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Meetings Calendar 2006
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Sectors of the Austrian economy

 

 

Chart and Table

 

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Industry

Although the service sector contributes most to Austria’s overall economic performance, Austria is still considered to be an industrial country, the reason being that it is difficult to make a clear distinction between production and services. Manufacturing is the precondition for business-related services such as software development, data processing, consultancy services or personnel leasing. In addition, services which industrial firms used to provide in-house, e.g. electronic data processing, book-keeping or cleaning, are increasingly being outsourced to external suppliers. Industry therefore remains the principal driver of economic activities and development within Austria.

A distinction is made in Austria between industry (Industrie) and commerce (Gewerbe).

  • Industry comprises enterprises which process and work raw materials and semi-finished products in large, mechanised production sites, including mining undertakings.
  • Commerce tends to emcompass small-scale, craft enterprises which work and process certain raw materials (wood, iron, etc).

The two segments are considered together in the category “Production of goods” to permit an international comparison.

Most of Austrian industry comprises small- and medium-sized enterprises. Approximately 40% of enterprises have fewer than 10 employees; almost 80% of all Austrian industrial enterprises employ fewer than 100 workers and only 1.4% of domestic industrial firms have more than 1 000 employees.

Austria has one of the world's largest industrial sectors. Only in Ireland, Finland, Norway and Germany, and some countries in Central and Eastern Europe, is the share of industry in gross value added higher.

 

Chart and Table

 

The significance of the industrial sector is also clear from the dynamics of industrial production and from productivity.

Thanks to brisk international demand (exports), goods production (industry and commerce) in Austria increased by 4.6% in real terms (net production value), with sales up by 11.1%. The driver for domestic industrial activity is still exports, which increased by 12.5% in 2004.

Traditionally, mechanical engineering and structural steel work, the motor vehicle trade (primarily engine and gearbox production), and the chemical, electrical and electronics industries have accounted for the largest share of production overall. In recent years, Austrian firms have also performed well in the fields of material engineering and surface coatings, IT, biotechnology and medical technology, as well as hydraulic engineering and environmental technology.

The share of domestic goods production in the creation of real GDP (at 2000 prices) amounted to 18.7% in 2004, while accounting for 16.5% of the total workforce.

With regard to labour productivity (productivity per hour worked), Austrian industry is among the best in Europe. Labour productivity in industry increased by an above-average rate of 5.2% during the period 1990-2000. The EU average for the same period was +3.6%, that of the USA +3.5%, and Japan +2.8%.

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Services

It is essential to complete the EU internal market for services if the Lisbon objectives are to be achieved. Services in the EU are key to economic growth (approximately 70% of Member States’ GDP is generated in the service sector, and around 70% of jobs are in this sector).

In Austria, too, services are the most rapidly expanding sector. Services in Austria already generate two thirds of GDP, which is in line with the EU average. New jobs created in Austria are springing up almost exclusively in this area. The number of persons gainfully employed (excluding "mini-jobs") in the service sector increased by 187 726 over the period 1995 to 2004. Overall, 2 189 324 workers were employed in this sector in 2004.

The trade segment, which contributes around 12% to GDP, is an important part of the service sector in Austria. It is not only a major employer but, for some years now, has been the most dynamic sector in terms of new company set-ups. In 2004, for example, over 8 500 new businesses were recorded. This corresponds to approximately one third of the total number of new businesses set up in Austria.

In recent years, there has generally been a very positive trend in company set-ups. While 14 631 new businesses were set up in 1993, this figure had increased to 29 715 in 2004.

In 2004, 498 321 persons were employed in trade in Austria, around 234 000 of them in the retail trade. The retail trade, with more than 27 100 firms, is the largest employer in this segment.

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Tourism – Driver for jobs in Austria

Austria’s tourism and leisure industry can compete with the best in the world. The special combination of culture, history, nature, sport, events and catering/accommodation give tourism and the leisure industry a very important place in the Austrian economy.

The direct share of value-added in GDP contributed by tourism in Austria most recently amounted to 9.8%. This economic performance is furnished by around 40 000 firms (excluding the leisure industry) with approximately 220 000 employees. Around 90 000 businesses are considered to belong to the tourism and leisure sector as a whole. Approximately 500 000 people in Austria make their living directly or indirectly from tourism, at least in part. The catering trade and hotel business alone employs almost 160 000 people (annual average). Tourism is therefore an important generator of employment in the Austrian economy.

In 2004, revenue from foreign visitors amounted to approximately EUR 15 billion. Austria is thus in seventh place in the world league according to the World Tourism Organisation.

Austria remains one of the countries which attracts the greatest number of foreign tourists. With 28.5 million arrivals and 117.2 million bed nights in 2004, Austria again improved its position in the world’s top 10 of the most popular holiday destinations. It also ranks among the international leaders in terms of the number of visits per inhabitant. Austria is the EU leader with 11.5 tourist nights per inhabitant.

