

arrangements involuntarily in the sense that these employees prefer to work longer hours at

prevailing hourly wage rates. In this respect, unemployed individuals accept part-time job

offers as a stepping stone to full-time work because they unable to work as many hours as

they which – full-time working period. Underemployment is according to ILO survey cap-

tures the partial lack of work compared to unemployment which defines the total lack of

work. Part-time work may also be defined over the course of the year rather than by the

weekly working hours. Workers are, for instance, employed for a fraction of the year and


temporarily laid off off-seasons – seasonal unemployment. Unemployment benefits for

part-time and atypical workers reduce their motivation for the transition from part-time to

full-time employment. Furthermore these benefits increase the legitimation of part-time

employment such the Hartz-IV arrangement in Germany (Ek and Holmlund 2014, 2 f.).

The research on part-time unemployment is significantly more meager compared to the

extensive literature on full-time employment. Nevertheless, part-time unemployment

achieved huge magnitudes which are hard to measure. At the end of 2009 labor force sur-

veys showed the underemployment rate of almost five percent within the OECD area (Ek

and Holmlund 2014, 2). The rate of the part-time underemployed workers corresponds

currently to roughly 7.7 percent of the entire Austrian workforce – is equal to 340,000 in-

dividuals (Schweighofer 2013). The majority of part-time unemployed individuals are

women with 66.7 percent compared to 33.3 percent in 2012 within the European Union

(Pepper 2014).

The news coverage of unemployment may have fundamental effects on social coexistences

(Hetherington 1996, 372-395; Easaw 2010, 253-264). On the one hand, unemployment

enjoys high political relevance and value, because the related news coverage affects elec-

tions and on the other hand, investigations of news about unemployment play an essential

role from the economic point of view, because it affects economic variables in terms of

economic stability, consumption, saving, investment or financial market developments

(Birz and Lott 2011). The political and economic role of unemployment implies the ideo-

logical preferences or certain interests of journalists, editors and owners of media groups

which results in deviations of news coverage from the reality. According to Patterson and

Donsbach (1996, 455-468) evidence proved a correlation between journalists’ political

attitudes and the alignment of their published content especially headlines. A survey of the

American Society of News Editors (Urban 1999) presented reporting inaccuracies may

result in circumstances of journalists such as that bias of news related political issues en-

hances favorable positions of certain individuals or groups. The findings of Garz (2014)

present evidence that US newspapers publish more positive reports about economic varia-

bles including unemployment during Democratic presidencies than during Republican

ones. Furthermore, on basis of such empirical observations Garz presents further game-


theoretic approaches of news markets to create conditions that allow media elites to pursuit

their ideological aims. It is occasionally profitable for media outlets to influence their audi-

ence – to stimulate the demand of media products, for instance, – by catering to prefer-

ences and attitudes of their viewers and readers, which are conferred on a relatively small

societal group. In contrast to, the potential consequences of biased news coverage includ-

ing distorted economic expectations and perceptions cause dispersed costs for the vast

parts of societies (Garz 2014, 4 f.).

However, there is a visible current tendency of an increasing unemployment development.

Even though, the Austrian economy was recently characterized by a slight recovery, the

improvement of unemployment figures requires according Social Minister Rudolf Hund-

storfer significantly higher economic growth figures (News 2014). Nevertheless, he em-

phasizes positive signals, such as the unemployment figures of the construction sector,

which is decreased by eleven percent compared to the previous year or the expectations by

the Public Employment Service Austria (AMS) for a noticeable easing of the unemploy-

ment beginning in the third quarter 2015 (ORF 2014b). The question arises whether these

statements distract from the real range of current unemployment regarding the unemploy-

ment growth of significantly over ten percent in the previous years.

4.6.1 Long-term unemployment

Similar to general unemployment faces long-term unemployment a significant growing

tendency within the previous year. The number of unemployed with health-related em-

ployment limitations increased, for instance, by 28.8 percent to a total of 55,631 individu-

als. Apart from that, the rate of long-term unemployed (more than 12 month) grew by 62.8

percent to 10,028 affected individuals (ORF 2014c). Moreover, the long-term unemploy-

ment figure grew already exorbitantly in the previous years – between 2012 and 2013 by

36 percent (Müller and Szigetvari 2013) as well as between 2011 and 2012 by 30 percent.

The Public Employment Service Austria (AMS) explains one reason for the significant

increase of the long-term unemployment figures as further educations for these individuals

reduced21 and thus additional 6,500 individuals obtained the long-term unemployment sta-

21 Long-term unemployed individuals did not work within the previous 12 month of the survey and did not

participate any further educational program of at least 62 days (Müller and Szigetvari 2013).


tus. However, the number of individuals who do not find a job is significantly higher than

captured by statistics – the number of long-term unemployed including the participants of

educational training would refer to 82,434 individuals instead of 55,631 (Müller and Szige-

tvari 2013).

The long-term unemployment figure of Austria is with 24.3 percent significantly lower

compared to the average rate of the European Union 28 with 47.5 percent long-term unem-

ployed individuals compared with the entire unemployed labor force. The rate of long-term

unemployed within the entire unemployment rate was up to 70.2 percent in Slovakia, fol-

lowed by Greece with 67.5 percent and Croatia with 63.7 percent (Sozialministerium

2014).

4.6.2 Youth unemployment

The already difficult situation of the global in terms of youth unemployment figures dete-

riorated unprecedentedly within the previous past. Since the period between 2008 and 2009

remained the global youth unemployment figure at very high levels between 12.3 and 12.7

percent with slight increasing tendencies since 2011. The rate is still expected to grow up

to 12.8 percent by 2018 (ILO 2013). Figure 1 illustrates the development of youth unem-

ployment in the major OECD area between 2011 and 2012. The developments of the youth

unemployment figures varied between stable norms such as Austria with roughly 9 percent

compared to unprecedentedly high increases such as Spain with a growth from slightly

over 40 percent to 52.9 percent and Greece with an increase from slightly below 40 percent

to 53.8 percent. In Greece the youth unemployment figures exceeded meanwhile with 61.4

percent the 60 percent threshold in 2013 (Handelsblatt 2014).


Figure 1: OECD Harmonized Youth Unemployment Figures, 15 to 24 years

Source: http://www.propagandafront.de/1163410/staatsschuldenkrise-gefahr-eines-vollstandigen-

zusammenbruchs-der-westlichen-zivilisation-ist-real.html.

As Figure 1 illustrates, in many European countries the youth unemployment obtained a

dangerous threat and magnitude as one result of the financial, economic and Euro crises of

the previous years in Europe. The risks of youth unemployment are serious for Europe –

youth unemployment represents a special form of unemployment because of its impacts to

the affected people – the youth, which represents our generation of tomorrow. In this re-

spect, a large number of the youth faces the threat to become excluded from the labor mar-

ket and the high costs of unemployment aggravate their situation with the enduring eco-

nomic discrimination. Apart from the individual consequences of youth employment, the

unpleasant effects for their societies are even pricier, because the continuous process of

systemic discouragement may result in eroding political participations or in permanent

social exclusion respectively distancing from democratic and traditional values. It is hard

to respond effectually to this, as the European Union faces already a legitimacy crises – the

priority needs to be focused on any measures that guarantee young individuals to enter into

the active labor market (Maguire 2013, 40).

The role of youth unemployment plays an essential role for the affected youth and its entire

societies both in the short-term and in the long-term, because it comprises the consequenc-

es of unemployment for the unemployed, their environment and societies enhanced by the


situation of the youth and its role in society in terms of future perspectives and tasks. Due

to youth unemployment and similar labor market situations, young people cannot be seen

any more as a homogeneous group, because as Jansen et al. (2005) perceived it is common,

that these young people were characterized by the need for additional provisions and sup-

port in finding and coping with their way through cultural ambivalences and social re-

straints of various dimensions. In general, employment is characterized by comprehensive

value for the youth in terms of biographical, social and cultural contexts for instance. Ma-

jor reasons for unemployment differ from optional steps on the path towards the promise of

more challenging work, which will fulfill their personal interests and goals as well as fi-

nancial needs; the result of desperation to find a job independent of the kind, as long as it

would support financially; and finally others were on the boundaries of opting out of trying

altogether, regardless of the consequences (Jansen et al. 2005, 88 f.).

The reintegration of the youth into the labor market is much more complex than the access

to develop specific technical or general skills and knowledge. The youth needs somehow to

bridge the gap respectively the difference between their “inner logics” about themselves in

relation to the labor market – the prevailed “rationalities” in changing local, regional, na-

tional and global economies as well as within “activation programs” in order to help those

(Jansen et al. 2005, 88). These gaps get enhanced by challenges of constantly shifting roles

and functions, the fast succession of profiles and projections, the dynamic nature of quali-

fications and technologies as well as the attendant require for sophisticated communicative

and social abilities. According to Jansen et al. (2005, 89 f.) young individuals define suc-

cess to be socialized into the social and psychological implications of the collectively per-

ceived emerging labor market rationalities, whose adaption is often seen as the precondi-

tion of surviving in contemporary knowledge and service economies.

