OIM - Labour Migration in Times of Labour Shortages in Austria de 2024

Labour Migration in Times of Labour Shortages in Austria Leila Hadj Abdou and Prisca EbnerThe opinions expressed in the report are those of the authors and do not necessarily reflect the views of the Austrian Federal Ministry of the Interior, the European Commission and/or the International Organization for Migration (IOM). The designations employed and the presentation of material throughout the report do not imply the expression of any opinion whatsoever on the part of IOM concerning the legal status of any country, territory, city or area, or of its authorities, or concerning its frontiers or boundaries. IOM is committed to the principle that humane and orderly migration benefits migrants and society. As an intergovernmental organization, IOM acts with its partners in the international community to assist in meeting the operational challenges of migration, to advance understanding of migration issues, to encourage social and economic development through migration and to uphold the human dignity and well-being of migrants.

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(RES) endorsement. This publication was issued without official translation by IOM Translations Unit (TRS). It is an unofficial translation of the original version in German, entitled Arbeitsmigration in Zeiten des Arbeitskräftemangels in Österreich. Environmentally friendly paper was used for printing.

Translation: V.I.T.A. Schächter-Hold e.U.

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Required citation: Hadj Abdou, L. and P. Ebner (2024). Labour Migration in Times of Labour Shortages in Austria.

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PUB2025/038/RPreface IV Summary V 1 Introduction 1 2 Context: employment, labour shortage and immigration 4 3 Austrian labour migration policy 8 4 Recruitment of workforces 29 5 Challenges and lessons learnt with regard to labour migration policy 36 6 Conclusion 41 Annex 43 Leila Hadj Abdou and Prisca Ebner Labour Migration in Times of Labour Shortages in Austria IPreface IV Summary V 1 Introduction 1 1.1 Background 1 1.2 Focus and research guiding questions 1 1.3 Definition of terms frequently used in the study 2 1.4 Data collection and analysis 3 2 Context: employment, labour shortage and immigration 4 2.1 Demand for labour and labour shortage 5 3 Austrian labour migration policy 8 3.1 Labour migration system 8 3.2 Regulation of labour migration 9

1.4 Data collection and analysis 3 2 Context: employment, labour shortage and immigration 4 2.1 Demand for labour and labour shortage 5 3 Austrian labour migration policy 8 3.1 Labour migration system 8 3.2 Regulation of labour migration 9 3.3 Most import access pathways for employment purposes 10 3.4 Key labour migration policy instruments 17 3.5 Legal and policy changes in the context of labour shortages 22 4 Recruitment of workforces 29 4.1 Initiatives, institutions and stakeholders 29 4.2 Bilateral agreements 31 4.3 Ethical recruitment 32 4.4 Regional initiatives 34 CONTENTS II5 Challenges and lessons learnt with regard to labour migration policy 36 5.1 Challenges 36 5.2 Lessons learned 39 6 Conclusion 41 Annex 43 A.1 List of abbreviations and translations 43 A.2 References 46 List of figures, infoboxes and tables Figure 1: Employees – annual averages 2023 by nationality 4 Figure 2: Initial approvals of Red-White-Red Cards (2021–2023) 11 Figure 3: Top four residence permits issued for the settlement of third-country nationals for the purpose of gainful (non-self-employed) employment (by year and residence permit) 12 Infobox 1: Definition and assessment of labour shortage and shortage of skilled workers 6 Infobox 2: Stakeholder involvement 9 Infobox 3: Red-White-Red Card 10 Infobox 4: Posting of third-country nationals to Austria 16 Infobox 5: Regularization as an answer to the labour shortage? 21 Infobox 6: Tasks of the strategy committee for international skilled workers 26 Infobox 7: WORK in AUSTRIA 30 Infobox 8: Skills Mobility Partnerships in Austria 33 Infobox 9: The subordinate role of work experience and soft skills in in immigration for employment purposes 39 Table 1: Overview of the main legal pathways for employment purposes 13 Table 2: Number of employees posted and recorded in accordance with the EU Posted

