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Some context/perspective on the Austrian employment situation: * Salaries are typically quoted per month, but there is a bonus of 2 months's salary paid per ye

Some context/perspective on the Austrian employment situation: * Salaries are typically quoted per month, but there is a bonus of 2 months's salary paid per year, so yearly gross is 14 x monthly. The bonus is taxed at a lower marginal rate (6%, no social security contribution, IIRC, vs 37.5% lowest marginal rate). * There is no fixed minimum wage in Austria. Instead, there is a collective bargaining system, which sets minimum salaries for each industry. Within each industry there are defined categories of jobs, education and levels of experience, along with minimum employment contract conditions and payment for each. This has some bizarre consequences, such that equivalent jobs (e.g. secretary) have different minimum wages in different industries. * Employers are required to pay a lot of social security/tax on top of what the employees themselves pay. (just checked this: 21.83% social security, communal tax 3%, about 6% other "social" contributions according to http://www.gruendungswissen.at/gruendungswissen/blog-post/2011/04/06/gruenderlexikon-lohnnebenkosten/ http://www.gruendungswissen.at/gruendungswissen/blog-post/20... ) * Employees are almost impossible to fire. If that programmer ends up doing negative work, he's going to be on your books for a while. I've never been anything but self-employed in Austria (we get screwed in entirely different ways) but culturally I think there is an expectation that you won't negotiate on your salary. This is further reinforced by the built-in graduated minimum pay: why permit the employee to negotiate a raise if they'll legally be due a raise anyway?