Societal Impacts of labor markets as a neoliberal capitalistic tool Seite 90

5 Societal Impacts of labor markets as a neoliberal capitalistic tool

5.1 The societal and macro-economic impacts of unemployment

The unemployment represents, apart from a central economic figure in terms of economic

situation, economic growth, purchase power and political or economic alignment, an im-

portant index for the labor force – in terms of job offer acceptance. According to Abraham

et al. (2013) job offer acceptance often depends on reservation wage concepts, but it is not

clear whether below-average reservation wages were the result of less attractive job offers

or of a lower willingness to accept job offers with other required concessions on the part of

job seekers. The labor market as one market type follows the rules and structures of mar-

kets – supply-demand equilibrium. The previous Chapters analyzed the shift of the market

equilibrium through the constantly increasing demand for labor – due to main factors such

as feminization of labor, job migration, new societal work standards, implicit replacement

of formal (full-time) by informal (various part-time) job-arrangements as well as labor

structures that force individuals to take two or more jobs – and the simultaneously con-

stantly decreasing labor supply caused by trend of offshoring, technological replacement of

human capital, European labor tax policies and in general global policies respectively

structures. This shift of the labor market equilibrium enhances the negotiating position of

the employers and simultaneously weakens the position of employees. In this context, cer-

tain studies (Abraham et al. 2013) have, for instance, found positive correlations between

individual unemployment and the willingness to relocate – nearly invariably empirical evi-

dence prove higher migration rates among the unemployed. Contemporary labor market

equilibriums in Austria, as well as in other European nations, cause higher pressure in

terms of job offer acceptances, because of the lack of job alternatives. This results in high-

er pressures to accept lower labor conditions and leads to new job arrangements acceptanc-

es such as atypical types of employment. In this context, employees tend to take working-

poor or precarious forms of employment against their will.

The trivialization of unemployment (Chapter 4.6) through the separation of unemployed

individuals in certain groups, for instance, is a method to hide the actual scope of societal

division. The social and psychological effects of unemployment on individuals are en-

hanced by their political-psychological marginalization through individualization, naturali-


zation and trivialization, for instance, in the 1980s in the West Germany. In this context,

this social-psychological concept constitutes a group negatively in order to socially deval-

uate them which increases the distance to the rest of society by aggravating differences

between them with the target of excluding the marginalized group deprived of basic rights

and of justifying negative measures against and attitudes towards them (Kieselbach 1994).

In addition, (high) unemployment concern entire societies and national economies, because

unemployed individuals are not only financed by taxes but also even more importantly

they lack social security contributions in welfare-state oriented economies such as Austria.

In combination with the continuous replace of full-time standard employment by atypical

employment welfare-oriented pension systems additionally struggle with decreasing pen-

sion contributions and thus face fundamental finance issues. According to the report of the

Credit Suisse (Neff et al. 2012, 10 f.), the financial challenges of pension funds are very

complex. The Pension Funds Survey conducted for Credit Suisse emphasizes the challeng-

es of financing pension funds in a long-term low-interest environment which 43 percent of

the sample agreed with, followed by the European debt crisis with 15 percent agreement,

high minimum conversion rates with eleven percent, demographic trends with nine per-

cent, too high minimum interest rates with eight percent and finally increasing administra-

tive costs with seven percent. These results imply a significant alignment of pension funds

with financial markets. The same report presents that the Austrian pension funds hold

roughly seven percent of their assets in liquid assets in contrast to around 30 percent

stocks, to roughly 45 percent bonds and ten percent other assets. The pension fund system,

which is designed for coping social needs of the (labor) society, drifted into risky financial

markets partly in order to finance the contemporary structures. The possible consequences

of this form of alignment are high, because in case of financial crises, for instance, incurred

high capital losses for societies, the possible extent of which is not even remotely tangible

yet.

5.2 Collective consequences of contemporary labor market structures

The macroeconomic consequences of contemporary labor market structures are only partly

caused by unemployment and aggravated through increasing atypical employment tenden-

cies especially of informal, precarious and poor job arrangements. As far as pension funds


are concerned, these forms of employment often completely lack pension contributions,

which additionally weaken the finance of pension funds.

The lack of social security contributions represents only parts of the hollowing out of na-

tion states respectively societies due to contemporary labor market structures. Labor-

related tax duties are, apart from social security contributions, important tax revenues for

governments, which are highly linked to full-time employment.

Unemployment is not the only labor market impact, which enhances criminality. Accord-

ing to Bennett and Eichholz (2007) increased the rate of the Boston’s youth from 34 per-

cent in 1980 to 63 percent in 1989 who declared that they would earn on the streets more

than in regular forms of employment. In this respect, it should be emphasized that real en-

try wages for the youth in the US decreased between 20 and 30 percent within the previous

20 years in contrast stable developments of earnings of the petty crime (Bennett and Eich-

holz 2007).

The relation between unemployment and criminality is a subject of much debate within

sciences in the previous past. Bennett and Eichholz (2007) presented increasing criminality

rates – three criminal acts each 100 citizens in 1963 compared to eight in 1993 in Germa-

ny; the number of prisoners in the US increased from 1.63 million in 1996 to 2.19 in 2005

– and its correlation to unemployment by reference to several (meta-) studies. In 1987 a

meta-study of Chiricos in the US proved a positive correlation between unemployment and

criminality, because of its 42 studies showed roughly the half a correlation between unem-

ployment and criminality (Bennett and Eichholz 2007). Possible reasons for higher crime

rates within the unemployed respectively within precarious employed refer apart from

monetary or economic backgrounds to social and psychological backgrounds such as the

recognition in social networks, gender-specific identity features as well as the quest after

social recognition which is undermined by unsecure forms of employment as well as un-

employment (Bennett and Eichholz 2007).

The Austrian welfare state expenses are a subject of much debate. Economists emphasize

numerous negative issues of the exorbitant costs of social transfer benefits occasionally to


the unemployed or low-wage earners, as it would harm the Austrian international competi-

tion factors and less performance-oriented individuals such as unemployed would live on

the costs of higher performance-oriented individuals as well as organizations. The division

of the labor forces respectively the entire Austrian society through occasionally precarious

or poverty living conditions, huge wage gaps or high unemployment cause societal ten-

sions and gaps between the entire societal system and the economy as subsystem, enhanced

by the ruthless and excessive activity of the economic subsystem at the expenses of society

due to the economic logic and peculiarity of its functional differentiations. Regular dimen-

sions of tensions are coped by political linkage between the systems. The duty of the mod-

ern state is to act in the name of law and order in case of above-average tensions (Willke

2003, 88) such as it was in Paris and London in the previous decade. However, the litera-

ture mentions more frequently the transition from welfare-state structures to security state

structures. Proponents of neoliberal concepts, for instance, demand a tight welfare state

with little welfare expenses. In this respect, it should be emphasized that savings of the a

tight welfare state are partly only fictitious savings, because they convert to expenses of

the security state through the need of coping and preventing societal tensions (Castel

2011). In this connection, the expenses and investments into the “anti-terrorism measures”,

for instance, increased significantly within the previous years (Schultz 2006).

The number of individuals living under precarious and poor labor conditions gets exceeded

by the relatives, marriage partners and children of unemployed or working poor who are

occasionally called as victims through closeness (Kieselbach 1994, 244 f.). The loss of jobs

or the working poor status of certain family members lead to financial problems as well as

additional daily concerns such as the lack of plannability of occupational futures or the

possibilities of social exclusion and stigmatization. In general, families and children of the

unemployed or working poor possess an ambivalent role for the unemployed or working

poor, because they represent a meaningful supporting role on the one side, and on the other

side they cause additional financial burdens due to the responsibility of these people, which

is perceived by unemployed or working poor not to be able to cover anymore.

Moreover, the majority of the parents of unemployed households endeavor intensively to

reprieve their children of the consequences of unemployment. Familial stress, due to the


occupational statuses, causes at the relatives comparable symptoms such as at the unem-

ployed or working poor such as increased possibilities of appearance of psychosomatic

diseases within children of unemployed or working poor families caused by additional

stress. According to several studies get children of poor working households more fre-

quently ill than comparable children of regularly employed parents. In this context, infec-

tious and chronic diseases such as disorders of the immune system, gastrointestinal diseas-

es or influenza and colds appear more frequently. Furthermore, young children of unem-

ployed, for instance, struggle more likely with eating and sleeping disorders. Unemploy-

ment or working poor statuses especially long-term statuses affect the psyche of children

such as through the drop of grades at school, significant lower general self-esteem, more

frequent self-derogatory statements, higher rates of depression, feelings of loneliness,

higher sensibilities as well as less competent to cope with stress (Kieselbach 1994, 245 f.).

Consequently, not only the future of the unemployed or working poor is threatened, but

also the future of their children.

5.3 Individual consequences of contemporary labor market structures

In terms of labor market consequences are not only objective impacts relevant, but also

subjective latent or manifested fears of casualization and unemployment, which also ap-

pear in partly protected labor sectors (Kraemer and Speidel 2004; Gimpelson and

Oshchepkov 2012). Fears of precarity also occur beyond the objective zone of precarity. Its

continuous spread refers to the generalization of social uncertainty and destabilization. The

German automobile group Daimler Chrysler, for instance, employed 4,400 workers in De-

cember 2012 (Labournet.de 2012) in their and external temporary employment agencies.