Infobox 9: The subordinate role of work experience and soft skills in in immigration for employment purposes 39 Table 1: Overview of the main legal pathways for employment purposes 13 Table 2: Number of employees posted and recorded in accordance with the EU Posted Workers Directive (2021–1st half of 2024) 17 Table 3: Quotas for the temporary employment of foreign nationals in tourism, agriculture and forestry (2021–2024) 19 Table 4: Work permits issued to seasonal workers by the Public Employment Service (2021–1st half of 2024) 20 IIIIV PREFACE This publication is based on Austria’s contribution to the comparative EMN study “Labour migration in times of labour shortages”, which was first prepared by Prisca Ebner (Research Associate, IOM Country Office for Austria) in collaboration with Leila Hadj Abdou (Deputy Head of the Policy Research and Migration Law Unit, IOM Country Office for Austria). Anna Ammann (Research Associate, IOM Country Office for Austria) and Martin Stiller (Legal Associate, IOM Country Office for Austria) supported them with the clarification of legal issues. Based on this work, the final contribution to the comparative EMN study and the publication at hand was prepared by Leila Hadj Abdou. Sarah Zischka and Ida Hamacher (Interns, IOM Country Office for Austria) also made an essential contribution to this study by transcribing interviews, formatting the document and working on references. Special thanks are due to the experts who were interviewed or provided written information for this study and thus contributed significantly to this publication: Nobert Bichl (Coordinator, Contact Points for people who gained professional qualifications abroad/ Counseling Center for Migrants), Gudrun Biffl (Former Director of the Migration and Globalization Department, University for Continuing Education Krems; Associate, Austrian Institute of Economic Research), Julia Bock-Schappelwein (Research Associate, Austrian Institute of Economic Research), Viktor Fleischer (Expert Vocational Training and Skilled Workers, Federation of Austrian Industries),

the Migration and Globalization Department, University for Continuing Education Krems; Associate, Austrian Institute of Economic Research), Julia Bock-Schappelwein (Research Associate, Austrian Institute of Economic Research), Viktor Fleischer (Expert Vocational Training and Skilled Workers, Federation of Austrian Industries), Margit Kreuzhuber (Head of WORK in AUSTRIA, Austrian Business Agency), Julia Moreno-Hasenöhrl (Deputy Head of the Department for Social and Health Policy, Austrian Federal Economic Chamber), Johannes Peyrl (Officer in the Labour Market and Integration Department, Vienna Chamber of Labour), Eva Pfleger (Director Department V/A/2 - Residence and Citizenship, Federal Ministry of the Interior), and Sylvia Vana (Director, Department IV/5 – Siting and Business Services, Industrial Policy, Federal Ministry of Labour and Economy). A big thank you also to Roland Sauer (Director Section III - Labour Market, Federal Ministry of Labour and Economy) for his valuable contribution to the event “Trendbarometer Migration and Asylum 2024 – Labour Migration from Non-EU Countries ” held by EMN Austria, which helped to better structure the section on legal and policy changes of this study. Many thanks also to the Department for the Employment of Foreign Nationals and the Department of Statistics of the Public Employment Service, and to the Fraud Prevention Office of the Financial Police at the Federal Ministry of Finance for the provision of data. We would also like to thank the following colleagues from the IOM Country Office for Austria for their helpful comments: Marian Benbow Pfisterer (Chief of Mission), Saskia Heilemann (Head of the Policy Research and Migration Law Unit), Katie Klaffenböck (Senior Project Coordinator, Counter-Trafficking), and Alexander Spiegelfeld (Head of Integration/Labour Mobility and Social Inclusion Unit).V SUMMARY The study “Labour migration in times of labour shortage in Austria” analyses the regulation, strategies and initiatives regarding the immigration of third-country nationals for the purpose of employment for the period 2021 to 2024. In the wake of developments such as digitization, the green transition and the increasing ageing of our societies,

