Is there an unemployment benefit in India?

Kocher: "If the unemployment benefit is too high, the incentive to look for a job decreases"

The style already differs from that of the predecessor. The new labor minister, Martin Kocher, does not wait to face the media, but rather gives eager interviews in his first week at work. Discussing critically, he likes that, he will say after the interview.

DEFAULT: When you were sworn in, you received an order from the Federal President to align your policy so that there were no social upheavals. How do you intend to do that?

Stove: As Minister of Labor, you can only fulfill this mandate if you make sure to create as much employment as possible after the pandemic. This requires cooperation between all relevant departments.

DEFAULT: You are recognized as an independent expert. Is there even an objective scientist who acts value-free?

Stove: No. Every scientist also has a foundation of values. But there are areas with clear evidence. That does not mean that there are no ideological reasons not to follow it. But it's important to talk about evidence.

DEFAULT: Let's do that. Unions and SPÖ are calling for unemployment benefits to be raised by 55 percent of final earnings. You are against it. What studies say a temporary increase would be bad right now?

Stove: There are hardly any studies on this, but there was not such an exceptional situation before. But we know that the incentive to look for a job decreases when the unemployment benefit is too high. That is a truism in itself. So it's about what the model looks like. That's why I was in favor of a model whereby compensation is higher at the beginning and then decreases. In general, I would find it bad to change the system now during the crisis.

DEFAULT: Why? 520,000 unemployed people are currently registered with the AMS, but only 50,000 vacancies. And unemployed people have to accept job offers and apply.

Stove: Hopefully the 1:10 ratio will only be the case in time. We need a regulation that works in good and bad economic times.

DEFAULT: The ÖVP has longed for degressive unemployment benefits. What would the benefit of that be? First there would be a higher replacement rate of 70 percent, which then goes down to ...?

Stove: Which then goes down to 55 percent or a little below that at the end. This would have the advantage that those affected initially do not lose so much when they become unemployed. You could quit your job and look for a new job, and a few months would not have such big losses. The incentive would then be to look for a job as quickly as possible. We are currently giving the implicit signal: You have a very long time, up to two years, if you have long insurance periods. Our big problem is long-term unemployment, and we are also not good at this when compared to Europe. That is also a little bit due to our system: that we have unemployment benefits of a constant 55 percent.

DEFAULT: A job offensive has been promised for the time after the pandemic. How exactly should it look?

Stove: 700 million euros have already been earmarked, which will be used in the coming years to create qualifications for job seekers. For those areas where there is a high demand: care, digitization and the environment and nature.

DEFAULT: It works for people who lose their job in the short term. But there are more and more long-term unemployed. Would a revival of Aktion 20,000 be conceivable for this group?

Stove: Long-term unemployed people who have lost their jobs due to the pandemic and cannot get one are less stigmatized than unemployed people before the crisis. But it's true, we have to face the problem without blinkers. The term "Aktion 20,000" will no longer exist. There are also active employment models now. My approach is pragmatic. The 20,000 campaign worked in certain areas; it was too broad in scope.

DEFAULT: Are you expecting a savings package?

Stove: No, I am not calculating. It would be wrong to think seriously about it at this stage. Now it is a matter of getting out of the crisis and creating growth and employment again. We don't have a massive public debt burden right now because interest rates are low. That may be different again in five or ten years, but now there is no reason to stifle an easy start to an economy with a debate about tax increases and austerity packages, because then people will not consume and companies will not invest. Then we would have now spent a lot of money in vain.

DEFAULT: Austria has actually spent a lot, but the effect of many measures is doubtful. So the income tax was lowered. Higher earners tended to benefit more from this. They put their money in the account, it doesn't help the economy. As an economist, you have to be critical of that.

Stove: The main aim of the pandemic was to cushion negative effects and not so much to provide positive impulses beyond that. The tax cut may not have had such a major impact in one form or another due to the poor economic situation. But that doesn't mean that it might not be successful in the next year or the year after that. And most of the money went into an area where I am convinced that it was really important: short-time work, fixed cost subsidies, sales compensation, deferrals and liabilities. These things were critical to avoiding disaster.

DEFAULT: One criticism of the programs is that the distribution was one-sided because entrepreneurs benefited more than employees. How do you see it

Stove: There was a first study, which Wifo presented in the summer, on the distributional effect of aid for employees. This showed that the bottom fifth of income earners benefited the most because there was a temporary increase in unemployment benefit because there were increases in the family bonus. It has hit those who have become unemployed, they are the losers of the crisis. But it also hit the middle, lower area. It is not yet really possible to assess how the measures were distributed. You will have to look at that, and this will also play a role in the tax measures that you may be taking in two or three years' time, if you see that there have been upheavals from the point of view of justice and distribution policy.

DEFAULT: What speaks of the right to justice against a tax for heirs of millions?

Stove: I don't think much of looking at individual taxes. There are a few findings for the Austrian tax system as a whole: One can talk on the basis of a package that this should be increased and that must be reduced. Unfortunately, in the past 20 years we have never managed to create an overall package.

DEFAULT: You are sitting on a ministerial ticket from a party that is at war with empiricism: All the important studies say that wealth is taxed too low and work is taxed too high in Austria. The ÖVP is blocking this.

Stove: Some say we already have such a high tax burden and are therefore not allowed to have any new taxes, and others say we should increase wealth taxes. If you say that we only create wealth taxes, and that in addition, I think that's bad. But there is nothing against discussing how to change the tax structure.

DEFAULT: So you have to talk about everything?

Stove: We will have to talk about a lot, if only because there will probably have to be a price for CO2 emissions in the medium term. (András Szigetvari, January 14th, 2020)

Martin Kocher, Behavioral economist, was head of the Institute for Advanced Studies from 2016 to 2021. The interview was conducted together with the "Tiroler Tageszeitung".

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