Vienna – a city benefitting from its economic diversity

Christian C. Pochtler, President of the Viennese Federation of Industries, and Walter Ruck, head of the Vienna Economic Chamber, talk about the challenges facing Austria’s capital city.

The Covid crises plunged Vienna into a deep recession. The gross added value fell by 5.6 percent in 2020, even though it is actually less than the decrease in Austria overall (–6.4 percent) thanks to a less dramatic slump in the first half of the year. The consolidation after summer was also negative, however – minus 4.8 percent (–4.6 percent nationwide). The decrease stems entirely from the Viennese service sector (tourism, transport, culture and leisure), says the Austrian Institute of Economic Research WIFO (Österreichisches Institut für Wirtschaftsforschung). Employment went down by 2.4 percent in the annual average of 2020 (- 2 percent nationwide), but part of it came down to a statistical one-time effect.

WIFO expects a strong economic recovery during the remainder of the calendar year thanks to the re-opening of businesses and the continuing solid upswing in international (industrial goods) trade. This will give Vienna a growth in added value of real 3.6 percent and in increase in employment by 2 percent in the annual average of 2021 – despite the country being mostly in lockdown from January to May. Vienna will follow the nationwide upwards trend (+3.9 percent and +2.1 percent respectively) with a slight lag resulting from the very slow recovery of the international trade in services and thus urban tourism, which is of course an important economic factor for Vienna. Regional employment will also recover along the strong upwards trend. But even WIFO warns that this outlook should be regarded with caution: There is a high number of uncertainties affecting any prognoses on the economic development this year.

But enough of boring numbers. Christian C. Pochtler, President of the Viennese Federation of Industries, and Walter Ruck, head of Vienna Economic Chamber, will tell us their views.

Mr Pochtler, Mr Ruck, how are the Viennese businesses doing at the moment? Christian C. Pochtler: Vienna’s industrial sector was able to keep working almost continuously during the pandemic and remains the economy’s engine in times of crises. Still, this period has been and continues to be a big challenge for many of our members, particularly in sectors where they depend on interna-

Walter Ruck: “We need measures that favour and support the increase of equity capital in companies, e.g. in fiscal law.”

tional supply chains. However, after an initial moment of shock most of them managed to react very well to the new situation and therefore we will be able to contribute significantly to the upswing – if the outside factors permit it. It will be critical for our success to secure enough skilled workers in numerous fields and also to secure highly necessary raw materials and semi-finished products. Walter Ruck: The Viennese companies are foremost very relieved that they are able to work once again without hardly any restrictions. Furthermore, the business indicators point towards a quicker recovery of the economy than expected. This is very good news, of course. Vienna will benefit strongly from this, as it is a very diverse business location. This is one of our strengths. But we can still see that sectors that depend highly on tourism are still fighting with the effects of the pandemic. Vienna misses its international guests.

The number of vaccinations kept rising before the summer while the number of infections fell. We seem to have overcome the worst. But have we really? Is the crisis over? What do we need to look out for now? Pochtler: The vaccinations were and remain the game changer in the fight against the pandemic – both when it comes to health and the economic fallout. Therefore, the Federation of Industries has always campaigned intensively to have key workers vaccinated quickly after vulnerable and high-risk groups. Together with the City of Vienna and the Vienna Economic Chamber we came to a good solution in spring. But the crisis isn’t over yet. Aside from issues on health, the economy and the job market will need longer to recover completely from the effects of the pandemic. Political decision-makers need to create clever incentives to boost entrepreneurial activities and to safeguard wealth and jobs in Austria in the long run. I’m thinking foremost of investment incentives such as an investment bonus and long-awaited tax reliefs. The reduction in corporate tax that the government programme has promised would be a good first step. Ruck: The Delta variant of the virus is currently spreading, unfortunately. The top priority is therefore to avoid further lockdowns. Quick vaccinations and reliable tests are necessary. We are in a good position in Vienna: There is an ample offer to get vaccinated and I’m very happy that we were able to implement city-wide PCR tests quite early. The programme “Alles Gurgelt” ensures that everyone has easy and ample access to PCR tests.

We should always think positive – so what are the positive findings you are taking with you from the Covid crisis? Pochtler: Every crisis is clearly also an opportunity. We must not carry on as usual after the pandemic is over and revert to old

Viennese businesses need to increase their equity capital. The Federation of Industries and the Economic Chamber want to help them do so.

habits. Rather, we have to learn from the mistakes made during this crisis in order to be ready for the next challenges such as climate change. Something that I learned personally from the crisis is that you can only solve global problems globally. This will apply to climate protection just like it applied to the pandemic – or maybe rather should have applied. In politics we need a more holistic, evidence-based planning strategy combined with the appropriate management know-how to implement measures in an effective and orderly way. If society manages to draw the right conclusions from this crisis and apply them to future problems, then the pandemic will have made us more resilient in the long run. And that is something positive to me. Ruck: Crises are always an accelerator of developments, and that also applies to the Covid pandemic, of course. The speed of digitisation has gone up, for example. Many businesses that had so far not really tackled the issue have taken the bull by the horn during the pandemic. All related funding has been used up very quickly and we had to keep replenishing the coffers. We need to keep this momentum in digitisation up once the pandemic is over. There are still gaps in high-speed internet coverage, even in Vienna. And from a social point of view, we saw that it makes sense to look out for one another a little bit more.

What is the Viennese Federation of Industries planning for next year? Pochtler: We will not fully overcome the economic crisis in 2022 either. We will therefore put all our efforts into creating the right conditions for companies in Vienna and Austria that allow for innovative and successful economic activities. These issues include strengthening the equity capital base of our businesses, continuous digitisation and appropriate measures to fight the lack of skilled workers. But next year will of course be dominated by climate change, something that we want to work on closely with political decision-makers in order to create a transformation that is both ecological but also economically and socially sustainable.

And what is the Economic Chamber going to focus on in 2022? Ruck: The crisis has shown that our businesses need to increase their equity capital. We need measures to promote and support the creation of our own capital – for example in fiscal law. The experiences made during the Covid pandemic need to be analysed in detail and then be worked into a new Epidemic Diseases Act. We need appropriate, contemporary plans to be ready for the next potential crisis. We are going to push for that. ◆