Austrian Construction Workers Outpace Inflation with 3.5% Pay Hike as Economy Shows Mixed Signals
12.06.2026 - 15:17:09 | boerse-global.de
Wage settlements across Austria are sending a split signal about the state of the labor market. While a new deal for roughly 250,000 construction workers delivers a 3.5% average raise — above the inflation rate — other sectors are settling for much less, and the central bank warns that the era of strong wage growth is winding down.
According to the Oesterreichische Nationalbank's Policy Brief 2026/1, the rapid pay increases that marked the labor market since autumn 2025 have begun to ease. Recent agreements now often land below the inflation rate, and multi-year contracts are becoming more common.
The construction sector bucks that trend for now. After collective bargaining in the spring wage round, wages for the industry will climb an average of 3.5%. Broken down by sub-sector, the construction industry, general building trade, and bodywork construction segments are getting the largest increase at 3.6%. For individual trades, that translates into concrete annual gains: a skilled worker in construction can expect roughly €1,690 more per year, while a tiler will earn about €1,550 extra.
Josef Muchitsch, chairman of the Bau-Holz trade union (GBH), called the negotiations fair and thanked the employer side.
Looked at over a longer horizon, construction workers have fared well. Since 2019, wages in the sector have risen by 31.4%, while cumulative inflation over the same period stood at 27.3% — meaning a real increase in purchasing power.
The picture is bleaker in the chemical industry. After eight rounds of talks, a deal was finally reached for about 50,000 employees. Actual wages and salaries will rise by 1.8% — capped at a maximum of €100 per month. There is also a one-time payment of €300, or an optional free day. Minimum wages are going up by 2.0%. Employers pointed to a sharp 18% drop in production over the last three years and the loss of 600 jobs in the fourth quarter of 2025.
A separate adjustment is looming for the public sector. Starting in July 2026, some 227,800 federal employees and state-level teachers will receive a 3.3% salary increase. The decision was actually taken in December 2025 but was postponed due to the budget situation.
On the fiscal side, the government is planning to lighten the burden on employers. As part of the 2027/28 dual budget, the contribution to the Family Burden Equalisation Fund (FLAF) is set to drop from 3.7% to 2.7% beginning in 2028. That would save businesses roughly €2 billion per year. To offset the revenue loss, a progressive corporate tax of 24% on profits above €1 million is under consideration. The final decision on the dual budget is scheduled for July 10, 2026. Whether any reduction in ancillary wage costs will be passed on to workers remains an open question.