These workers earn a fraction compared to their colleges with standard full-time employ-

ment at Daimler Chrysler, although they perform the same work, whereby the hourly gross

salary differs between 8 Euro of the temporary employees and 23 Euro of the personnel of

Daimler Chrysler and test drivers even earn as little as 3.80 Euro per hour (Focus Online

2013). It happened already several times in the previous past that full-time employees of

Daimler Chrysler dropped over night into precarious job arrangements at temporary agen-

cies, although they kept the same duties and working times. Workers fear about their un-

certain labor future, because organizations can change their employment status into precar-


ious or temporary forms of employment at any time, as it continuously shapes the recent

past and present (Kraemer and Speidel 2004).

Potential threats and impacts of the labor market structure consequences are still only part-

ly tangible even at the inclusion of subjective forms of labor market impacts, because the

social influences on other still standardized forms of employment as well as labor market

segments are hardly noticeable. Although precarious job arrangements or higher unem-

ployment appear currently primarily in certain labor market segments and thus do not af-

fect the plurality of the Austrian labor force, anxiety of casualization or unemployment

may diffuse within organizations and labor market segments and the spread to currently

unexpected above average protected labor segments could be faster than estimated (Kra-

emer and Speidel 2004). Consequently a significantly greater part of western societies is

affected with precarity or fears of unemployment than covered even in comprehensive sta-

tistics, which implies its difficult measurability (Gimpelson and Oshchepkov 2012).

Anxiety of unemployment or of unsecure respectively informal job arrangements enjoys

high importance in societies, economies and nations, because fears may have essential po-

litico-economic impacts. Politicians often use various labor market fears for political ma-

nipulation, because these can induce politicians to support more rigid employment protec-

tion legislation which is likely to suppress full-time job creation and develop the informal

also known as the atypical labor sector. Consequently, fears which results into a vicious

circle that is hard to disrupt increase. Moreover, the reaction of politicians to voters’ sub-

jective perceptions freezes reforms in case of latter strategies lead to more labor market

volatility. In this context, employees’ fears of unemployment as well as unsecure job ar-

rangements convert to the fear of politicians and consequently stimulate the government to

populist political actions, which in turn and endangers further reductions of protected jobs

and thus cause even stronger fears (Gimpelson and Oshchepkov 2012).

Unemployment, poor or unsecure working conditions as well as economic recessions have

shown, apart from the monetary impacts, to negatively affect health-related outcomes such

as subjective health risks, symptoms of anxiety and depression, higher vulnerabilities to

obtain health-damaging behaviors such as smoking, alcoholism or drug consumption as


well as even mortality, which has been proved by numerous studies and meta analyzes

(e.g., Kieselbach 1994, 240 f.; Oschmiansky 2010; Bennett and Eichholz 2007; Castel

2011; Jones et al. 2011; Rogge and Schunck 2010; Lopez-Valcarcel and Urbanos-Garrido

2014). In general, the peculiarity of the health impacts vary between relatively harmless

forms e.g. in cases of unemployment as a bridge-function into further employments, and

disastrous self-destructive aggravations more likely in terms of longer unemployment peri-

ods (Kieselbach 1994).

Working conditions in general as well as unemployment constitute major social determi-

nants of health. According to Lopez-Valcarcel and Urbanos-Garrido (2014), public health

literature proves that employments protect and strengthen health. In fact, previous studies

showed that unemployment or drops of income and job securities may lead to considerably

higher vulnerability of health-damaging behaviors such as excessive alcohol consumption,

smoking, decreased physical activity or obesogenic diets. In addition, reduction in the level

of income caused by unemployment or precarious job arrangements, for instance, leads to

discouragements of seeking medical attention in order to avoid or reduce treatment costs.

However, it is well known, that general health conditions are shaped by health-damaging

behaviors (Lopez-Valcarcel and Urbanos-Garrido 2014; Rogge and Schunck 2010). Longi-

tudinal studies from Britain and Sweden indicate an increasing problem of drinking in un-

employed men as well as increased obesity in unemployed women, similar to the results of

Finnish panel studies which refer to the impact of an individual’s employment progression

on alcohol and weight behavior (Rogge and Schunck 2010).

Kieselbach (1994, 242 f.) refers to another Finnish study which proved the adoption of

unemployed or working poor individuals of certain health risky lifestyles such as the

strengthened affinity to smoking, alcohol consumption, unhealthy sleeping habits and lacks

of sportive activities. He additionally refers to an Australian study which compared short-

term and long-term (over five years) youth unemployed individuals with the conclusion

that the long-term unemployed were characterized through stronger peculiarities of physi-

cal inactivity, social withdrawal, disorganization of sleeping and eating habits, higher alco-

hol and tobacco consumption as well as a more frequent usages of medical services (Kie-

selbach 1994, 243 f.). This correlates with the results of an American study which illus-


trates the likelihood of heavy drinking increases due to unemployment and more im-

portantly increases with the duration of this labor status. Another study based on the Ger-

man census data shows an increased vulnerability of health-damaging actions among the

long-term unemployed (Rogge and Schunck 2010). Koßmann (2012) underlines with his

study the aspect of fear within the long-term unemployed in Germany – 37 percent are

confronted with perceptions of fear and shame, 57 percent are afraid of thematizing their

occupational failure within their environment and over 60 percent are affected with fear of

occupational failures. Furthermore, 57 percent of the long-term unemployed claim about

disabilities of relaxing abilities while 53 percent perceive permanent stress and anger.

The status of unemployment or poverty as well as precarious job arrangements means the

exclusion for the affected individuals from potential social labor markets as well as societal

structures (Castel 2011; Rogge and Schunck 2010; Koßmann 2012). Koßmann (2012) re-

fers to the psychosocial consequences appearing from the lack of appropriate jobs such as

the security of income for the livelihood, time-structures, the extension of social relation-

ships, the setting of superior targets, the allocation of social status, the shape of personal

identities as well as the affinity to frequent activities. Especially long-term unemployed

live according to Koßmann (2012) in advanced forms of isolation – 50 percent hardly per-

ceive personal support while 14 percent live completely isolated.

These forms of exclusion lead according to Rogge and Schunck (2010) to a so called “so-

cial reward deficiency” entailing stress reactions at neuro-regulatory levels. Consequently,

unemployed or social excluded individuals tend to compensate such deficiencies through

health-damaging behaviors. This form of reactions enhance stress levels and thus lead to

the problematic direct link between stress, consequential neuro-regulatory dysfunctions

and health-damaging behaviors, which aggravates the situation of the affected individuals

and frequently causes serious long-term health issues. Consequently, situations of unem-

ployment or poor working conditions can also impair apart from the affinity to health-

damaging behavior, the entire mental as well as physical health conditions by various psy-

chological mechanism, loss of self-esteem, pessimism about future perspectives, cognitive

losses, formal thought disorders, avolition, dysthymia, suicidality, anxiety disorders and


suchlike (Lopez-Valcarcel and Urbanos-Garrido 2014; Koßmann 2012; Gumplmaier

2002).

Moreover, the wide range of psychological effects of unemployment as well as insecure

working conditions starts from general lower levels of optimism at these individuals com-

pared to regularly employed up to fears of long-term unemployment. The literature men-

tions from small degrees of depressive resentments to three times higher depressive rates

within unemployed or informal employees than regularly employed (Gumplmaier 2002;

Koßmann 2012). According to Gumplmaier (2002), the most frequent symptoms are losses

of appetite as well as insomnias, as a Norwegian study proved that 49 percent of the unem-

ployed were affected by an illness and 15 percent by two or even more health issues. An-

other study of Sweden presented that 44 percent of the unemployed were confronted with a

declining health conditions due to the unemployment status. One of the main consequences

of unemployment is a permanent malaise, which is a prestage to frustration, loss of self-

esteem, apathy, stress as well as the loss of the personal and social identity. This form of

permanent malaise appears independent of personal factors such as gender, age, cultural

background or family situation (Gumplmaier 2002).

The loss of personal and social identity refers to the disappointment of oneself, because

collective respectively social problems seem to be individual problems (Michalitsch 2006).

The status of unemployment refers instead of the problem of mass-unemployment to per-

sonal issues such as insufficient willingness to work or personal inability. The lack of cop-

ing high collective economic pressures are seen as personal failures and not as the exorbi-

tant high level of economic requirements or the excesses of economic structures. Such mis-

interpretations about the origin of “personal failures” keep invisible for the affected indi-

viduals and thus frequently lead to anger, frustration, disappointments, perceived helpless-

ness, hopelessness, pessimism, depressive mutes, stress as well as fear, because of the lack

of personal successes such as in terms of job search. As numerous long-term unemploy-

ment studies proved (e. g. Rogge and Schunck 2010), individuals tend to decrease respec-

tively stop their endeavor in terms of job-searching, for instance, or lack of prospects in

life by time and face constantly a more intensive uncontrollable situation (Koßmann 2012).

Finally, the re-entrance into the labor market out from long-term unemployment situations


is aggravated by the health consequences as well as affinity to health-damaging behavior

(Kieselbach 1994, 244 f.).