In the 2004 ranking of overnight stays by foreign visitors according to their countries of origin, visitors from Germany were still most numerous, with approximately 85.9 million overnight stays,

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Agriculture: Austria's delicatessen

Agriculture and forestry, which generate approximately 2% of GDP, are playing an increasingly important role in landscape conservation and environmental protection. The principle of sustainability is a key concern of agricultural policy. The emphasis is no longer on the quantitative production of agricultural goods, but on quality (organic products), care of the environment, conservation of agricultural land and its resources, and the production of renewable raw materials and energy sources.

Austria ranks first in the EU in organic farming and has positioned itself successfully as the “Delicatessen of Europe”. Around 18 700 farms refrain from using chemicals or genetic engineering. The area cultivated organically reached a new high in 2004 at 350 000 hectares.

The change in emphasis in agriculture has gone hand in hand with a far-reaching structural change in farming practices and farm management over the last few decades. Compared with the early 1950s, the number of workers has fallen to one quarter. In 2004, two thirds of the approximately 210 000 businesses were farmed part-time. Agriculture employed around 530 000 persons (including family members).

Compared with other EU countries, small and medium-sized farms predominate in Austria. The average farm size in 2004 was 16.4 hectares, the EU average being 18.4 hectares (Greece: 4.3 hectares, UK: 69.3 hectares).

Austria has approximately 7.5 million hectares of land used for agricultural purposes, corresponding to roughly 40% of the country’s total area. 69% of the land used for agricultural purposes is located in mountainous areas. Extreme locations on slopes, difficult climatic conditions and infertile soils make production more difficult in these regions. Similar conditions also apply in forest management, the central tasks of which are to safeguard forest resources and manage forests in a semi-natural manner.

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Forestry and water: renewable raw materials

Woodlands are Austria's green lung. Forests cover 47% (3.9 million hectares) of the surface area. Statistically, this represents 0.5 hectares of woodland for every inhabitant. Only 60% of timber stocks, which currently amount to more than one billion cubic meters of solid timber, are being actively used, so that there is a plentiful supply of timber for the paper and board industries and for energy usage. Wood is becoming an increasingly important renewable energy source (57.4%) alongside hydropower

An international comparison demonstrates the significance of renewable energy sources in Austria: the share of renewable energies in gross inland consumption in Austria was 21.39% in 2003, which is the fourth highest after Norway (49.6%), Sweden (32.9%) and Finland (24.9%).

Since the beginning of the 1970s, the amount of energy generated from hydropower has roughly doubled. With a share of 9.4% (2003), hydropower is one of the most important renewable energy sources in Austria. Its importance in electricity generation is even greater, with 60 219 GWh of electricity generated from hydropower in 2003.

Austria has excellent water resources. Annual precipitation is approximately 1 170 mm: that translates to approximately 98 billion cubic metres of water, of which 55 billion cubic metres drain into surface waters. Every year, 2.25 billion cubic metres of water from this cycle are used: 35% by the domestic sector, 60% by industry/commerce and 5% by agriculture. Only 3% of the available water supply is consumed. In normal years, there is almost six times as much water available as is needed to supply drinking water and for commercial use. Nevertheless, careful, sustainable use of this most elementary foodstuff is central to Austria’s environmental policy.

The quality of water in Austria is among the best in the world. The prestigious universities, Yale and Columbia, placed Austria fifth out of the 142 countries investigated (behind Finland, Canada, New Zealand and the United Kingdom) in the Environmental Sustainability Index for water quality. In Europe, Austria therefore occupies third place in this area. 99% of the Austrian population are supplied with spring water and ground water. 86% of the population are connected to public water purification plants while roughly 90% of the waste water produced in Austria is subject to extensive purification. All Austrian lakes meet the stringent quality requirements for bathing water laid down in EU directives, and many even meet the drinking water quality criteria. 87% of Austrian rivers (1998: 81%) are now virtually uncontaminated (at least quality class II). Even the quality of water in the Danube is in the top category, despite the fact that millions of people live in its immediate catchment area.

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Foreign trade

Exports are a key factor in Austria's economy. In 2004, exports of goods and services accounted for more than 50% of Austria's GDP, thereby making an important contribution to the national economy. An increase of 1% in the quantity of goods exported means up to 10 000 new jobs and an extra EUR 280 million in budget resources. Furthermore, half of all jobs depend, either directly or indirectly, on exports. Approximately 19 000 Austrian businesses are export companies. Service exports of EUR 1 000 trigger exports of goods to the value of around EUR 7 000. Direct investors, both outward and inward, create and safeguard jobs.

All in all, the export industry safeguards over one million jobs. The 13% growth in exports in 2004 alone created 85 000 jobs in Austria and generated approximately EUR 1 billion in tax revenue.

Austria’s export industry has increasingly prospered over the last few years, as the positive trade balances show. The turning point came in 2002 when, for the first time in the Second Republic, domestic exports exceeded imports. Austria’s export industry still has potential for further development in overseas markets, however, which hitherto account for only about 15% of total exports.

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Date: 11.01.2006