“Brunnenmarkt”, street market in Vienna’s 16th district

After the disasters of the first half of the 20th century, First World War, Great Depression, Second World War, disintegration of the Austro-Hungarian Empire, Austro-Fascism and Nazi regime, holocaust and ethnic cleansing, Vienna, the former 2-million multi-ethnic capital of a 50-million peoples’ empire, had turned into a provincial town, capital of a 7-million country, with a decreasing, rather homogenous population. Since the middle of the 1960s the lack of much needed workforce at the times of the economic boom years led to a change of attitude towards labour migration in Austria. The census of 1961 registered 7,074,000 inhabitants in Austria; 102,000 of them foreigners, most of them German citizens, the lowest number ever.

In 1961 the first recruitments abroad for the construction industry took place. Of the agreed 7,300 persons only 1,800 arrived, mostly from Italy. In 1962 a recruitment agreement with Spain under the fascist regime of Franco was unsuccessful. Between 1962 and 1964 37,000 “guest workers” were invited annually, but those numbers of migratory workers never arrived in Austria. Austria did not seem to be an attractive destination at that time. Finally in 1964 a recruitment agreement was signed with Turkey and an official Austrian recruitment office was opened in Istanbul, which was closed nearly 30 years later in 1993. In 1966 such a recruitment agreement was signed with Yugoslavia, too, together with a social agreement that regulated the claims of the workers with respect to health, accident and pension insurance. An official Austrian recruitment office was opened in Belgrade. In 1969 a similar social agreement was negotiated with Turkey. In general, recruitment offices were of minor importance because most migrants entered Austria via tourist visa and their stay was later legalised after they had worked here for some time. The status of these migratory workers was precarious, as the two following examples show: In 1965 Yugoslav workers at the company Iso-Span in Obertrum, Salzburg, went on strike because they received lower wages than agreed. As a consequence the strikers were taken in custody pending deportation. The same happened in 1966, when Yugoslav workers in a construction company in Admont, Styria, went on strike.

Political crises in neighbouring countries also had an effect on migratory movements in Austria. When the dissatisfaction of the Hungarian population with the Soviet domination culminated in the Hungarian revolution of 1956, approximately 180,000 Hungarians fled to Austria and took residence here temporarily. In 1968 160,000 Czech and Slovak refugees settled in Austria for some time due to the revolution in Prague that was crushed by the Soviets as well. After the military coup-d’état In Turkey in 1980 – one of several coup-d’ètats there – the Turkish refugees in Austria received “guest worker” status and that’s why their exact number is not known. When in 1980 martial law was imposed on Poland, more than 35,000 Polish refugees came to Austria, most of which remained here permanently. When in 1991 the war in Yugoslavia started Austria welcomed approximately 90,000 refugees from ex-Yugoslavia over the next four years.


Austrian National Bank, Vienna, completed in 1925 by Ferdinand Glaser and Rudolf Eisler

The Euro was a grand experiment in real time much observed by economists. If you create a single currency you take away the two most important tools of governments to steer the economy, namely the exchange rate and the interest rate. In the first years the single currency system was working well, but that was no real test because there were no economic shocks. The first big shock was 2008 and all the fears of economists came true. Europe was not able to respond adequately.

Before the euro was created the question had to be posed: What are the conditions for a single currency? And unfortunately Europe did not satisfy any of those criteria. First, if there is a shock where regions are differently affected, is there true free labour mobility? In the US people move if there is not enough work in one region or state; there is no real identification with those places. That is totally different in Europe. Greece does not want an “empty” country with all the young moving to other parts of Europe. Second, there should not be too many economic differences for a single currency to work, but the idea was that the European countries would move more closely together with the euro and unfortunately that was a wrong assumption. The Maastricht criteria of 60% stock of debt and 3% flow of deficit should have moved the economies closer together, but there is no economic theory on these figures; they are completely arbitrary. On the contrary, there is evidence that even above 90% debt-GDP ratio there is no negative effect on growth. In the post-World War II years the US had 130% debt-GDP ratio and GB 250% and the Eisenhower administration reacted with an investment programme instead of an austerity programme, e.g. the GI bill which offered free higher education for everyone who needed it or the Highway bill with extensive investment in infrastructure or the R&D bill with government investment in scientific research. With these measures the debt GDP ratio went down to around 50% in a few years due to these governmental investments in human capital, infrastructure and science. Due to high economic growth rates these two countries got rid of their debt without any crisis.…