The impact of contemporary, flexible, poor and precarious labor market conditions shape

not only the individuals who are confronted with unemployment or poor working condi-

tions – the “zone of precarity” (Kraemer and Speidel 2004) – but also other labor market

segments including employees of full-time standard job arrangements. In this respect, the

consequences are less tangible and consequently more difficult to measure. Apart from the

psychological impacts of increasing precarious labor market pressures in the “zone of nor-

mality” such as increased fears of dropping down at any time into precarious employment

(Chapter 4.3) shape aggravated working condition of full-time work arrangements. Espe-

cially after the previous economic and financial crises, a tendency established itself in

which managers received incentives and bonuses for dismissing employees without (suita-

ble) replacements in order to reduce labor costs (Stiglitz 2013). Consequently, the takeover

of former duties of the dismissed employees of their colleges leads to higher work efforts

and stress levels, which are connected with higher overtime rates. In this context, unpaid

extra hours represent a measureable indicator for increasing job pressures, as a main in-

strument for the extension of labor capacities as well as a capacity buffer instead of em-

ploying additional personnel. In addition, unpaid extra hours may as well occur in case of

temporary or systematic under-occupation. Even though it is not legally conformant, em-

ployees create work flexibility within the organization as well as financial flexibility for

their organizations by circumventing working time regulations. Unpaid extra hours repre-

sent direct savings of labor costs for organizations, which strengthens organizational com-

petition factors (Famira-Mühlberger and Fuchs 2013).

While the advantages of unpaid overtime for organizations are tangible arises the question

why employees commit to work unpaid overtimes. Famira-Mühlberger and Fuchs (2013)

elaborated empirical proved reasons for the willingness of employees to work unpaid over-

time. The major causes comprise:


1. an increasing number of job arrangements which are output-driven instead of goal

oriented (e.g. All-in contracts)

2. unpaid extra hours as forced investments in careers in form of higher income

growths in the future22

3. unpaid extra hours are additionally accepted caused by compensational needs of

productivity lagging – according to several studies unpaid extra hours get addition-

ally done by colleges whose productivity is below those of their colleges23

4. unpaid overtime is intended to be done in order to keep the own job – high unem-

ployment figures have significantly positive effects on unpaid overtime work

(Famira-Mühlberger and Fuchs 2013).

Consequently, the willingness to work unpaid overtime is enhanced by contemporary labor

market conditions including high unemployment, which imply less or sometimes no job

alternatives and thus the increased need to keep current jobs appear with poor conditions.

Famira-Mühlberger and Fuchs (2013) elaborated the situation of unpaid extra hours in

Austria until 2012. According to their point of view the development of unpaid extra hours

is characterized by controversial points of view within the previous years, because official-

ly the amount of unpaid extra hours decrease between 2005 and 2009 in Austria, which is

referable to the rearrangement of the micro-census survey structures. In 2012, the Austrian

labor force performed 68 million unpaid extra hours, which is equal to 1.2 percent of the

entire volume of work in Austria. The affected labor force rate of unpaid extra hours re-

ferred to 167,656 individuals in 2012. Roughly two third of the unpaid extra hours were

done by employees especially with higher qualifications such as academic professions or

executives and more frequently in full-time employment than in atypical forms of em-

ployment (Famira-Mühlberger and Fuchs 2013).

22 Within the previous past has legitimated the idea to work initially in poor working conditions in order to

invest into the own career. Internships done by academics shortly after graduation are perfect examples espe-

cially with several extensions of the internship status. In this context, organization benefit from cheap labor

force by selling the employees future promises without guarantees. 23 In this context, organizations roll over the risk of employee productivity to their employees by converting

high productivity levels to standard norms.


5.4 The division of society – decoupling and de-collectivization

Castel (2011) emphasizes that modern western labor societies struggle with the erosion of

the two main collective social security systems – the state (Chapter 3) and the homogene-

ous socio-professional groups. The homogeneity of occupational groups in general as well

as of the collective regulating instances is not only hollowed out, even weakened down to

its foundations – mass-unemployment and increasing informal and unsecure forms of em-

ployment do not affect only different groups of employees, but also cause considerable

inequalities within former homogenous groups of employees. The occupational objective

of two equal employees may differ over night, in case of one loses his job whereas the oth-

er keeps it. The fear of losing occupational benefits appears between colleges. Consequent-

ly, solidarity is replaced by competition within equal employees and working groups. In-

stead of focusing on collective targets and interests within equal groups, individuals are

forced to emphasize their differences in order to secure their current working and living

conditions (Castell 2011).

The development of atypical labor market structures, which enhances entrepreneurial posi-

tions on the unbridled global competition, leads basically to opposite dynamics. A flexible

and individualized labor management replaces collective organizational managements

based on stable employment. Since the 1970s, the process of the changing capitalism with

its visible impacts conducts an entire flexibilization of employment arrangements and

structures, occupational careers and social security systems, which are in each case heavily

connected to the employment status. Such dynamics induce de-collectivization, further

individualization as well as cutbacks in social security benefits. The de-standardization of

gainful employment respectively the individualization of work process is characterized by

the transmission of responsibility and costs to the employees who partial run entire produc-

tion steps autonomously respectively need to adopt responsibilities of product qualities

(Castell 2011). Increasing parts of employees move into permanent crisis of gainful work

or securing one’s livelihood, because of the scope of the transfer of costs and risks, for

instance, when chambermaids are only paid by the made rooms or waitresses need to rent

the tables in restaurants (Wichterich 2011).


Moreover, another transfer of risks and costs from employers to their employees refers to

the dynamic and flexible occupational careers. Each employee takes over responsibility of

uncertainties of his by now intermittent occupational developments including increasing

occupational decisions, timely re-educations measures as well as occupation self-

responsible behavior in order to maintain on the active labor market or to organize career

beyond linear standard patterns – employees basically need to become personal companies

“Ich-AG” (I incorporated). This results into a greater distance to collective regulatory sys-

tems and thus increases the vulnerability of employees for further flexibilization pressures.

According to Castel (2011), instead of comparing modern, traditional or archaic forms of

work organizations, the focus should more rely on the ambivalence of individualization

and de-collectivization processes, which manifests itself in diverse forms of various con-

figurations of labor organizations and affects in different extensions nearly all employees’

groups beginning from trainees up to start-up entrepreneurs. Individualization refers to the

condemnation of freedom and the release from unpleasant collective constraints. However,

modern employees need to bring performance according to numerous rules and norms but

are broadly on their own and kind of “free” in terms of labor decisions. The collective con-

straints get in different dimension enhanced in terms of aggravated competitions and the

constant threat of unemployment or descent career developments (Castel 2011).

However, not all groups of employees are confronted with equal scopes of labor pressures

– some benefit from the individualistic labor market tendencies by maximizing their poten-

tials and by realizing unknown entrepreneurial competences, which were not able among

bureaucratic constraints or strict regulations – there are winners of these change processes

with new opportunities to unfold their personal and occupational potentials. Apart from

that numerous individuals face disadvantages of these modernization processes, because

they are not able to cope with current requirements and standards or through the new cir-

cumstances in general. In this context, the dividing line in labor markets and societies be-

tween winners and losers – rich and poor grows and is enhanced as well as has no arbitrary

proceed, because the adoption with these new situations heavily depend on objective re-

sources as well as on the organizational bases of individuals24 (Castel 2011).

24 In this context it should be emphasized, that any individuals with a lack of further (apart from the current

job) economic, cultural or societal capital are dependent of collective forms of social security. The combina-


A common historic phenomenon describes the advancement of dominant societal groups at

the costs of other societal groups, whose downfall is connected to this development. These

groups whose common life situation declines, faces social descent which is simultaneously

a hotbed for uncertainty. The consequences of such societal developments refer to the reso-

lution of social connectedness – the de-socialization among individuals who are decoupled

from their social referential aspects and these individuals are left with themselves and their

“uselessness”. The socially excluded are rather an accumulation of individuals than a

linked community, because they have rarely any common factor except similar social and

monetary deficiencies. Comparing a long-term unemployed with a juvenile from a satellite

metropolis characterized by few occupational prospects within the same scheme of exclu-

sion, so are hardly any common factors visible, as they face completely different paths –

they would live beyond society, but which is impossible, because no one including even

the socially excluded exists beyond society – de-collectivization itself is a collective phe-

nomenon. It has been ignored that there are groups and social classes, whose common de-

velopment does not imperatively lead into a glorious future, but even that these individuals

carry the biggest burden of the misery of modern capitalism (Castel 2011).