SUMMARY The study “Labour migration in times of labour shortage in Austria” analyses the regulation, strategies and initiatives regarding the immigration of third-country nationals for the purpose of employment for the period 2021 to 2024. In the wake of developments such as digitization, the green transition and the increasing ageing of our societies, the world of work is changing. This is resulting in a declining labour force and shifting requirements in terms of professional qualifications. It is becoming increasingly apparent that the supply of labour in the European Union (EU) is not sufficient to meet the resulting demand for labour and skilled workers. In addition to other measures, immigration from countries outside of the European Union represents therefore a relevant response to this development. This underscores the need to focus on existing labour migration policy approaches and instruments, with regard to their effectiveness in times of labour shortages, and to address their potential shortcomings. The aim of this study is to make a contribution in this regard. The results of the study show that Austria is one of the European Union countries with the highest number of job vacancies. The labour shortage affects both occupations with higher and lower qualifications. During the observation period, Austria responded to the existing labour shortage with a number of legislative amendments. Particularly since the law reforms in 2022, a proactive, strategic approach to the recruitment of labour from third countries has been pursued, which is also reflected in partnership agreements, the establishment of a cross-government strategy committee for international skilled workers, as well as increasingly service-oriented bureaucratic processes. Challenges in the strategic recruitment of skilled workers from third countries, as the study points out, are the comprehensive realization of a whole-of-government approach, the different educational and vocational training systems in the countries of origin and Austria, the (associated) complexity of the recognition system for qualifications acquired abroad, the lack of agreements on social rights and the expansion of a welcoming culture. According to the experts interviewed for this study, successful recruitment hinges on close cooperation with countries of origin, counselling services and liberal labour market access regulations for the family members of recruited workers. In addition to a whole-of-government approach, a comprehensive approach that encompasses everything from promoting the host country to providing support for workers who have

culture. According to the experts interviewed for this study, successful recruitment hinges on close cooperation with countries of origin, counselling services and liberal labour market access regulations for the family members of recruited workers. In addition to a whole-of-government approach, a comprehensive approach that encompasses everything from promoting the host country to providing support for workers who have already been recruited is regarded as essential. The example of the WORK in AUSTRIA service centre, which is part of the Austrian Business Agency, demonstrates the positive impact of institutions that act as intermediaries between employers, employees from third countries and domestic authorities. The new Austrian government programme for the period 2025-2029 indicates that labour migration will continue to play a relevant role in preserving Austria as a business location in the future, and that further reforms will be implemented.1 1 INTRODUCTION 1.1 Background The world of labour in Europe is changing as a result of developments such as digitalization, the green transition and the increasing ageing of our societies. This is resulting in a declining labour force and changing requirements in terms of professional qualifications. It is becoming increasingly apparent that the labour supply in the European Union is not sufficient to meet the resulting demand for labour and skilled workers. Immigration from countries outside of the European Union, some of which have much younger populations, is therefore an important response to this development, in addition to other measures such as vocational education and training and the better utilization of the unused labour force potential 1 (European Commission, 2023b). The key challenge for national labour migration policies is to calibrate the regulation of labour migration with the needs of the labour market (European Migration Network, 2015; Ruhs, 2020). The demand for labour cannot be easily predicted. Moreover, it is also not possible to exactly predict to what extent (newly created) opportunities to access the labour market will ultimately be taken up by migrant workers (Geddes et al., 2020:79). The increasing (and changing) demand in recent years has underlined the need to focus on the effectiveness of existing labour migration policy approaches, strategies and instruments of labour market policy and to adopt additional measures to better manage the shortage of labour and skilled workers (Hooper,