pavlov 14y ago
Salaries are typically quoted per month, but there is a bonus of 2 months's salary paid per year, so yearly gross is 14 x monthly. Interesting. During the recent Euro crisis, when journalists discovered that some workers and officials in Greece enjoy a similar "extended year" of extra salary months, there was wide uproar across Europe about how the corrupted Greeks are being overpaid in ridiculous ways. In the EU it's nowadays easy to see the speck in your brother's eye, but not notice the log in your own...
- pmjordan 14y ago
  I don't know if it's still the case, but bankers used to receive 16 salaries in Austria. The 4 bonus months presumably taxed at the low rate. That said, it's irrelevant if you get paid 14 salaries or 12 salaries that are 1/6th higher and correspondingly adjusted tax/social security rates. It's just a trick to make the "common man" feel better, just like the employer's share of tax & social security. Employees would be outraged if it all came off their (correspondingly higher) paycheck.
- tdrgabi 14y ago
  I guess the workers and officials were getting "bonuses" payed by the state in a bankrupt country. The developers are payed by companies, they don't get money from your pockets while also working against you.
- Jabbles 14y ago
  I think the anger was from Greeks "paying themselves" more than they can afford, and getting into astonishing amounts of debt. If you can afford to pay 14 months a year it's simply equivalent to an increase in your monthly salary with 12 months, which no one would have a problem with.
- tezza 14y ago
  The Press wrongly just focus on one issue at a time. Other problems become side-notes or explicitly ignored. Any solution to the current focus problem is paraded as a global solution. But when the long ignored problems finally burst, the Press simply say 'the problem resurfaced' as if it had gone away somehow. Relating to Austria, their banks were all wiped out lending to Hungary (more than 80% of loans to Hungary were Austrian) There will be no mention of these zombie Austrian banks until one goes under. (Like Dexia) --- from 2008: http://www.economist.com/node/12564042?story_id=12564042 http://www.economist.com/node/12564042?story_id=12564042 http://www.moneyweek.com/investments/stock-markets/the-plague-heads-east-14050 http://www.moneyweek.com/investments/stock-markets/the-plagu... http://www.moneyweek.com/personal-finance/credit-default-swaps-how-to-spot-the-riskiest-banks http://www.moneyweek.com/personal-finance/credit-default-swa...
- smackay 14y ago
  It is a similar situation in Portugal with one extra month paid in the summer and one at Christmas. It seems an eminently practical idea so that lower paid people would have ready cash for holidays and Christmas. However given the furore over the apparently profligate peoples of the Mediterranean the government is currently in the process of phasing it out completely.
zeemonkee 14y ago
I've had a similar experience in Finland - the shitty salaries (and lack of interesting work that isn't somehow tied to the sinking ship that is Nokia) are one reason I avoid Finnish companies like the plague, and just work for foreign clients. This is the reason Finnish companies don't advertise salary, which is common in the UK and US for example - it's all collectively bargained in some way out of your control.
- pmjordan 14y ago
  To be clear: collective bargaining normally only sets minimum conditions. You're free to negotiate for more, the employer just might not go with it. And I know what you mean about foreign clients: the majority of my contracting revenue has been from clients in more progressive countries. Part of it is also that Austria is a small country (though higher population than Finland), so of course there are more potential good clients elsewhere.
  - zeemonkee 14y ago
    I don't know about Austria, here it's a case of "well, this is the industry standard, why do you deserve more? - oh you're a foreigner? Just be grateful we even give you a job" (even if you speak Finnish). So, most employers don't go with it ;-) I'm quite happy with foreign clients as they pay better and the work tends to be more interesting - the only killer is the different timezones.
    - pmjordan 14y ago
      Yes, there is also a strong bias against employing non-natives (or at least non-Germanics) in Austria, orthogonal to the other issues, which was quite shocking after living the previous years of my adult life in the UK, which has a much more liberal culture. This bigotry is much less of an issue (I'd almost say a non-issue) in actual technology companies though. It's telling that the proportion of immigrants among the self employed is much higher than the total proportion of immigrants (though that effect is seen in many countries, and I don't know if it's much higher in Austria).
RobertKohr 14y ago
I think you might have got to the the main issue. It is not like there is a cultural pressure to keep the pay for a programmer down, because that would break down quickly if there are a lot of positions not being filled. I somehow doubt that the value earned by hiring a programmer is much less than elsewhere. So really that leaves only some other operator that is messing up smooth market operations, and that is the extra costs in hiring. Your last point is the strongest. Would you hiring a programmer if it was impossible to fire them. If you were a programmer that knew he couldn't be fired, what would your output look like.
- danssig 14y ago
  The market is notoriously inefficient in hiring/working because companies work so hard to keep prices (salaries) hidden so one has a really difficult time knowing what the market value of a given skill is.
manmal 14y ago
Austrian (currently self-employed) developer here. You are mostly right, except that: Employees are not impossible to fire, that's a myth. There was this big Siemens layoff some years ago where several hundred developer lost their job, just because Siemens decided they are not into software anymore. Also, it is common to pressure people into signing mutual "job quit contracts" (don't know a better word). How did you get screwed in Austria? I haven't been screwed yet, but I'm not doing much contract work in Austria anyways.
- spullara 14y ago
  A layoff is not considered being fired.
  - manmal 14y ago
    It is not considered being fired by you ;) This particular layoff was a strategic decision - and a bad one too, they are now advertising in TV that Siemens is a good place for IT folks.
    - jessriedel 14y ago
      The point is that the existence of layoffs does not rebut the claim that programmers cannot be fired (individually) in Austria.
      - pmjordan 14y ago
        Or the claim that it's a financial burden. Layoffs involve expensive severance payments.
- pmjordan 14y ago
  Veering into the crash barrier of off-topicness, but... How did you get screwed in Austria? It's hard to overstate how much the SVA (the social security provider for self-employed people) annoys me. The amount you pay them in theory depends on your earnings[1] but in practice how much you pay right now is linked to how much you earned 2 years ago: They assume your profits will go up 8% each year, so for the current year, you pay ((profits 2 years ago * 1.08²) * social security rate) + (difference to what you underpaid 2 years ago). So if your income is unusually high one year, you pay social security as if you earned the usual amount, which means your profit is artificially high, and thus you pay a lot of tax. Then, 2 years later, you have to pay the difference of what you should have paid in the year you earned lots. Conversely, if you're having a bad year for whatever reason, you have to pay the same amount you usually would, even though you're earning very little. So the worst situation is if you earn a lot and then 2 years later earn very little: you pay lots of tax in the "good" year and get stuffed for social security in the bad year. This is exactly my situation right now: in 2010 I decided I'd need some runway for our startup so I took on lots and lots of contract work. In 2011 and 2012 I've mostly been working on the startup, so I'm only doing maintenance work for existing contract customers. All of my contract revenue this year has been going straight into the SVA. The SVA bill is more than the rest of my cost of living put together. And yes, back in 2010 I did try to increase my SVA payments because I knew this would happen, but they wouldn't let me. Of course employees simply do not have this problem: even if their income fluctuates like crazy (seasonal workers etc.), every month they pay a percentage of the exact amount they earned. Yet self employed people are the ones whose income is most likely to fluctuate. [1] 7.5% for health insurance, ~17.5% for pension, ~1% other - so this is quite a lot of money, and unlike tax there's no free earning threshold. In fact, it's the opposite: if you earn below around €550 p.m., you owe as much as if you earned €550.

