Austria to reward companies for hiring locals

VIENNA (Reuters) - Austria’s coalition government approved new employment rules on Tuesday to ensure workers already in the country are given priority for new jobs over potential immigrants from other EU states in an attempt to halt an increase in unemployment.

However, the plans could undermine the European Union’s principle of free movement of people and prompt opposition from Brussels. A European Commission spokesman said the EU executive would not comment on legislation it has not yet examined.

Immigration into Austria’s labour market, especially from its poorer eastern European neighbours, has been rising for years due to its significantly higher wages and social benefits.

Unemployment in Austria is still relatively low at 5.7 percent, under a harmonised EU measure, but is steadily rising and the government is also facing slower economic growth.

Under the plans, EU nationals already resident in Austria would also enjoy priority along with Austrian citizens over newcomers from outside the country.

“This has nothing to do with hostility towards foreigners. I do not care about the birth certificate but I do want to solve a problem we are dealing with in Austria,” Chancellor Christian Kern said in a Facebook message.

Under the new rules, the government will halve non-wage labour costs for three years starting from July for companies which create new jobs and hire people in Austria changing jobs or registered as unemployed.

Graduates of an Austrian educational institution and highly-qualified third-country workers with a special working permit can also be hired under the plans.

The deal will cost 2 billion euros (£1.69 billion) and will help to create 160,000 new jobs, the government said.

Kern said he was confident of winning the green light from Brussels, adding that Austria had to find creative solutions to apply European regulations in order to curb unemployment.

Reporting by Kirsti Knolle; Editing by Gareth Jones