Demographic change threatens Austria’s growth

Demographic trends are jeopardising Austria’s growth. Although current forecasts predict economic growth until 2030, this is contingent on an increase in the labour supply. Against the backdrop of demographic trends, this is anything but certain, as the number of people of working age in Austria is set to decline in the coming years.

We have calculated for various occupations how the labour market would develop if employment rates and working hours remained constant and demand from companies remained stable. The result: the shortage of skilled workers is increasing overall and jeopardising the growth of the Austrian economy. However, not all occupations are affected to the same extent.

The Austrian daily newspaper Die Presse reported exclusively on the study.

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Fewer workers due to demographics

The supply of labour depends primarily on demographic developments: the Austrian population is ageing and the baby boomers will soon be retiring. As a result, the number of people of working age will fall from 5.57 million in 2023 to 5.31 million in 2035.

In our scenario calculation, we examined how the labour supply would develop if only demographic factors were taken into account – with employment rates, working hours and the integration of unemployed people into the labour market remaining constant.

Under these assumptions, there will be 46,000 fewer workers available in 2035 than in 2023 – the labour supply will fall to around 4.47 million people.

There will be a shortage of skilled workers in the future – but not in all occupations

What does this decline mean for businesses and economic growth? From a business perspective, a declining labour supply becomes critical when companies are no longer able to fill vacant positions.

Assuming that an additional 200,000 employees will be needed for annual GDP growth of around 1.2 percent until 2035, there will then be a shortfall of around 246,000 workers.

This shows that strategies are needed to increase the volume of work – such as longer working hours, higher labour force participation or more efficient matching of unemployed people and job vacancies. However, such measures only work if they are implemented on a profession-specific basis.

This is because the development of labour demand and supply varies greatly depending on the profession.

Too few bus drivers and lorry drivers, enough IT specialists

We have therefore analysed developments at the level of individual occupations. Two examples show how important it is to take a differentiated view:

Shortage of lorry and bus drivers on the rise: a significant proportion of employees will retire in the next ten to fifteen years. The next generation is unlikely to be able to compensate for these losses. This imbalance will lead to increasing shortages of skilled workers.

No shortage of IT specialists despite rising demand: Demand for IT specialists continues to grow due to increasing digitalisation in various industries. In our scenario, the supply of skilled workers will increase by around 22 percent, as the demographic structure in this occupational group is favourable and the proportion of young and prospective skilled workers is above average. Therefore, despite rising demand, there will be no shortage of skilled workers by 2035, or existing shortages can be mitigated.

Calculations possible for all EU countries and 130 occupations

Scenario calculations such as these enable a differentiated assessment of individual impacts and provide policy makers with a sound basis for setting labour market policy. With the Prognos Skilled Worker Model, we can perform such analyses for up to 27 countries and at the level of 130 ISCO occupational subgroups, taking into account both national conditions and cross-country dependencies.