Castel (2011) describes the destiny of the “partial social excluded” as victims of an eco-

nomic and social progress based on reasons such as modernization constraints, but in

which these individuals have lost their position. The desperation about the missing future

perspectives gets conceived in different ways between individuals, but reactions are also

characterized by collective natures such as resentments25. The “societal groups at the lower

end of the social ladder” including the youth and lower qualified are in particular affected

by modernization process since the 1970s in an increasingly distinct European and global

tion of the de-coupling of collective systems from each other with the aggravated competition within former

homogeneous groups of workers result into social uncertainty characterized with the lack of future perspec-

tives (Castel 2011). 25 The phenomenon resentments has according to Robert Castel (2011) so far not sufficient been explored

and represents a strong initiative for societal and political movements and reactions. It is seen as a mixture

between disfavor and contempt based on differences between social positions and in which individuals search

for the responsibility for the own well-being between two societal groups which are very closely located on

the social ladder. Resentments within societal groups, whose societal status dropped, get nourish from per-

ceptions of incurred injustice and the perceived privation of advantages of their previous situation. It is a

collective frustration searching for the guilty ones (Castel 2011).


context. The contemporary labor market structures are not only characterized by mass-

unemployment but also by occupational de-qualification of the mass. In terms of deindus-

trialization vocational school-degrees, which once guaranteed the entrance into the stand-

ard work life lost significantly their value. The future of the once reputable metal worker

is, for instance, very dubious similar to the future of highly specialized educations which

are linked to precise technical production processes (Castel 2011).

Individuals face the impression of being abandoned and perceive personal, monetary and

social disadvantages, due to other individuals who took their advantages and thus ag-

grieved individuals create resentments against other societal groups and their political rep-

resentatives, who obviously benefit from modernization processes and do not pay any at-

tention to the losers whose destiny is in the best case to become wage slaves of the modern

world economy or are in the worst case simply not usable for labor markets and in the long

run within society. Resentments create less likely feelings of generosity or risk disposition

but more likely defensive attitudes. Instead of accepting other societal groups and their

diversity, the disadvantaged search a scapegoat who is apparently responsible for their own

unpleasant situation – social conflicts are directly projected to mostly neighboring social

groups. Racism would refer to such a magnitude – the supposed lower qualified but sup-

pler immigrant enjoys alleged preferential treatments, obtain social benefits, which “would

be actually for Austrians”, and behave like in enemy territory whereas they are in fact only

a benefit scrounger. The fact that these beliefs are wrong is nowadays secondary, consider-

ing its propagation. In this context, increased protest votes and growing significances of

right- and left-wing extreme political parties in Europe are significantly affected of resent-

ments. Thus the election results in Austria and other Western-European countries of the

previous years are no surprises (Castel 2011).

Resentments are seen as social reactions to social sorrow of societal groups within the di-

rect competition of status. It describes the reaction of individuals belonging to groups to-

wards the end of the social ladder, who face a situation of deprivation or poverty and find

themselves in competition with members of other likewise or stronger deprived groups.

They search after reasons to understand their situation and try to achieve superiority

through occasionally racial contempt. The resulting shrinking solidarity within socially


equals in combination with aggravated tensions between social groups decrease living

quality standards is additional enhanced by poor-working conditions, unemployment or

risk of poverty status. Castel (2011) describes the extended consequences of contemporary

social respectively labor structures in increasing uncertainty factors. Individuals with lower

incomes and thus lower societal status tend to get more frequently confronted with addi-

tional unpleasant aspects including environments which are characterized with higher rates

of unemployment respectively marginal forms of employment; dilapidated residential envi-

ronments which are characterized by numerous forms of immissions such as air-, water- or

noise pollution; soulless urban constructions; divers ethnical groups living closely apart

from each other; criminality through drug dealing and handling with stolen goods; uncivi-

lized behavior in everyday life; and tensions, conflicts as well as disturbances with security

guardians. In this context, social and civil uncertainties meet and reinforce each other re-

ciprocally (Castel 2011).

According to Castel (2011) the concentration of these developments focuses mainly on the

suburbs of the satellite metropolis and affects primarily the youth. The French sociologist

emphasizes a shift of the social conflicts and threats of a society to specific groups mainly

of the suburbs whose conditions significantly aggravate. These individuals are not really

integrated into society, as they often belong to other cultures or have other less popular

characteristics and thus face disadvantages at searching for jobs of adequate lodging as

well as are confronted with daily enmity with parts of the population and security guardi-

ans. If media, politics and major parts of the public opinion attribute the uncertainty diffi-

culty to such minor groups, such as high criminality rates of immigrants or unemployed

youth, these individuals will face circumstances with which the adoption and implementa-

tion of stabile family connections or civilized manners are significantly aggravated. In fact,

the affected youth, for instance, is less likely criminal but more likely disoriented, but the

behavior of few people is conveyed to the entire youth through the distortion of infor-

mation. In this respect, western republics are weakened to the very foundations in an al-

ready unusual compression of this more global difficulty (Castel 2011).


5.5 Monetary de-collectivization – deprivation

Unemployment and marginal employment mean a decrease of living standards of the af-

fected individuals through income cutbacks which are usually enhanced by unpleasant in-

creases at the households’ expenses. Especially in the previous years occurs that organiza-

tions who face limited possibilities of increasing their income, economize their balances

with significant cutbacks of their expenses. The development of poor individuals repre-

sents kind of opposite tendencies, as their living costs rose significantly within the previous

years. The currency devaluation is measured by the inflation which was in June 2014 at 1.9

percent which is 0.4 higher than in February 2014 with 1.5 percent in Austria (WKO

2014a). The inflation rate is based on the consumers’ price index, which covers collective-

ly regarded the most important goods and services within one society. Contortions of this

key figure appear in terms of the chosen goods especially for deprived or poor individuals,

because they simply do not purchase or afford each year technological luxury devices such

as flat screens or smart phones as well as long haul flights. These luxury goods and ser-

vices are mostly characterized by decreasing price developments and thus the inflation rate

for poor and deprived individuals is significantly higher and is more likely covered by the

micro respectively mini- consumers’ price index.

Janek-Zenker (2014) compares, for instance, the inflation rate of April 2014 in Austria

which varies from 1.7 percent of the entire consumers’ price index, 1.8 percent of the pen-

sioners index to 3.5 percent of the micro-consumers’ price index. The products of the daily

purchase are only partial covered by the micro-consumers’ price index, because, for in-

stance, fruits with 4.9 percent, milk, cheese and eggs with 6.9 percent and solid fuels with

5.2 percent represent the typically daily products. The reality of the currency devaluation is

only minimal tangible by the annual values, because the accumulation of these rates is of

importance – only between 2010 and 2013 increased the mini-consumers’ price index for

12.3 percent in Austria. The top three categories are education and tuition with 13.4 per-

cent, food and non-alcoholic beverages with 11.3 percent and followed by alcoholic bever-

ages and tobacco. Significant growths in prices were also in other categories such as living,

water, energy and transportation recorded in contrast to shoes and clothing with decreasing

price levels (Höller 2013).


In addition, apart from increasing expenses in combination with decreasing incomes

(Chapter 4) for more and more Austrian households and individuals, these individuals

struggle more frequent with the accumulation of crises respectively multiple crises. Several

crises including economic crises, ecological damages, illnesses, cutbacks of social benefits

in terms of neoliberal adaptions of the welfare states or climate change, lead to complex

emergency situations for vulnerable households. The growth of energy costs forced some

households, for instance, to use charcoal or to collect firewood, which causes more work,

higher physical burdens, higher health risks and higher ecological damages. In addition,

the climate change led in the previous years more frequently to tempests such as floods and

the annual raining and dry periods are not any more reliable which might cause high crop

failures especially noticeable for small farmers. In other words, poor households suffer

even more intensively from the economic excesses such as climate change (Wichterich

2011).

“Less privileged” individuals or groups are due to the accumulation of crises more vulner-

able for deprivation, poverty and social exclusion as well as to extended magnitudes of

their deprivation status. Deprivation is seen as one possible consequence of low incomes

and thus lack of societal participation with the characteristics of low tangibility by statis-

tics, because of its complex nature which ranges from the enforced sacrifice of electronic

devices or holidays over pollutions of any kind in the living area to chronic diseases

(Chapter 2.2; Grausgruber 2012). Deprivation is segmented into seven areas of social ex-

clusion:

1. fundamental needs such as food and clothing

2. living

3. education

4. health

5. social relationships

6. social participation

7. financial stress respectively situation of one household (Lamei and Till-Tentschert

2005)


Similar to other economic figures such as unemployment, unpaid extra hours, poverty or

income rates of certain atypical forms of employment vary the rates of deprivation due to

different data collection methods and measurements – the EU-indicator which defines in-

dividuals as deprived if they lack at least four out of nine basic needs, which differs from

the Austrian definition that adds individuals to the financial deprivation quote in case of a

lack of two out of seven basic needs26. The rate of financial deprivation increased from

13.7 percent in 2004 to 16.4 percent in 2010 in Austria. Contortions of the data may occur

due to the definition of basic needs, because goods and services such as holidays, cars,

telephone, television or washing machine are, for instance, not defined as basic needs ac-

cording to the national Austrian definition. In this context it is interesting to observe that in

the same period the number of individuals who were at least two succeeding years finan-

cially deprived has doubled itself – in 2010 nearly eleven percent. This correlates with the

development of number of persons in the so called open social support – it had doubled

between 2000 and 2010 where nearly 180,000 people were affected (Till-Tentschert 2012).

According to Fabris (2014), 14 percent of the Austrian population faced deprivation in

2013, whereas 22 percent – 1,852,000 individuals – cannot, for instance, afford unexpected

expenses. Significant deprivation describes circumstances of households, which cannot

afford four out of the seven basic needs, which relates to 355,000 individuals or four per-

cent of the Austrian population (Fabris 2014).