pavlov 14y ago

Salaries are typically quoted per month, but there is a bonus of 2 months's salary paid per year, so yearly gross is 14 x monthly. Interesting. During the recent Euro crisis, when journalists discovered that some workers and officials in Greece enjoy a similar "extended year" of extra salary months, there was wide uproar across Europe about how the corrupted Greeks are being overpaid in ridiculous ways. In the EU it's nowadays easy to see the speck in your brother's eye, but not notice the log in your own...

pmjordan 14y ago
I don't know if it's still the case, but bankers used to receive 16 salaries in Austria. The 4 bonus months presumably taxed at the low rate. That said, it's irrelevant if you get paid 14 salaries or 12 salaries that are 1/6th higher and correspondingly adjusted tax/social security rates. It's just a trick to make the "common man" feel better, just like the employer's share of tax & social security. Employees would be outraged if it all came off their (correspondingly higher) paycheck.
tdrgabi 14y ago
I guess the workers and officials were getting "bonuses" payed by the state in a bankrupt country. The developers are payed by companies, they don't get money from your pockets while also working against you.
Jabbles 14y ago
I think the anger was from Greeks "paying themselves" more than they can afford, and getting into astonishing amounts of debt. If you can afford to pay 14 months a year it's simply equivalent to an increase in your monthly salary with 12 months, which no one would have a problem with.
tezza 14y ago
The Press wrongly just focus on one issue at a time. Other problems become side-notes or explicitly ignored. Any solution to the current focus problem is paraded as a global solution. But when the long ignored problems finally burst, the Press simply say 'the problem resurfaced' as if it had gone away somehow. Relating to Austria, their banks were all wiped out lending to Hungary (more than 80% of loans to Hungary were Austrian) There will be no mention of these zombie Austrian banks until one goes under. (Like Dexia) --- from 2008: http://www.economist.com/node/12564042?story_id=12564042 http://www.economist.com/node/12564042?story_id=12564042 http://www.moneyweek.com/investments/stock-markets/the-plague-heads-east-14050 http://www.moneyweek.com/investments/stock-markets/the-plagu... http://www.moneyweek.com/personal-finance/credit-default-swaps-how-to-spot-the-riskiest-banks http://www.moneyweek.com/personal-finance/credit-default-swa...
smackay 14y ago
It is a similar situation in Portugal with one extra month paid in the summer and one at Christmas. It seems an eminently practical idea so that lower paid people would have ready cash for holidays and Christmas. However given the furore over the apparently profligate peoples of the Mediterranean the government is currently in the process of phasing it out completely.

zeemonkee 14y ago

I've had a similar experience in Finland - the shitty salaries (and lack of interesting work that isn't somehow tied to the sinking ship that is Nokia) are one reason I avoid Finnish companies like the plague, and just work for foreign clients. This is the reason Finnish companies don't advertise salary, which is common in the UK and US for example - it's all collectively bargained in some way out of your control.