et al., 2020:79). The increasing (and changing) demand in recent years has underlined the need to focus on the effectiveness of existing labour migration policy approaches, strategies and instruments of labour market policy and to adopt additional measures to better manage the shortage of labour and skilled workers (Hooper, 2023). The aim of the study is to contribute to this need by analysing labour migration laws, policies and initiatives in Austria. 1.2 Focus and research guiding questions The overarching research question guiding this study is: what role does labour migration play in addressing current and future labour shortages in Austria? The following questions are addressed by the study: á Which are the (numerically) most important labour migration pathways from third countries? á Which legal regulations, political strategies and initiatives are in place regarding labour migration to address labour shortages, and which new developments thereof can be observed? á What are good practices, lessons learned, and existing challenges in using labour migration to address labour shortages? To answer these questions, this European Migration Network (EMN) study look at regular immigration of third-country nationals for the purpose of employment, including temporary, seasonal forms of labour immigration. The study addresses the issue of labour shortages and labour migration at all qualification levels. 1 The unused labour force potential represents the sum of the unemployed, the non-employed (hidden reserve available and not available), as well as the part-time underemployed (part-time employees who would like to work more and are available Klapfer, 2023).2 Self-employment was analysed in a study by the EMN in 2019 and does consequently not fall under the scope of this study at hand (European Migration Network, 2019b). Since the focus of this study is on international immigration for employment purposes, the study does not include third-country nationals who already reside in Austria or immigrate to the country for other reasons, such as international/temporary protection. The scope of this study does hence also not cover international students. The findings of an EMN study on international students in 2019 showed that employment or entry into the labour market is considered a secondary objective for this group (European Migration Network, 2019a:6).

such as international/temporary protection. The scope of this study does hence also not cover international students. The findings of an EMN study on international students in 2019 showed that employment or entry into the labour market is considered a secondary objective for this group (European Migration Network, 2019a:6). In order to be able to trace recent developments, the study focuses on the period from 2021 to 2024. For reasons of availability at the time of writing this study statistical annual data is limited to the period up to the end of 2023. 1.3 Definition of terms frequently used in the study2

Labour market test: Mechanism that aims to ensure that migrant workers are only admitted after employers have unsuccessfully searched for national workers, European Union citizens (in European Union Member States this also means EEA workers) or legally residing third-country nationals with access to the labour market according to national legislation.

Labour migration: Movement of persons from one state to another, or within their own country of residence, for the purpose of employment.

Labour shortage: Shortage of labour of a particular type in a particular labour market which may be said to exist when the number of vacancies has been (or is expected to be) above a level considered to represent “normal” turnover at the prevailing wages and working conditions for an extended period (see also Infobox 1) Third-country national: Any person who is not a citizen of the European Union within the meaning of Art. 20(1) of TFEU and who is not a person enjoying the European Union right to free movement, as defined in Art. 2(5) of the Regulation (EU) 2016/399 (Schengen Borders Code).

Shortage occupations: Occupations for which employers face a shortage of suitable employees on the domestic labour market. The European Labour Authority (ELA) defines this as occupations for which the demand is greater than the supply of jobseekers with the required qualifications in the desired location. The ELA distinguishes between “severe shortages” and “widespread shortages” (European Labour Authority, 2022:8). 2 Based on European Migration Network, 2018.3

demand is greater than the supply of jobseekers with the required qualifications in the desired location. The ELA distinguishes between “severe shortages” and “widespread shortages” (European Labour Authority, 2022:8). 2 Based on European Migration Network, 2018.3

Seasonal worker: A third-country national who retains their principal place of residence in a third country and stays legally and temporarily in the territory of a European Union Member State to carry out an activity dependent on the passing of the seasons, under one or more fixed-term work contracts concluded directly between that third-country national and the employer established in that European Union Member State. 3 1.4 Data collection and analysis This study was conducted by the National Contact Point (NCP) Austria in the European Migration Network

