Austria Slashes 200 Million Euros from Labour Budget as Germany Reviews School Aid for Disabled Children
13.06.2026 - 03:06:15 | boerse-global.de
Workers over 63 in Austria may soon have to pay unemployment insurance contributions, while the self-employed will lose their health-insurance tax credit entirely by 2028. These are among a raft of cuts the Austrian government has embedded in its 2027–28 dual budget, targeting roughly €200 million in savings from labour-market programmes.
The most contentious change involves Altersteilzeit — the state-subsidised scheme that allows older employees to reduce hours while topping up their income. Originally, the replacement rate for this benefit was set to rise to 90 % in 2029. That plan is now scrapped. Instead, the government will cap the assessment base at 75 % of the maximum contribution base, or about €5,200 a month.
Coalition partners differ on how far to go. The liberal NEOS party proposed limiting Altersteilzeit to workers with medical restrictions, which would slash annual costs from €600 million to €200 million. The centre-right ÖVP defended the programme’s principle but backed the new ceiling.
Other Austrian measures include freezing the earnings limit for marginal employment (geringfügige Beschäftigung) in 2027 and raising the employer levy on those mini-jobs from 19.4 % to 23 %. The Public Employment Service (AMS) will also face reduced funding for corporate-training subsidies.
Across the border, Berlin is wrestling with its own savings drive. A more-than-100-page strategy paper from the Chancellery, titled “Efficient Resource Use in Benefit Legislation,” contains over 70 proposals for social spending cuts. One of the most explosive ideas: abolishing the individual legal entitlement to school assistants and integration aides for children with disabilities. Experts estimate that alone could free up €3 billion. The advance maintenance payment (Unterhaltsvorschuss) for single parents, which reaches more than 850,000 children, is also under review.
The planned legal right to all-day primary-school care, due for the 2026–27 school year, is being questioned too. Opposition politicians warn that short-term savings will create long-term social costs, especially as German municipalities already racked up a record deficit of nearly €32 billion in 2025.
Beyond these immediate budget talks, the federal government is pushing wider reforms. Parliamentary debates in mid-June fleshed out plans for higher co-payments in statutory health insurance and cuts to contribution-free spousal coverage. A rising retirement age is back on the table. At the same time, the government wants to make working hours more flexible by replacing daily caps with weekly limits — giving employers more room to schedule shifts. These reforms are due to advance until the summer parliamentary recess in mid-July.
Who wins and who loses? In Austria, companies will see the employer contribution to the Family Burden Equalisation Fund fall by one percentage point in 2028, a relief worth about €2 billion a year. Labour-intensive sectors such as retail, hospitality and care stand to gain most. But other pockets will hurt. The public broadcaster ORF faces an annual shortfall of €93 million from the abolition of input-VAT reimbursement. Rail infrastructure and spa-rehabilitation facilities are also bracing for cutbacks.
German municipalities, already under financial strain, fear they will be left to pick up the pieces if social entitlements are scaled back. For now, both countries are pressing ahead — Austria with a surgical €200-million package, Germany with a sweeping checklist that could reshape the welfare landscape for millions.
