Austrian government faces three political battles

Ahead of the new parliamentary session Austria’s chancellor Christian Stöckl outlined a three-way agenda: find a sustainable fix for the insolvency payments fund without loading employers with fresh costs; push through a linked reform of military and civilian service; and ensure parliamentary oversight of a newly proposed Federal Public Prosecutor’s Office.

Shortfall in the insolvency payments fund and political options

Stöckl warned that the Insolvenzentgeltfonds — the state-backed fund that pays wages, allowances and severance when companies collapse — faces an expected gap of about 160 million euros for 2027. The law allows the shortfall to be covered either by borrowing or by raising employer contributions, but the chancellor said the government must first determine whether the deficit is a temporary shock or evidence of a structural problem.

State Secretary Josef Schellhorn proposed using reserves held by the Chamber of Commerce and the Chamber of Labour before imposing new obligations on firms. That idea was rejected by the Chamber of Labour, while the industrial union PRO GE insisted employers cannot evade responsibility. The Greens favour increasing contributions to stabilise the fund.

Stöckl framed the debate as a balancing act: the government must protect workers affected by insolvency while avoiding additional burdens that could hurt companies. He said the coalition will seek a solution that preserves the fund’s mandate without repeating past rises in employer costs.

On the political front, the chancellor urged cross-party responsibility, warning that quick fixes could have long-term consequences for both employment protection and business competitiveness.

Parliamentary discussions on concrete proposals are expected to follow in the coming weeks as the government prepares legislative text.

Photo: press material from the event