The deprivation and poverty of children up to 19 years has achieved above average dimen-

sions within the previous decades with a rate of 17 percent which is equal to 304,000 chil-

dren and teenagers and even more significantly the risk of poverty of non-Austrian chil-

dren achieved 35 percent in 2013. The risk of poverty within children decreases at higher

ages – between six and nine years were 18 percent, between ten and 14 were 15 percent

and between 15 and 17 years were 13 percent affected of risk of poverty. Apart from the

financial deprivation of children, children face a lack of the participation to education, for

instance, such as only 24.8 of the children of unskilled laborer parents attend high schools

26 Both the EU-definition and the Austrian definition evaluate the following aspects as basic needs: to heat

the flat appropriately; to finance unexpected expenses; to eat every second day meat or fish; to cope pay-

ments such as rents timely (within 12 months); and the national definition also includes: to purchase clothing;

to visit doctors in case of illnesses or emergencies as well as to invite friends or relatives once a month for

dinner (Till-Tentschert 2012).


in contrast to 74.3 percent of children from households with higher qualified parents

(Fabris 2014). Consequently deprivation does not only affect societal participation rates of

the present it further aggravates it in the future and thus leads automatically to more diffi-

cult societal circumstances of the affected individuals.

5.6 The “invisible ghost of poverty”

The welfare state Austria as the 7th or 12th richest country worldwide and the third richest

country within the EU measured by the GDP per capita (Till-Tentschert 2012) faces appar-

ently the invincible situation of poverty or social exclusion with stable risk of poverty

within the previous years between 13.2 and 18.5 percent which equals to roughly 1.2 to 1.5

million individuals (Lamei and Till-Tentschert 2005; Fabris 2014; diePresse 2013a; Statis-

tik Austria 2014a; Springer 2013). Income is usually the criteria for poverty in terms of a

lack of people’s participation and realization opportunities in order to live a desirable life

within the certain society (Till-Tentschert 2012). The risk of poverty or social exclusion

rate decreased from 17.7 percent – 1,431,000 individuals – in 2004 to 16.7 percent –

1,376,000 individuals – in 2007 followed by an increase to 19.7 percent – 1,627,000 – in

2008. Since then the rate was until 2012 constantly above 18 percent (18.3 percent in 2009,

18.2 percent in 2010, 19.2 percent in 2011 and 18.5 percent in 2012) (Statistik Austria

2014a). In Austria 1,201,000 individuals lived under the risk of poverty or social exclusion

in 2012 (Fabris 2014). The situation of individuals living near or under the poverty thresh-

old – 60 percent of the median income – is after the adjustment of the SILC-survey meth-

ods clearer captured, because the SILC-survey of 2012 to income and living conditions

includes firstly administrative data unemployment benefits or family benefits. Consequent-

ly, the number of individuals living under the risk of poverty or social exclusion is higher

than so far assumed – the number of 2011 is, for instance, corrected from 1.4 million to 1.6

million individuals (Springer 2013). One fourth of the individuals who live under the risk

of poverty or social exclusion are children and youth up to 19 years – 304,000 children and

youth live under the risk of poverty in Austria (Fabris 2014). According to the EU-SILC

2011 in Vienna live nearly one third of the children and youth under the risk of poverty

(diePresse 2013a). Among the roughly five percent – 426,000 individuals – who are con-

fronted with manifested poverty, live 127,000 children and youth up to 19 years with this

status (Fabris 2014).


Similar to deprivation the risk of poverty or social exclusion makes itself noticeable in di-

verse areas of life including residential environment, health and life expectancy, education

or the entire societal participation. As far as the residential environment is concerned indi-

viduals are “forced” to live in precarious and poor living conditions such as through the

social benefits structure27. In 2012 six percent of the Austrian population or 541,000 indi-

viduals were affected of overcrowded habitation28. Furthermore, 20 percent of the Austrian

population – 1,699,000 individuals – is affected of unacceptable housing expenditures –

more than one fourth of the household’s income. The rate of the single living pensioners is

roughly 40 percent as well as 36 percent of the non-Austrian citizens. For nearly two third

of the Austrian population the housing expenditures are a burden. As far as precarious res-

idential environment is concerned, 101,000 individuals or one percent of the Austrian pop-

ulation lives in flats with shared restrooms or bathrooms, 986,000 individuals respectively

12 percent live in damp and moldy flats and 480,000 persons or six percent have to live in

dark rooms. Individuals who live under the risk of poverty or social exclusion live more

likely in minor flats but also in sordid neighborhoods – 1,630,000 individuals or 20 percent

of the Austrian population struggle in their neighborhood with noise pollution (28 percent

in Vienna), 900,000 or eleven percent face environmental pollution and 977,000 are con-

fronted with criminality or vandalism. Furthermore, energy poverty shapes the reality of

263,000 Austrians or three percent of the Austrian population who are not able, for in-

stance, to heat their shelter appropriately. According to estimations of the Austrian Cham-

ber of Labor (German: Arbeiterkammer) 60,000 households are affected with annual gas

and electricity shutoffs. Poor households pay in average between 30 and 40 percent higher

energy prices compared to regular households, because of the additional costs caused by

reminder charges or costs produced by the power-up or power down of gas respectively

electricity (Fabris 2014).

Health risks due to poverty or social exclusion are in mutual correlations with poverty and

social exclusion (Fabris 2014; Lampert and Kroll 2010). On the one hand, people may lose

27 Housing benefits in Upper Austria are, for instance, bounded to maximal gross rent per square meter of

seven Euro (Land Oberösterreich 2014). 28 Overcrowded habitation describes the situation in which too many individuals live in apartments with

insufficient number of rooms: two persons in less than two rooms, three to four persons in less than three

rooms, five to six persons in less than four rooms apartments and so on (Fabris 2014).


jobs due to chronic illnesses or long-term consequences of accidents and on the other hand,

poverty causes additional stress symptoms in combination with possible lower living quali-

ties which enhance the risk of illnesses. An increased appearance of diseases and health

issues of any kind at poor people has been proven by consistent results of meta-studies. In

this context, poor individuals are more frequently disadvantaged in coping their everyday

life because of their health problems. In addition, similar to the status of unemployment,

poverty increases the affinity to health damaging behaviors (Lampert and Kroll 2010). Fur-

thermore, the life expectation is linked to the health situation, because life expectancies of

men with higher education, for instance, are six years longer than of men with compulsory

education compared to a two years difference within women. Moreover, significant con-

nection appear between health, education and occupational status – individuals with com-

pulsory schooling claim with 13 percent about four times higher rates of significant inter-

ferences caused by health problems than individuals with high school certificates with

three percent. Laborers are twice as much confronted with health impairment than other

employees (Fabris 2014).

Current consequences of modern labor market structures including mass-unemployment,

precarious or atypical employment and working-poor conditions do not affect only con-

temporary developments of poverty but also the situation of the future for the affected in-

dividuals as well as for society – the increasing tendency of old-age poverty (Bosch 2012,

28 f.; Springer 2014; Albrecht and Fuchs 2013; Leban 2013). The upcoming dimensions of

this phenomenon are not even approximately foreseeable as low wages do not cover an

old-age protection, which needs to be augmented by the taxpayers. According to Bosch

(2012, 29) individuals who work 45 years without disruption periods of unemployment for

eight Euro per hour, receive pension benefits under the threshold of the basic security at

old age (German: Grundsicherung) in Germany. Apart from low income rates and atypical

employment non-permanent working careers, unemployment and the pension reforms in

Germany enhance the old-age poverty.

The old-age poverty includes any individuals with a higher age than 65 years and who live

under the risk of poverty, because they receive less than 50 percent of the average house-

hold income. In 2013, 11.3 of the Austrian elderly population lived the risk of poverty in


contrast to the OECD-average of 12.8 percent (diePresse 2013b). Considering the demo-

graphic development of Austria in combination with atypical employment tendencies, the

national expenses for pension benefits increase exorbitantly. The fact, that this develop-

ment is under evaluated from public interests or media such as diePresse (2013b) who

forecasts an increase of OECD-average public expenses for pension benefits from 9.3 per-

cent in 2010 to 9.8 percent in 2020 and to 11.7 percent in 2050, shows the social and eco-

nomic severity of this public concern. According to Leban (2013) the public expenses will

increase without the possible countermeasures from 6.8 billion Euro in 2010 to the triple

by 2035. Consequently, national pension benefits will additionally struggle, because of the

higher life expectancy – the number of persons who receive pensions constantly rises as

well as their pension periods (Leban 2013).

Apart from the increasing rates of poverty in combination with their aggravated conse-

quences on individuals including health concerns or social exclusions, the income and

wealth gap between the rich and poor continuously grows and has achieved record stages

in history. The lowest tenth in terms of incomes in Austria earns annually maximum

11,630 Euro compared to the highest tenth which earns at least 39,379 Euro per year. In

Austria as well as in other western countries the distribution of wealth is even more une-

qual than the income gaps (Stieglitz 2013, 1-35; Fabris 2014). The top five percent of the

Austrian households hold almost the half of the entire gross wealth, whereas the lower half

of the households possesses not even four percent of the gross wealth and who lives mainly

in rentals – eight percent of the lowest half lives in property in contrast to a 86 percent

property rate of the top five percent who dispose in average of 1.7 million Euro (Fabris

2014). As far as income or wealth gaps are concerned the US are an extreme example and

kind of a trendsetter (Stiglitz 2013, 1-35; Chapter 3.1).

