Foreign direct investment (FDI) in Austria provides the knowledge and financial resources needed to stimulate the economy and sustainable development. In addition, the activities and employment practices of foreign affiliates of multinational enterprises influence the creation and quality of jobs, including for women. This report asseses gender equality and women's empowerment in the Austrian labour market. It then examines the impact of FDI on several dimensions of gender equality, including employment, wages, skills development, career progression and entrepreneurship. It also briefly explores areas for policy consideration.
FDI Qualities Review of Austria
Abstract
Executive Summary
Foreign direct investment (FDI) inflows in Austria have increased with the rise of global value chains (GVCs) in the 2000s. Investment has thus importantly contributed to Austria’s economic growth and rising per capita incomes. Since 2009, however, Austria has experienced a decline in FDI inflows, which has led to a stagnation of the FDI stock at around 40% of GDP. FDI is mainly directed towards service activities, in particular head office and management consultancy activities, reflecting Austria’s role as a regional hub for multinational enterprises (MNEs). New establishments of foreign MNEs or ‘greenfield investments’ are an important component of total FDI and can directly bring new knowledge and technologies to the host economy. In Austria, greenfield FDI is primarily concentrated in manufacturing (55%), particularly in the production of motor vehicles, electronics, and pharmaceuticals.
FDI contributes to making Austria a more resilient and sustainable economy. Foreign companies contribute significantly to value added and exports (30% of total value added and 40% of total exports). FDI also supports the expansion of the most productive sectors, i.e. those sectors where an hour of work creates the most added value. Moreover, foreign companies are on average more productive and more likely to invest in R&D, to use foreign technologies and to innovate than domestic companies in Austria. Austria has a remaining gap in renewable energy production relative to its comparators. Foreign investments in renewable energy have increased in Austria, accounting for 100% of energy FDI and 3% of total greenfield FDI inflows over 2017‑21. Nonetheless, Austria lags considerably behind peers such as Germany, Denmark and the Netherlands that receive 2 to 3 times the amount of FDI in renewables per USD of GDP.
Besides supporting the economy and sustainable development, FDI can also advance gender equality in Austria by creating new and better jobs for women, and by supporting their career progression and participation in entrepreneurship. However, FDI is not always directed where it is most needed and its impact on gender equality is not automatically positive. This report offers an assessment of gender equality in Austria’s labour market, and provides a detailed analysis on how FDI is influencing these outcomes:
Gender stereotypes are more prevalent in Austria than in other OECD countries. Gender stereotypes reinforce the idea that childcare, care of the elderly and domestic work fall under the responsibility of women, and men should be main income earners in the family.
Austria’s traditional family model underlines deep gender asymmetries in paid and unpaid work. Women’s labour force participation is lower than men’s (73%, compared to 82% for men). Women also work more part-time (36% compared to 9% of men). These gender gaps are more pronounced than in several OECD countries with similar traditional family models. Gender imbalances also exist in unpaid work, as women spend considerably more time than men on domestic work and caring for children and the elderly. A sub-optimal participation of women in paid work puts a strain on economic growth and rising living standards.
Women also face worse working conditions. They are paid less for work of equal value (the hourly gender pay gap of 20% is among the highest in the OECD area) and, they more often have non-standard contracts and less qualified positions. They are over-represented in services (especially in health and social care, trade, hospitality and education – fields that pay relatively lower wages) and under-represented in manufacturing and construction.
Women and men do not have the same opportunities for career advancement. Few women become managers (only 35% of managers are women) or choose to start a business (only 2.4% of women are entrepreneurs with employees, compared to 6.4% of men). Gender asymmetries in the labour market also stem from the different choices of fields of study and career paths of women and men. Men are more likely to prefer science and technology fields of study, while women tend to choose the fields of social sciences and humanities, education and health. Men prefer occupations with higher and more secure incomes, while women prefer those compatible with career breaks and part-time work.
FDI supports the development of sectors with a good gender balance in terms of labour force participation, as it mainly benefits service sectors, namely professional services, finance, trade and real estate. However, sectors with significant shares of FDI are characterised by high gender wage gaps.
Greenfield FDI is concentrated and has a greater employment impact in male‑dominated sectors like construction, manufacturing (especially motor vehicles, electronics, machinery and equipment), transport and information and communication. As these sectors have low levels of female labour force participation, the job opportunities created by greenfield FDI are likely to benefit men more than women.
Gender practices of foreign compared to domestic firms are mixed. Foreign firms in Austria employ on average a lower proportion of women than domestic firms, particularly in plastics and rubber, food, computer activities and construction. Yet, foreign firms pay higher wages on average and have a higher share of trained workers than domestic firms in almost all sectors. On the other hand, foreign firms do not seem to have a positive impact on career progression and entrepreneurship of women, as evidenced by the lower proportion of foreign firms with female top managers and with women in ownership compared to domestic firms.
Given its contribution to economic growth, innovation and job creation, FDI holds potential to address some of the gender gaps in the Austrian labour market. Strengthening the positive impact of FDI on gender equality requires targeted policy actions, but also the continuation of a broader reform agenda to eliminate gender gaps and strengthen the empowerment of women in the Austrian society and the economy. Increasing the participation of women in sectors receiving significant shares of FDI is crucial for women to have equal access to job opportunities generated by FDI. Supporting the development of talent, including female talent, can enable Austria to attract increasing shares of FDI in sectors deemed strategic from an investment promotion perspective (e.g. green tech, artificial intelligence), while generating skilled and well-paid jobs for women. Strengthening the link of existing policy schemes with gender equality objectives is also a way to support more gender-inclusive business practices in companies, including foreign ones. It is important to mainstream gender in all programmes and policies of investment institutions and to promote their co‑ordination with organisations responsible for gender issues.
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