The economic crisis triggered by the Corona shock is – measured by the decline in gross domestic product and the rapidly increasing unemployment – the deepest crisis in 100 years. A wave of bankruptcy threatens in autumn, says Christoph Badelt.
The head of the Economic Research Institute (Wifo), Christoph Badelt, warned on Sunday in the ORF “press hour” about high unemployment in Austria in the next few years. Labor market policy is therefore one of the most important areas of post-corona policy. On the four-day week demanded by the SPO, he said that working hours should be regulated more at the collective agreement and industry level.
The economic crisis triggered by the Corona shock is – measured by the decline in gross domestic product (GDP) and the rapid rise in unemployment – the deepest crisis in 100 years. But it should be much shorter than past crises. After the 10 percent decline in the second quarter, positive growth rates are expected again in the third quarter. But growth next year will not bring the economy back to pre-crisis levels, he predicts.
Badelt expects unemployment to remain high despite new growth. In the autumn, therefore, a corona-specific extension of short-time work would be needed. Furthermore, one had to pursue the “ordinary labor market policy” in order to reduce the high unemployment. This includes a wide range of measures, from good equipment of the AMS labor market service to a qualification campaign and more apprenticeships to a better education policy.
The four-day week should be “discussed objectively,” he said. However, he did not believe in imposing additional costs on the economy through a central specification of working hours. It is smarter to act at the collective agreement and industry level. The proposal raised a long-term issue, namely the consequences of digitization, and a short-term one, the end of short-time work.
Bankruptcy wave in autumn
In autumn there is a risk of bankruptcy because the small and medium-sized enterprises in Austria have insufficient capital resources on average and because then various deferrals from the Corona period, for example for financial and social security contributions, expire. Therefore, companies have to be supported by equity capital and private capital must also be mobilized through a fund that participates in companies. “It will be necessary very, very quickly,” said Badelt.
The economic researcher considers the billions of state aid for the Austrian economy to be fundamentally correct. The message “whatever it costs” was necessary to build trust. There were certainly bureaucratic problems in the implementation, which should be conceded. After the Corona period, there was a great need for investments in care and health, research, transport and climate protection.
Badelt expects a compromise on the controversial EU reconstruction program. “It would not be wise to leave Italy in the rain, it would not make economic sense either,” said the economist, making a comparison with the state’s bank bailout at Heta. A large country like Italy cannot simply be dropped economically. Chancellor Sebastian Kurz (OVP), who has been on the brakes with Sweden, the Netherlands and Denmark, has already hinted at a possible compromise. If the money goes to the right areas, such as research or nursing, be it a good plan.
A “huge immoral experiment” is currently underway in the United States because the corona pandemic is accepting the disease and death of hundreds of thousands, but does not want to affect the economy, Badelt said. This is a “paradoxical situation”: He thinks it is morally reprehensible, but it could be better for the economy than a shutdown. If America fell into a total economic crisis, it could be the nucleus for a global economic crisis.
When asked about the structure of the Wifo, he defended the board of directors, which is staffed by social partners. The scientific work of the economic researchers takes place completely independently, he emphasized. “The bottom line is that we can go through our projects without anyone telling us what to do.”