Similar to the magnitude of complexity, connection and linkage of economic structures are

nowadays the social crises such as unemployment or poverty, but in the same magnitude

vary the effects of the crises on the globe. In the conglomerate of crises between 2007 and

2009 occurred several closely interwoven crises mainly food crises and starvation, the

more noticeable climate change as well as the from the US initiated financial crises and

their global impact, which were enhanced by several interim mechanisms such as pricing


and demand, investments and bank lending, retransfers, employment effects and govern-

ment transfers. In Latin America, which is seen as the backyard of the US, was hit in an

enormous magnitude by the long waves of the financial speculation and the stock market

crash – on the one hand retransfers of migrants from the US decreased by one fourth and

on the other hand at the same time price levels of basic food increased by 25 percent. The

consequences of crises advanced in cascade effects within entire economies including in-

formal sectors. The loss of 300,000 formal jobs in Congo, due to the price collapse of raw

materials, intensified the competition of the informal labor sector in that country and pros-

titution increased. The more frequent accumulation of crises aggravates the situation of

poverty and leads to complex emergency situation for economies, nations and societies – to

permanent survival problems of any kind. Increased tempest caused by the proceeding cli-

mate change of the previous years lead to considerable consequences of the food or drink-

ing water supply (Wichterich 2011).

Consequently, the situation of poverty in Austria is significantly influenced by the global

situation, and thus the issues are only partial solvable through measures in Austria, because

it has become a global symptom of contemporary capitalistic and economic situation, en-

hanced through cascades effects such as climate change, for instance.

5.7 The role of the welfare state in Austria

The welfare state represents a complex construction of nation states which occurs as a form

of a political or societal society that encompasses any institutions and political-economic

relations of their citizens. Within the numerous definitions and associations of the welfare

state describes one definition the term welfare state as a descriptive concept of certain

types of government activities – the state adopts an active role in the governance of eco-

nomic and social purposes as well as invests a significant part of its resources for the reali-

zation of more equal life opportunities in terms of income safety, living standards, access

to health and education, for instance, on the one hand and the enhancement of economic

growth and full employment on the other hand (Schmid 2010). Welfare states possess tar-

gets such as social integration of their individuals, high efficiency, low inequality rates

through monetary redistribution and prevention of its misuse. In other words, the highest

priorities of the basic orientation of welfare states are the combating of inequalities, socie-


tal disadvantages and poverty within one society and their efficiency get evaluated by his

contribution to the societal participation of societal disadvantaged groups (Dahme 2006).

According to Esping-Andersen (1990, 9 f.) the efficiency of the welfare state refers much

more than to the magnitude of the “social expenses” – he emphasizes the organizational

structure of social policies with a substantial focus on themes of de-commodification29 and

re-stratification30 (Esping-Andersen 1990, 15 f.). Welfare state structures differ from each

other through diverse main alignments such as poverty politics, the relation between state,

market and family as well as the reduction of society’s market dependence and social ine-

quality. International variations of social policies and stratifications between the states im-

ply different welfare adaptions of the particular states (Riedmüller 2002, 1f.). In general,

the differences between welfare state arrangements are not linear and thus elaborated

Esping-Andersen three welfare state categories – the liberal welfare state, the conservative

welfare state and the social-democratic welfare state. Nations who adopt conservative wel-

fare states structures are Austria, Germany, Belgium and France, for instance, have a more

intensified focus on monetary interventions, which implies de-commodification – the pro-

tections against market forces and its resulting loss of incomes appear in median dimen-

sions, because this welfare state model is significantly working life oriented in form of

social insurance contributions. Consequently, there is a high correlation between social

rights and occupational status, class and performance. According to such statuses get the

majority of the social benefits calculated – the magnitude and length of social benefits de-

pend on previous monetary labor contributions and taxes (Tálos 2002 14 f.; Dahme 2006).

The protection of the dependent labor force against social risks of illnesses, accidents, un-

employment and in the advanced age appearing income losses or increased requirement of

medical treatments as well as against structural unequal labor conditions in terms of social

protection within employees are main objects of the Austrian welfare state, which requires

the linkage between gainful employment and thus gets a precondition of social security

benefits. Within this form of employment orientations are in particular women, for in- 29 De-commodification implies whether the states enables based on social policies the secure someone’s

livelihood apart from gainful work – the relief of the need to earn the livelihood through gainful work. 30 The concept of re-stratification elaborates in which magnitude the state may influence and mix social strat-

ification.


stance, excluded from an independent social security system. Only few social benefits are

independent from the occupational status including care allowance (German: Pflegegeld),

family subsidy (German: Familienbeihilfe) or diverse health benefits. The marriage repre-

sents an example of co-insurance forms for non-occupied family members of one insured

worker. Numerous women get via their marriage included into the social security system,

whereby their social benefits heavily depend on the stability of their marriage (Tálos 2002,

14 f.).

Due to the occupational orientation the principle of equivalence correlates between the

height and duration of the social security payments of contributions and the height of the

financial social security benefits as far as health insurances, unemployment benefits, emer-

gency unemployment assistance (German: Notstandshilfe) and (disability) pension bene-

fits. This form of equivalence principle especially in terms of social insurances enhances

income inequalities and the in particular gender specific economic and social inequality

(Tálos 2002, 16 f.).

The (financial) structure and organization of the Austrian welfare state has got heavily un-

der critics within the previous past. The welfare state in Austria is financed mainly by so-

cial security contributions of employees and their employers based on the economic value

added in forms of income rates. Other financial opportunities include contributions of pub-

lic funds, cost sharing of the insured (e.g. prescription charge) and the rest is financed by

means of taxation. The main challenges of the financial situation of the Austrian welfare

state are the rising expenses versus stagnating incomes (Tálos 2002, 17 f.). The national

rate of the welfare spending measured on the GDP in Austria increased from 25.9 percent

in 1980, over 28.4 percent in 2000 to 30.4 percent in 2013 (Statistik Austria 2014f). The

reasons for the growing welfare expenses rate and the reducing social incomes within the

previous years refer to complex economic, societal and political realignments and devel-

opments including demographic changes and the societal aging processes, increasing un-

employment figures, the erosions of full-time employments, lower economic growth rates

as well as the impacts of internationalization and EU-membership to the scope of actions

of national politics. The Austrian participation in the European Union causes in terms of

welfare state politics to higher supranational pressures through the allegation of suprana-


tional policies such as zero deficit policies for instance. In addition, demographic devel-

opments in Austria are shaped by the societal aging process, which is enhanced by declin-

ing birth rates, increasing life expectancies and the shift of the active full-time labor force

to the atypical labor force with significantly lower social contributions and to unemployed

labor force which instead of paying social contributions obtains social benefits (Chapter 4).

Meanwhile, the demographic change is characterized by an increase of divorce rates,

which increased from 26.5 percent in 1981 to 49.47 percent in 2007 (Statistik Austria

2014g), and single parents. These developments imply the erosion of the second important

channel of access to social security benefits in the Austrian welfare state structure – mar-

riage, which is more and more fragile for women (Tálos 2002, 20 f.).

The importance of the welfare state in Austria is only partly tangible by reference to a pov-

erty, which is calculated at the current societal structures without welfare structures –

mainly through the lack of social and pension benefits, the current poverty would be at 44

percent instead of the current actual rate of 14.4 percent (Fabris 2014). Even though the

obvious importance of the Austrian welfare state, economists demand the realignment to a

more performance oriented welfare state, which pursuits instead of the goals of welfare

state principles of decreasing social gaps, social-political activation strategies in terms of

self-responsibility and self-discipline according to the neoliberal dictate (e.g. Michalitsch

2006; Castel 2011; Wichterich 2011; Butterwegge 2009; Dahme 2006). The reconstruction

of the “Keynesian welfare state” is justified, that the welfare state impairs in times of glob-

alization the competition factors of welfare states and its economies with other internation-

al business locations. The welfare state is still seen as responsible to secure the societal

solidarity. The aims of social transfers in the future are not primarily to strengthen the pur-

chase power of poor individuals or to enable their societal participation, more likely they

should invest into the employability of the citizens by enhancing self-discipline and self-

responsibility. The critics of neoliberal and conservative parties against the welfare state

have meanwhile established themselves in the global context – generous welfare states

distribute monetary benefits without requiring performances in return, which consequently

undermines the individual willingness to work and more importantly the fundament of the

civil society – self-responsibility and civil engagement. According to welfare state critics,

the lack of employability of individuals and social classes are caused by welfare state


structures and its institutions instead of the consequences of economic structural changes

within the previous decades. According to the neoliberal ideology, reasons for poverty and

unemployment are less likely in structural, economic and societal relations but more likely

as a resulting behavior – the poor endeavor or laziness – or as a consequence of individual

misbehavior and individual lacking life decisions (Dahme 2006). According to Dahme

(2006) the former German Federal Chancellor Schröder emphasized in an interview in

2001, that any individuals who are capable to work but lack the willingness to work,

should not expect any form of solidarity with the results of cutbacks of social benefits.