pmjordan 14y ago
To be clear: collective bargaining normally only sets minimum conditions. You're free to negotiate for more, the employer just might not go with it. And I know what you mean about foreign clients: the majority of my contracting revenue has been from clients in more progressive countries. Part of it is also that Austria is a small country (though higher population than Finland), so of course there are more potential good clients elsewhere.
- zeemonkee 14y ago
  I don't know about Austria, here it's a case of "well, this is the industry standard, why do you deserve more? - oh you're a foreigner? Just be grateful we even give you a job" (even if you speak Finnish). So, most employers don't go with it ;-) I'm quite happy with foreign clients as they pay better and the work tends to be more interesting - the only killer is the different timezones.
  - pmjordan 14y ago
    Yes, there is also a strong bias against employing non-natives (or at least non-Germanics) in Austria, orthogonal to the other issues, which was quite shocking after living the previous years of my adult life in the UK, which has a much more liberal culture. This bigotry is much less of an issue (I'd almost say a non-issue) in actual technology companies though. It's telling that the proportion of immigrants among the self employed is much higher than the total proportion of immigrants (though that effect is seen in many countries, and I don't know if it's much higher in Austria).

RobertKohr 14y ago

I think you might have got to the the main issue. It is not like there is a cultural pressure to keep the pay for a programmer down, because that would break down quickly if there are a lot of positions not being filled. I somehow doubt that the value earned by hiring a programmer is much less than elsewhere. So really that leaves only some other operator that is messing up smooth market operations, and that is the extra costs in hiring. Your last point is the strongest. Would you hiring a programmer if it was impossible to fire them. If you were a programmer that knew he couldn't be fired, what would your output look like.

danssig 14y ago
The market is notoriously inefficient in hiring/working because companies work so hard to keep prices (salaries) hidden so one has a really difficult time knowing what the market value of a given skill is.

manmal 14y ago

Austrian (currently self-employed) developer here. You are mostly right, except that: Employees are not impossible to fire, that's a myth. There was this big Siemens layoff some years ago where several hundred developer lost their job, just because Siemens decided they are not into software anymore. Also, it is common to pressure people into signing mutual "job quit contracts" (don't know a better word). How did you get screwed in Austria? I haven't been screwed yet, but I'm not doing much contract work in Austria anyways.

spullara 14y ago
A layoff is not considered being fired.
- manmal 14y ago
  It is not considered being fired by you ;) This particular layoff was a strategic decision - and a bad one too, they are now advertising in TV that Siemens is a good place for IT folks.
  - jessriedel 14y ago
    The point is that the existence of layoffs does not rebut the claim that programmers cannot be fired (individually) in Austria.
    - pmjordan 14y ago
      Or the claim that it's a financial burden. Layoffs involve expensive severance payments.
pmjordan 14y ago
Veering into the crash barrier of off-topicness, but... How did you get screwed in Austria? It's hard to overstate how much the SVA (the social security provider for self-employed people) annoys me. The amount you pay them in theory depends on your earnings[1] but in practice how much you pay right now is linked to how much you earned 2 years ago: They assume your profits will go up 8% each year, so for the current year, you pay ((profits 2 years ago * 1.08²) * social security rate) + (difference to what you underpaid 2 years ago). So if your income is unusually high one year, you pay social security as if you earned the usual amount, which means your profit is artificially high, and thus you pay a lot of tax. Then, 2 years later, you have to pay the difference of what you should have paid in the year you earned lots. Conversely, if you're having a bad year for whatever reason, you have to pay the same amount you usually would, even though you're earning very little. So the worst situation is if you earn a lot and then 2 years later earn very little: you pay lots of tax in the "good" year and get stuffed for social security in the bad year. This is exactly my situation right now: in 2010 I decided I'd need some runway for our startup so I took on lots and lots of contract work. In 2011 and 2012 I've mostly been working on the startup, so I'm only doing maintenance work for existing contract customers. All of my contract revenue this year has been going straight into the SVA. The SVA bill is more than the rest of my cost of living put together. And yes, back in 2010 I did try to increase my SVA payments because I knew this would happen, but they wouldn't let me. Of course employees simply do not have this problem: even if their income fluctuates like crazy (seasonal workers etc.), every month they pay a percentage of the exact amount they earned. Yet self employed people are the ones whose income is most likely to fluctuate. [1] 7.5% for health insurance, ~17.5% for pension, ~1% other - so this is quite a lot of money, and unlike tax there's no free earning threshold. In fact, it's the opposite: if you earn below around €550 p.m., you owe as much as if you earned €550.