(EMN) as part of the EMN Work Programme 2023–2025. In order to ensure the comparability of the results, the study was prepared based on a common study template with a standardized set of questions used by all EMN Member States. The data collection and analysis was therefore thematically guided by this predetermined set of questions. The results of this national contribution build on existing international and national studies and reports and are based on a thematic analysis of seven qualitative, semi-structured interviews and two written query responses from national experts in the fields labour market, employment of foreigners and labour law. In addition, legal texts and parliamentary materials on legislative initiatives, press releases and media reports as well as publicly available or requested statistical data from Eurostat, the Austrian Ministry of the Interior, the Public Employment Service and the Ministry of Finance (Central Coordination Office) form the data basis for the analysis. 3 Directive 2014/36/EU of the European Parliament and of the Council of 26 February 2014 on the conditions of entry and stay of third-country nationals for the purpose of employment as seasonal workers. OJ L 94, pp. 375–390.4 2 CONTEXT: EMPLOYMENT, LABOUR SHORTAGE AND IMMIGRATION In 2023, Austria had an employment rate 4 of about 74 per cent. This places Austria in ninth position in

purpose of employment as seasonal workers. OJ L 94, pp. 375–390.4 2 CONTEXT: EMPLOYMENT, LABOUR SHORTAGE AND IMMIGRATION In 2023, Austria had an employment rate 4 of about 74 per cent. This places Austria in ninth position in the European Union, with its employment rate exceeding the European Union average of 70.4 per cent. Seven out of ten people in employment were employed in the service sector (Statistics Austria, 2024b:40). One quarter of employees in Austria in 2023 were foreign nationals, of which the share of third country nationals was 40 per cent and the share of nationals from EU/EFTA States was 60 per cent (see Figure 1) (Statistics Austria, 2024a:19). The proportion of foreign nationals varies greatly between sectors, with the highest shares found in accommodation and food service activities (57%), extraterritorial organizations and entities (55%), provision of other economic services (52%) and agriculture, forestry and fishing (52%) (Public Employment Service, 2024a). Figure 1: Employees - annual averages 2023 by nationality Austrian nationals 2 975 437 (75.2 %) employees Foreign nationals 980 821 (24.8 %) employees Of those 595 454 were nationals from EU/EFTA states (15.1 %), and 385 367 (9.7 %) nationals from third countries 75.2 % AT 15.1 % EU/EFTA 9.7 % Third countries Source: Public Employment Service and Federal Ministry of Labour and Economy, 2024. Since 2021, the domestic labour force potential (i.e. the supply of workers with Austrian citizenship) has been declining sharply (Public Employment Service and Federal Ministry of Labour and Economy, 2024). Since then, the expansion of the labour supply has been entirely driven by foreign workers (Public Employment Service, 2024d:2). This means that the decline in the number of domestic workers active on the labour market has been offset by labour migration from EU/EFTA States and third countries. Given the EU-wide demographic

the expansion of the labour supply has been entirely driven by foreign workers (Public Employment Service, 2024d:2). This means that the decline in the number of domestic workers active on the labour market has been offset by labour migration from EU/EFTA States and third countries. Given the EU-wide demographic ageing, it can be assumed that the contribution of immigration to the labour supply, based on free movement from the EU/EFTA, will decrease (Public Employment Service, 2024d:3). 4 Share of employed persons in the working-age population. The employment rates listed above refer to the percentage of people aged 15 to 64.5 2.1 Demand for labour and labour shortage The demand for labour in Austria rose significantly during the economic upturn after the COVID-19 pandemic (EURES, 2023). Despite the onset of the economic downturn in 2023 and a decline in the number of vacancies (Public Employment Service, 2024c) Austria continued to be (as at Q3, 2024) one of the countries with the highest rate of job vacancies within the European Union (Eurostat, 2024). On average, there were 174,000 job vacancies in Austria in 2024. Vacancies emerge particularly in service occupations and among salespeople, tradespeople and technicians (Statistics Austria, 2024b). The labour shortage affects both higher and lower-skilled professions. From the companies’ perspectives around 44 per cent of the vacancies in 2023 only required a compulsory school leaving certificate or no minimum school qualification at all (Statistics Austria, 2024a:37). The Austria-wide survey of companies on labour and skills shortages/demands (n=2,793 companies) from 2024 (Dornmayr and Riepl, 2024) shows that the tourism and leisure industry, trade and manual occupations, and transport and haulage are particularly difficult sectors in terms of recruitment. According to the survey (ibid.), the following professions have the greatest recruitment difficulties: cooks (incl. kitchen staff); trade/ sales, IT specialists, electronics/electrical engineering, drivers, restaurant specialists. Although such surveys cannot determine the exact needs, they are an important tool for identifying issues.