Furthermore, proponents of welfare state realignments share the point of view that the lack

of jobs will be solved by the extension of low-wage labor sectors. These new jobs will

support the recipients of modernized welfare states, which are based on the re-preparation

of the individual’s competitiveness. Social politics obtain constantly more the status to be a

part of the economy, because it is meanwhile assumed that the economy itself may be able

to solve the self-induced problems. The spread of social security benefits moves constantly

towards more selective natures and in this context socio-politic parties decide in which

societal groups to invest resources or not. The definition of the citizens in their market par-

ticipation leads to the spread of society in those who are worth to be promoted – for in-

stance productive societal groups such as families or women – or not worthy of promotion

social groups by the welfare politics. The losers of this new form of welfare politics would

be any who are not willing to perform or are not anymore capable to perform due to health

issues for example. New welfare politics imply the switch back of parts of the risk alloca-

tion to society itself and thus enhances an even more unequal social supply. The traditional

welfare state fundamental consensus of the reduction of poverty and inequality is replaced

by regulatory, politico-economic and technocratic targets (Dahme 2006).

Conclusion and looking up into the Future Seite 118

6. Conclusion and looking up into the Future

When considering the perceptions and recommendations of main stream or neoliberal-

minded economists in terms of the major alignment of a deregulated market and modern-

ized state with performance-oriented individuals taking responsibility for them, it seems as

if our collective is on the right way to solve contemporary societal or economic challenges

and crises. It is interesting to observe that according to neoliberal proponents the funda-

mental politic-economic realignment is still too slow, as welfare structures interfere with

the doctrine of salvation – the self-regulating market, which apparently follows only one

target –profit-maximization of the super-rich by widening the gap between rich and poor

(Stiglitz 2013). In this context, liquid assets move from entire societies, economies and

nation states into the hands of few individuals and thus are removed from the economy and

society. Consequently, the collective lacks continuously more assets, for instance, for wel-

fare distributions. In this respect, the question arises why political and economic decisions

are made without the input from reputable experts on society, although recently more and

more empirical data has proven the validity of their perceptions and opinions. In general,

national and supranational institutions such as the EU heavily promote to solve contempo-

rary labor market and poverty issues since decades. However, tax politics such as the de-

crease the remove of stock and capital taxes and the heavy labor taxation aggravate the

solution in this respect.

This paper refers to societal issues such as unemployment, risk of increased poverty or

similar economic key figures. Some powerful groups use these data for their interests and

thus distort the results according to their needs, as the subsequent adjustment of the pov-

erty figure in Austria proves (Chapter 5.6). At first glance none of these well-known eco-

nomic and societal challenges are indeed new phenomenon. However, the tangibility of the

new atypical labor-market developments is relatively low, because of the lack of long-term

data on the consequences in combination with the difficult measurability of its magnitude.

An accumulation of these new societal and economic challenges of atypical labor markets,

the de-collectivization of society and recent poverty and deprivation development in terms

of more detailed analyzes of these developments in western societies due to the economic

and societal situation leads to a totally new situation whose tangibility is once again even

less comprehensible. Reputable experts such as Robert Castel (2011), Wichterich (2011) or


Löwy (2005) have published completely new data about the current scope of societal is-

sues, whose magnitude harms the entire capitalistic existence, even though they do not to

consider further societal issues such as the demographic developments, the exorbitant lev-

els of national debts, the scope of previous economic crises, ecological excesses and those

of the financial markets as well as the accumulation of these multiple crises both for indi-

viduals and entire continents. Even though they only deal with parts of capitalistic and

modern excesses but they already refer to fundamental societal threats.

The consensus of the contemporary global public debate about the economic situation is a

high priority for creating economic growth and stability as a result of the previous initially

financial crises and further economic crises, whose magnitude was already heading to-

wards a total financial crash. In this context, the debts of nation states, poverty and the in-

cessantly growing gap between rich and poor are important aspects in terms of economic

stability, for instance. Nonetheless, tendencies seem to develop even faster in the opposite

direction, as this paper postulates, achieved magnitudes of poverty, unemployment and the

gap between rich and poor record levels in addition to newly arising collective challenges

of privatization and precarious labor markets. The impacts of these arising challenges are

only partly tangible and detailed scopes are only in the long terms measureable (Tálos

2002). This leads to a collective underestimation of these factors, as privatization prettifies

national balances or mitigates annual national debts and atypical employment or early re-

tirements reduce unemployment figures and thus prettifies the labor market situation in

western societies.

These arising problems which enhance the already difficult situation for modern econom-

ics, enhance the accumulation of multiple crises which hardly enjoy any attention, because

experts are specialized in their particular fields such as poverty or labor markets, for in-

stance, and thus the real threat of the entire impacts of the upcoming crises is totally under-

estimated whose scope is only partly analyzed in this paper due to their complexity. The

situation of the over-aging western societies, the extension of the national debts, ecological

pressures to the economy or global financial markets which operate beyond societal as-

sumptions influence modern economics. In this context, it should be emphasized that none

of these issues have so far only been partially solved; in contrast their development is pro-


ceeding with continuously higher speed. Despite the threatening scope of the accumulation

of contemporary societal and economic crises, mainstream economists still incessantly

promote strategies which have established to achieve opposite results in the previous past.

Josef Stiglitz (2004; 2013) emphasizes how current global policies effect national econo-

mies worldwide in unpleasant ways which leads to the question of the targets of the global

alignment? Stiglitz (2004, 136 f.) refers to several critics of the IMF whose economic

measures for economic growths lead towards economic crises and that were based on hard-

ly any evidence on the real promotion of economic growth.

It must be emphasized that the current accumulating of crises are not separately or even

accumulated tangible and partly not even visible. The high youth unemployment of over 60

percent in the European south is currently compensated by their parents or other relatives.

The crisis appear in its entirety if these relatives retire, get sick or die – who will compen-

sate the income lack of the affected youth and how will the economy stabilize the missing

consumptive power of these currently over 60 percent? However, companies understand to

invest into the youth as they will be the consumers of tomorrow. In the societal point of

view the youth is even more important, because they represent society of tomorrow in cou-

ple of years. What will be the perspectives and attitude of such a society of which 60 per-

cent cannot participate independent of their willingness to participate?

According to Albritton et al. (2010), exploitative and predatory characteristics of neoliberal

business conduct trigger international criticism. The authors refer to studies which empha-

size a world characterized by nonviable national economies in combination with ungov-

ernable entities characterized by chaos causing a rising stream of “stateless” refugees. The

scenario of former economic theories – the realization of wealth in the middle-class was

replaced by pointing to a future scenario in which half of the world’s urban society will be

living in slums. The future of today’s youth aged between 15 and 24 is especially bleak

character, not only because around 50 percent of the one billion young people worldwide

are currently living in poor conditions (Albritton et al. 2010).

Data on the increasing inequality prove how the richest one percent of the western popula-

tions increases their wealth at the cost of the other 99 percent of their own societies which


in contrast had to accept mostly significant cutbacks in their salary, the fate of unemploy-

ment or even poverty (Stieglitz 2013). One-Euro jobs represent one extreme side of the

significant income gap, which faces the opposite income pole with wages of several mil-

lions such as the bank manager Josef Ackermann with an income of 14 million Euro in

2010. Experts emphasize a never before existing income inequality in human history, be-

cause the American hedge-fund manager John Paulson, for instance, earns Ackermann’s

annual income in each workday and achieves annual wages of around four billion Euro.

Occasionally due to this reason, contemporary economic structures or deformation such as

the erosion of the nation states and the correlating hegemonic shift towards global players

or flexible and cheap labor in western societies have converted from economic excesses to

the precondition of the existence of the contemporary form of capitalism and global econ-

omy (Michalitsch 2006, 52-54; Brinkmann et al. 2006). Consequently, these developments

cannot be stopped but rather only limited or slowed down.

In order to solve the fundamental excess of our civilized global society, key leaders

worldwide need to take responsibility for all their decisions including the consequences

instead of creating an artificially complex politic-economic construct functioning as a

maze of confusion. Moreover, the transparency on individuals and interest groups making

the important societal decisions needs to be more obvious, in order to hold those responsi-

ble for popular sovereignty to account. However, Löwy (2005) refers to the scope of the

contemporary excess of modern life and emphasizes that a radical change is required in

order to solve the situation of our multiple crises, which concern not only production but

consumption as well. In other words, the problem-solving approach is only possible if each

individual as well as the collective are willing to decide on the path of truly solving our

current challenges, no matter how fundamental these decisions might be and to take re-

sponsibility for oneself and collective actions in order to create general well-being, which

implies the question what is the good life and whether a system which is based on the ex-

ploitation of national and international minor groups is capable of satisfying us. In this

connection, the importance of each individual is totally underestimated not only because

we shape production and consumption alignments, but also the entire alignment of our life

as individuals and as the collective which modern democracy actually implicates.

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