How Austria steers around severe economic storms

Austria is famous for opera and pastry. But since World War II the charming country has produced much more than sopranos and tortes. Its economy has consistently been one of the most robust in Europe, strenthened by government-business-labor cooperation that may hold lessons for the United States.

During the 1970s, Austria managed to avoid many of the teeth-rattling economic fluctuations that hit the rest of the world. For the decade, its growth rate averaged 1 percent higher than that of its partners in the Organization for Economic Cooperation and Development (most of the industrialized West). The unemployment rate anchored down around 2 percent. As the Organization of Petroleum Exporting Countries flexed its marketing muscle and oil prices went up, Austria's inflation rate went down,m from 10 percent in 1975 to 3.5 percent in 1979.

"I think one can safely say that Austrian economic policy weathered the problems of the '70s very well," testified Hans Seidel, state secretary in Austria's Federal Ministry for Finance, before the Joint Economic Committee.

Mr. Seidel's testimony was somewhat unusual, as congressional hearings generally star, at best, a US Cabinet member, followed by an undersecretary or two and platoons of lobbyists. The Austrian's appearance before the JEC was the first ever by a foreign official.

Part of Austria's economic strength can be attributed to its Joint Price and Wage Commission, an organization charged with stabilizing key prices and keeping wage hikes from becoming inflationary.

The commission's methods are less stringent than across-the-board controls and more effective than "jawboning." For social and political reasons, it couldn't be directly emulated here in the US. But the idea at the commission's core -- a kernal Seidel describes as "institutionalized dialogue" -- might be effectively transplanted to America as a way of improving the working relationship between government, business, and labor.

Basically, the commission forces people to talk. It is composed of four government representatives, joined by eight members recruited from Austria's Trade Union Federation and its "chambers" for commerce, labor, and agriculture.

The "chambers" are legally mandated interest groups, financed by taxes. Membership is compulsory.

Meeting once a month, the commission handles problems in three areas:

* Prices. It reviews the costs of about 200 key items, raising them upon demonstration of increased production prices. Though endowed with some enforcement authority, Seidel says that in practice no one's hand gets legally slapped. Arm-twisting through the chambers generally brings a renegade pricer into line.

* Wages. The commission can authorize individual trade unions to begin wage negotiations, but it can't rule on the outcome.

* Long-term economic changes. Experts employed by the commission make recommendations on such issues as the recent move to a 40-hour work week.

In practice, says Seidel, the commission has worked not because of legal niceties but because everyone is stuck together in the same room, talking, with a vested interest in the outcome.

"If labor is going to stay in line, the Chamber of Commerce has to make sure its side stays in line," says Seidel. If wage increases are to be moderate, in other words, then price hikes had better not be very high, either.

"Social partnership does not just mean that we all sit in the same boat," says Seidel. "It also means that we are willing to steer the boat in a direction upon which most of us agree."

In Austria, economic interest groups have developed strong centralized organizations -- the "chambers." In America there is no such unity. A much more diverse, patchwork quilt of an industrial base, for instance, would make it hard to find one voice to speak for industry.

"America is much bigger," says the JEC chairman, Rep. Henry S. Reuss (D) of Wisconsin. "We don't have such cohesive groups. But the spirit of labor-government-business cooperation is something else."