Introduced in the framework of a preventive pro-active employment policy, this is an early warning system (Frühwarnsystem) to be activated in case of staff reductions. The regulations, administered by the Federal Ministry of Labour, Health and Social Affairs (FMLHSA), stipulate compulsory notification of all staff reductions only when they exceed a certain proportion of total numbers employed in firms of a certain size. The aim is twofold: to improve coordination of personnel management within enterprises with the opportunities provided by employment promotion policies to enable them to maintain the highest possible level of employment, and to inform workers threatened by dismissals and to help them find new jobs (using unemployment benefit, placement assistance, guidance, counselling, the creation of training jobs, financial support).

The early warning system grew out of a sense shared by all actors involved in the labour market that the shake-up of economic structures rendered inevitable job or occupation changes by individuals as the economy adapted to new productive conditions and a new market environment, but that at the same time it was necessary to provide the workers affected with longer term employment perspectives.

The system was introduced in Austria following negotiations among the social partners and then between the social partners and the government in 1976, with Article 45a of the Employment Promotion Law (AMFG). The new regulatory system, which aimed to set up preventive measures to avoid long periods of unemployment or to provide support for rapid and sensitive retraining for the unemployed, arose from the effects of the first 'oil shock' which, in Austria as elsewhere, imposed long-term adaptation to new demand conditions and led to the restructuring of industrial locations, production and so on.

This preventive policy entered a new phase in 1993 with the implementation of the European Economic Area Agreement (EEA), whereby Austria agreed to apply the Council of Ministers' 17 February 1975 Directive on the harmonization of legislation among member states in relation to collective redundancies (75/129/EEC, as amended by Directive 92/56/EEC). The Austrian National Council adopted this initiative on 9 July 1993 in the framework of the Employment Security Law, setting 1 August 1993 as the date from which the early warning system would be established in accordance the EEA Agreement so as to take into account in addition the particular situation of older workers. The early warning system remains in force as set out in that version.

The aim of this regulation is to provide the Employment Office with time to examine possible solutions and to look for the best way to respond to the needs both of the wage-earners affected and of the economy as a whole.

The role of the leading actors

Despite initial reluctance among employers, this regulation eventually was the subject of an agreement between the social partners and the government based on the AMFG Law, thus bringing together a norm derived form employment management with the labour legislation. In 1976, together with the introduction of the early warning system, the social partners and the Employment Office of the time - in its role as the Ministry's main intervention agent in the labour market - agreed that this mechanism paved the way for the establishment of various advance measures when redundancies and the resulting unemployment were threatened:

consultations with management, the factory committee and the workers affected concerning the threatened redundancies;
'concertation' with the management and the factory committee on measures to be taken to avoid redundancies, including in the social programmes pre-insertion training and measures facilitating labour market insertion;
the provision of information to the workers concerning their entitlements to unemployment insurance and to support in starting a new job;
drawing up personal occupational reinsertion plans for the workers affected (pro-active placement, skills training, etc.).

The location of the system in the old structures of the Employment Office was based on the following reasons:

the dense network of employment agencies and offices allowed contacts, consultations, negotiations and information meetings to take place on the spot and without delay (one agency for each State - Land - overseeing a varying number of local offices).
the close association of the social partners in consultations and key decision-making concerning employment promotion measures. Labour market policy in Austria, like social policy in general as well as labour relations and income distribution issues are all dealt with via close cooperation between the social partners and the government. In employment, this cooperation has a long history: employment promotion policies comprise unemployment insurance, as well as all pro-active measures such as counselling, placement, labour market reinsertion assistance etc.

Before 1994, this association among the partners took the form of consultation, with the partners being represented at all levels of the Ministry. The 1994 Law, by transforming the Employment Office into an Employment Service (a statutory body), preserved and even increased the participation of the social partners, turning it into a full joint decision-making process. In virtue of this Law, the Employment Office ceased to be a service provided by the federal government, becoming instead a statutory service-providing body.

The current organisation of the Service is as follows:

the Ministry:

established the Employment Service's objectives in the labour market sphere;
oversees and monitors the Service's work;
has overall responsibility for the Service's Budget;

the Employment Service, at Federal level, is managed by:

a Board of Directors (which oversees the work of the Employment Service, formulates general federal directives on the implementation of labour market policy). This is a tripartite body with three representatives each from the government, the workers and the employers. The Board has several committees, including a management committee made up of two people;

the Employment Service at Land level is managed by:

a Directorate in each Land (responsible for general oversight of the Employment Service at the Land level, and for the formulation of directives specific to each Land for the implementation of labour market policy within the framework laid down at federal level). The Directorate is composed of a staff, and two representatives each of workers, employers and government. It has committees dealing with the provision of subsidies, unemployment insurance and policy on the employment of immigrants. The staff consists of two people who undertake tasks at the Land level and oversee the Employment Service's regional offices;

the Employment Service at Regional level is managed by:

the regional Consultative Committee (which implements employment promotion policy at the district level). It is composed of a regional administrative director, and two representatives each of workers and employers. It also has committees as at the Land level.