(ibid.), the following professions have the greatest recruitment difficulties: cooks (incl. kitchen staff); trade/ sales, IT specialists, electronics/electrical engineering, drivers, restaurant specialists. Although such surveys cannot determine the exact needs, they are an important tool for identifying issues. Developed by the Federal Ministry of Labour and Economy and the Public Employment Service, the Skilled Workers Barometer uses several indicators to identify occupations exhibiting shortages. It classifies electricians and fitters, nurses (certified and uncertified), motor vehicle mechanics, carers and social workers as the top shortage occupations (as at Q2 2024; Federal Ministry of Labour and Economy, 2024a). A 2024 report on the Austrian care system underlined the fact that in comparison with other Western European countries, Austria has a low number of carers. This shortage of workers is already evident today and is reflected in high workloads and dissatisfaction with work in the care sector. From 2035 onwards, a significant increase in the demand for carers is projected for Austria (Famira-Mühlberger and Weingärtner, 2024). One of the main reasons for the increased demand for labour is the retirement of the baby boomers, a trend that is set to continue. One factor that needs to be taken into account in meeting the demand for labour is the unused labour force potential. In particular, women (in part-time employment), 5 older people, migrants (especially humanitarian migrants), younger people who are neither in training nor in employment, and people with health problems make up part of the unused labour force potential in Austria (Public Employment Service, 2024b). 5 In 2023, 31.6% of all employees in Austria worked part-time, with more than half of female employees working part-time (51.6%). This part-time employment rate for women is among the highest in Europe (Statistics Austria, 2024c).6 Infobox 1: Definition and assessment of labour shortage and shortage of skilled workers Austria does not have a generally accepted definition of the term “labour shortage”. In the context of migration – due to the stronger focus on skilled immigration – the term “shortage of skilled workers”

Infobox 1: Definition and assessment of labour shortage and shortage of skilled workers Austria does not have a generally accepted definition of the term “labour shortage”. In the context of migration – due to the stronger focus on skilled immigration – the term “shortage of skilled workers” (Fachkräftemangel) is typically used rather than the term “labour shortage”. “Shortage of skilled workers” is defined in a report by the Austrian Court of Audit, for example, as a situation in the labour market in which the demand for certain vocational skills significantly exceeds supply, at national or regional level, and which is not just a cyclical or short-term phenomenon (Austrian Court of Audit, 2024a). The database for measuring labour shortages in Austria is limited (Austrian Court of Audit, 2024a:86; Pohler et al., 2023:40). There is a (legally binding) definition of the term “shortage occupations”, however, which is based on the ratio of jobseekers to vacancies reported to the Public Employment Service (“applicant-to-vacancy ratio”). In the context of regulating labour migration – more precisely, the admission of skilled workers from third countries in shortage occupations – this applicant-to-vacancy ratio is used to assess labour shortage (see also 3.4 ). The “applicant-to-vacancy ratio” is often criticized as being too short-sighted for various reasons (see, for example, Austrian Court of Audit, 2024b:45). For instance, not all vacancies are reported to the Public Employment Service. 6 Parameters such as demographics, digitalization, ecologization7 and wage developments are not taken into consideration. 8 The annual change in the applic