Who will really benefit from the reduction of “extra wage costs”?

Not a day goes by without business representatives repeatedly calling for “reducing non-wage labor costs” – but that doesn't make the arguments any more valid. The ÖGB's analysis based on AK calculations now clearly shows: almost only adults will benefit from further reductions in non-wage labor costs – which, due to their special importance, should really be called fringe benefits or welfare state contributions: “almost half, i.e. 47.6 “of non-wage labor costs The required reduction percentage will only go to one percent of companies,” analyzes Mattias Muckenhuber, economist at the ÖGB's Department of Economics.

Very few will get paid much

ÖGB economist Matthias Muckenhuber

So companies benefit very differently. “Very few people get a lot of money,” Muckenhuber explains. More than a quarter make it to the top 500, and a third make it to the top 1000. “These are only minimum values; some companies enroll their employees in multiple employer accounts, which themselves may be small,” says Muckenhuber. That is, if all of these are combined, the proportion of the top one percent will be even higher.

These are the big beneficiaries

It is also clear to whom most of the money will flow: banks and insurance companies, for example, will be among the biggest beneficiaries of the inflationary crisis and make the profits of their lives. And you can avoid the argument that reducing non-wage labor costs leads to higher returns. As Muckenhuber explains, research clearly shows that companies are unlikely to pass on any cuts in the form of wage increases.

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Small businesses will not benefit

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At the other end of the spectrum, reduction contributes almost nothing. “A small business with five employees earning a total of 3,500 euros a month would save just 2,450 euros a year if non-wage labor costs were reduced by one percent,” says the ÖGB economist. Thus additional staff cannot be hired even for a month.

Even an average industrial company, as is often said, has no surplus in the end. “There are companies paying triple-digit millions in dividends, while the proposed reduction in non-wage labor costs would net them less than two million a year,” Muckenhuber calculates. “Considering these figures, one should not talk about a lack of competitiveness. Anyone who can distribute such an amount should have no problem finding money when needed,” says the economist, and he clarifies: “Large, often already very profitable companies benefit greatly by reducing non-wage labor costs. Small ones are rare.”

The cuts have already cost three billion

The costs to the welfare state and thus to society are huge even without further cuts, ÖGB economist Miriam Fuhrmann says: “Overall, the welfare state is already losing billions every year. Cuts from 2015 – for example contributions to accident insurance or family burden equalization funds – in the previous year alone. It costs about 2.3 billion euros, and this value will increase to three billion annually by 2025,” Fuhrmann calculates. The bill is paid by the employees who are responsible for the company's success and who generate these taxes in the first place. “It's never the bosses' money — they're just changing it,” says Furman.

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