The information, counselling and conciliation tasks involved in the early warning system have been transferred from the old Employment Office and integrated into the Employment Service. The first responsible body to be consulted, and therefore the decisive instance for authorising collective redundancies (as prescribed by the Law) is the Regional Agency of the Employment Service, with the support of the Land Agency in cases where the redundancy affects a strategic location.

The Regional Agencies, with the support of the Land Agencies, advise and inform both management and the workers affected. When a large scale intervention is required for a location to be preserved, coordination is undertaken at federal level under the aegis of the Ministry of Labour, Health and Social Affairs, which has the relevant employment promotion powers, together with the Ministries of Finance and Economic Affairs so as to ensure a consistent and coordinated approach on the part of all the institutions concerned as well as those at Land level.

Implementation

The detailed implementation of the mechanism are governed by an Employment Service Directive which spells out all the aims and procedures to be applied.

Official notification of impending job losses is compulsory only where they surpass a certain threshold, and are required from employers only for employment policy-related job losses (thus excluding retirement, resignations and the like). Failure to comply with the early warning mechanism entails the annulment of redundancies as laid down in the labour legislation.

These notifications, by the employer or the employer's representative, are addressed in the first instance to the managers of regional employment service offices, or to be precise to their staff in charge of early warnings of redundancies. The institutional framework guarantees for all parties to collective agreements the right to take part in consultations between employers, the factory committee and the Employment Service. The legislation requires immediate consultations between employers' representatives and workers party to collective agreements, as well as the immediate intervention of the factory committee which, according to Austrian tradition, has close links with the union.

This compulsory participation of employers and workers is intended to ensure that redundancies will be kept to a minimum as a result of an analysis of their social consequences, and that all possible and imaginable measures will be taken to protect jobs, in partnership and in agreement with the Employment Service and the relevant political decision-makers.

The early warning system at regional office level (the Employment Service is comprised of one authority at federal level, nine at provincial level, 96 at regional level and 14 branch offices) simplifies administrative and technical procedures with regard to seasonal enterprises.

The early warning system is usually brought into action in the following sequence:

the firm contacts the regional office by telephone or in writing prior to issuing the formal notification. The office then provides information and advice on the notification and proposes alternative ways forward;
the firm submits the formal written notification;
the office proceeds to formal examination of the notification to ensure that all the information required by law has been provided;
having received the notification, the regional office chief must decide on the basis of employment promotion policy on the advisability of talks to avoid redundancies or on limiting their number. If the result of this decision is positive, the office then contacts the interested parties;
special examination is undertaken in cases where an employment contract is terminated prematurely without the thirty day legal warning period;
the procedure initiated by the Employment Service is designed to protect the continuity of employment, and it therefore proposes appropriate measures in each case (training, partial layoffs, time-sharing);

If no way is found of protecting the jobs threatened, services must be recommended to enable the redundant workers to return immediately to the labour market. The Agency then offers:

the usual Employment Service services;
a set of insertion measures;
information provided to groups of workers;
guidance provided to groups of workers;
group activities - outplacements - with financial support from the employers;
business start-up guidance.

The Service also arranges the involvement of 'insertion foundations'. This term is used to refer to an employment promotion vehicle, and has little to do with the usual meaning of the word 'foundation'. It refers to anybody with a juridical personality of its own (such as an association) or indeed without such status (where insertion measures are contracted to occupational training concerns, or agencies involved in economic and employment promotion). Such foundations, envisaged in the Unemployment Insurance Law, are recognized by the Employment Service when the firm concerned makes available to its redundant employees the services of an institution possessing certain objective and personal financial, and organizational conditions, and which takes on responsibility for the planning and implementation of job-creation measures.

The implementation of this mechanism is a clear commitment for the Employment Service's agencies. Their internal norms at both Land level and regional level make quite clear the responsibilities of all departments and employees charged with the implementation of the mechanism, and these receive continuous training devoted especially to the relevant provisions of labour law and to amendments of the law concerning the early warning system.

