VIENNA — Austria’s coalition government of the People’s Party (ÖVP), Social Democrats (SPÖ), and NEOS has launched sweeping pension and labor reforms aimed at keeping people in the workforce longer while slowing the growth of public spending on pensions and wages, according to ORF News.
At the center of the changes, in effect since the start of the year, is the introduction of a new “partial pension” model. Under the scheme, workers who meet the requirements for retirement can reduce their working hours by 25 to 75 percent while already drawing a portion of their accrued pension. The remainder of the pension continues to grow until full retirement, with payouts adjusted according to the degree of reduced employment.
The reform significantly scales back Austria’s long-standing early-retirement “phased retirement” program. Going forward, phased retirement will be available only to workers who do not qualify for partial pensions. Its maximum duration will be gradually shortened from five years to three, and new restrictions will prohibit secondary jobs with other employers, except for work already regularly performed in the year before entering the program.
The government is also continuing its gradual increase in the retirement age for women. Women born in the first half of 1965 will now be eligible to retire at 61 and a half, reflecting a further step toward parity with men. In addition, the eligibility age for the so-called “corridor pension,” an early retirement option for those with long insurance histories, will rise incrementally from 62 to 63. At the same time, the required number of contribution months will increase from 480 to 504.
One notable exception benefits workers in the care sector. As of this year, all professional caregiving qualifies as “heavy labor,” provided it accounts for at least half of working hours or four hours per day. This designation eases access to earlier retirement.
Pensions will rise by 2.7 percent for monthly payments of up to €2,500, in line with inflation. Higher pensions will receive a flat increase of €67.50. The average increase amounts to 2.25 percent, though newly granted pensions will receive only half that adjustment in their first year.
Wage growth, meanwhile, will lag behind pensions in most sectors. Public-sector pay raises have been delayed until midyear, effectively halving their annual impact, while negotiated increases in industry and retail largely reflect recent inflation trends. The reforms also extend collective bargaining rights and new dismissal protections to freelance workers, tightening loopholes that previously allowed employers to sidestep labor law.
Together, the measures mark a decisive shift in Austria’s social policy, one designed to balance fiscal restraint with an aging workforce.
