Socialist Austria puts on conservative clothing to preserve economic success
One of the oddities of Europe today is that socialist governments are being forced by the laws of economics to behave conservatively. That has been the case in France, Italy, and Greece. International payments problems or burgeoning government deficits have required their left-of-center regimes to restrain spending, including that for social welfare programs. The same is happening in Austria.
The Austrian government, says Prof. Stephan Koren, president of the Austrian National Bank, has the same difficulty as French President Francois Mitterrand.
Austria's Socialist-Freedom Party ''has no room for maneuver,'' said Dr. Koren. ''It is not possible to expand budget deficits.''
Austria has made remarkable economic progress in the last 20 years or so. ''We moved from a semi-industrial country between the two world wars to an industrial nation,'' Dr. Koren noted.
Some signs of Austria's economic progress:
* It had a per capita income of $8,900 in 1982, just behind Japan at $9,000, France at $9,900, and West Germany at $10,700. It was ahead of the United Kingdom at $8,500.
* Between 1973 and 1980, Austria's gross domestic product grew at an average rate of 3.9 percent, second only to Norway among the industrial nations and considerably faster than Japan.
* Between 1973 and 1983, Austria's average annual inflation rate was 6 percent, somewhat above the 4.8 percent rate of West Germany but well below the average of 7.7 percent for Japan or 8.4 percent for the United States.
* Productivity growth averaged 4.3 percent a year between 1977 and 1981, somewhat under Japan's 5.2 percent but well above most other industrial nations. That, together with close cooperation between labor and management in setting wage increases, kept the rise in labor costs per unit produced to 2.6 percent a year, compared to 7.2 percent a year in the US or 17 percent in the United Kingdom in the same years.
* Austria's exports grew at an average 11 percent per year between 1972 and 1982, fractionally above even the growth of Japan's exports.
Austria is one of the outstanding economic success stories of Western Europe. Years ago there was a joke about a West German and a leisure-loving Viennese heatedly talking about their postwar industrial progress. The German spoke about the ''miracle'' of his nation's rapid reconstruction from rubble to affluence.
''That,'' said the Austrian, ''was no miracle. You worked.''
Austrians, of course, have also worked hard to get where they are, although not always with the intensity of their German cousins.
Today Austria is still doing relatively well economically. But this nation of 7.5 million did not entirely stave off the effects of the international recession. National output stagnated in 1981 and grew only modestly in 1982 and 1983. This year real growth should run about 2.5 percent, Dr. Koren figured.
Unemployment, which ran around 2 percent in the 1970s, is now about 5 percent. That remains well below the average in Western Europe.
Finance Minister Herbert Salcher, in an interview, maintained that extra government spending had helped keep the number of jobless at the relatively low level. Further, he said, the government had taken tax measures to encourage business.
In any case, the result was a rising deficit that now amounts to about 6.5 percent of gross domestic product, a slightly higher proportion even than in the US.
''That is a lot,'' said Dr. Koren, who is a member of the conservative opposition, the People's Party. He says he is telling the government ''every day'' that it must reduce the deficit.
His American counterpart, Federal Reserve Board chairman Paul Volcker, frequently urges the Reagan administration and Congress to slash the deficit. But he doesn't offer suggestions as to how to do so.
Dr. Koren freely offers advice. The government, he says, should make cuts in areas where spending has been automatically increasing year by year, recession or not. These include government employment, the nation's pension system, and the state-owned railway system.
He describes the deficit as ''not serious now'' but warns that it will become so unless restrained.
Finance Minister Salcher says the difference between his government and the opposition is that the Socialist-dominated coalition wants to trim the rate of growth in spending while the People's Party wants to actually cut spending. For instance, without any change in the budget, pension costs would rise 4 to 5 percent a year. Under the budget announced last fall, they will rise only 3 to 4 percent. Besides showing some spending restraint, the government raised taxes substantially this year.
Dr. Salcher admits he must make more cuts in the forthcoming budget. ''It is not an easy task for a Social Democrat.''