The number of staff devoted to the early warning system is small, reflecting its secondary role in the battery of instruments at the disposal of the Employment Service. They number fewer than 25 staff in the entire country - without counting staff gathering redundancy notifications through electronic media. Once a notification has been received, the staff launch the necessary actions and coordinate them. The total staff of the Employment Service is some 4,200. Usually, people charged with implementing the mechanism also have other responsibilities, but the standard practice is for them to react immediately on receipt of a redundancy notification from an employer, so as to avoid delays which might undermine the effectiveness of remedial measures.

Selection and recruitment of staff is undertaken in accordance with the general recruitment procedures of the Employment Service when a post provided for in the budget becomes vacant. Once recruited, staff undergo a basic systematic training programme, followed by more specialized training related to the field to which they will be assigned - viz. unemployment insurance, counselling, placement, and the Employment Service's measures to ease reinsertion in the labour market. This training is provided within the framework of broader-based courses imparting the knowledge and skills indispensable for any Employment Service staff member: labour law, social law, techniques for counselling and for approaching clients, complemented by information on the relations between institutions operating in social affairs and their various tasks, with special emphasis on the interface between them and the Employment Service - such as medical insurance funds, pension funds, the federal Office for Social Affairs and the Disabled, social assistance offices and collective bodies. After this initial training programme staff are introduced to the early warning system.

A staff member assigned to the early warning system receives further training in the relevant computerized instruments.

The early warning system makes use of computerized aids. In a dedicated section within the Austrian information system - the application of databases to enterprises - certain fields have been defined by the legislation, and these must compulsorily be filled in. These fields are used to support the compilation of essential information for decision-making and planning and concern the individual enterprise: location, number of employees, type and method of production, number of jobs threatened, the knowledge and skills possessed by the employees, their occupational experience, their labour law and social law situation, as well as social and demographic information. Other parties to negotiations among social partners are similarly profiled. Every employee of the Service has the necessary computer equipment and the Employment Service's own internal network allows permanent real-time information exchange throughout the country.

The financial provision for employment promotion policy enables the Service to respond to needs as they arise, and, among other things, allows an extension of unemployment insurance payments beyond the standard period, as provided for in the Unemployment Insurance Law.

The budget, which is laid down as a special budget by the annual Federal Finance Law passed by Parliament, is funded mostly by employers and workers, on an equal basis, together with unemployment insurance contributions (currently 6 per cent). Furthermore, in accordance with the responsibilities of the Federal government in the employment field, there is a further federal subsidy, though it represents only a tiny proportion of the total budget.

After its transformation into a statutory body, the Employment Service also received a special budget for staff and equipment expenses, in the framework of employment policy. This framework also covers expenditure commitments made by staff assigned to the implementation of the early warning mechanism as well as current expenditure for example on computer equipment.

Like all other expenditure on employment policy, expenditure for the mechanism are budgeted annually and are permanently monitored. A complex audit system has been set up by the Employment Service and the federal Ministry of Labour, Heath and Social Affairs for this purpose. Finally the Public Accounts Court audits accounts after the end of each financial year.

Impact of the measures

The value of this mechanism has been proven particularly in the context of numerous structural adaptations and of the creation of the insertion funds.

A series of statistics covering the last three years showing the frequency of use of the mechanism show that redundancy notifications cover all sectors of the economy, even if special circumstances have meant that some sectors sent in more notifications than others, often in the context of long term restructuring - such as public and private infrastructure works, construction and related activities, and wholesale and retail trade.

As yet no scientific evaluation has been undertaken of the effect of the early warning system. Evaluation does not seem to have a high priority. The evaluation of effects in terms of success or failure of the mechanism seems to occur at the implementation level where the associated social partners in charge play a central role. The effectiveness of the mechanism is evaluated in the light of feedback from the Länder concerning the applicability and adequacy of federal directives, accompanied by recommendations for more suitable legislation.

The coordination among social partners and the Employment Service have led those involved to the conclusion that the mechanism provides several opportunities:

timely collection of information on the enterprises concerned;
the assembly, on the basis of that information, of a basis on which all those involved, including local communities and other bodies, can develop concrete measures to overcome the problems presented;
the timely introduction of preventive measures for the benefit of employees affected so as to avoid redundancy (viz. short-time work, reorganization of working time);
to envisage measures which will ease the workers affected into new jobs or training (insertion foundations, regional integration measures or a concerted job placement effort). The Unemployment Insurance Fund has also been able to save money thanks to the speed with which redundant workers find a new job. Evaluation expenses are covered by the general operating budget.