The resurgence of the far right has abated and Austria has returned to consensus politics
Austria is one of Western Europe's most mountainous countries. The western two-thirds of the country fall within the Alps, in ranges that run from east to west divided by broad river valleys. Another smaller and less dramatic highland region extends from the north of the country into the Czech Republic. Lowland Austria is largely in the east, including the Vienna basin through which flows the Danube on its way to Slovakia.
In ethnic terms, Austria is fairly homogenous, though there is some representation of neighbouring nationalities. The end of the cold war also saw a further surge of immigration from Eastern Europe, following the war in former Yugoslavia. As a result, between 1989 and 2007 the proportion of foreign-born rose from 4% to 10%—though these flows have eased now as border controls have been tightened. Immigration did at least temporarily rejuvenate the population. Otherwise, with a fertility rate of only 1.4 children per woman of childbearing age, the population is ageing fast: by 2030 over-60s will be 32% of the population.
Austrians enjoy one of Europe's more generous systems of welfare. Parents are entitled to three years of maternity leave, for example. But many welfare benefits including retirement benefits have recently been cut to reduce future liabilities.
Two-thirds of Austrians are now employed in service industries, from banking to transport. And following the opening up of Eastern Europe, many foreign companies use Vienna as a base. One of the more significant service industries is tourism. In 2005 Austria had around 20 million tourist arrivals which have been growing around 2% per year. People from other European countries are drawn to Austria's rich cultural heritage and to the scenic and winter sports attractions of the Alps.
Austria is also an important centre for manufacturing, which employs around 17% of the workforce and accounts for 21% of GDP. Traditional industries such as textiles and footwear have stagnated, but others have been expanding, including electronics, chemicals, and metals. Much of the output consists of medium-technology intermediate goods for other European countries, particularly Germany.
Agriculture now employs only 1% of the workforce, but Austria is still largely self-sufficient in food, much of it produced using ‘organic’ methods. Large herds of livestock, particularly in the mountainous west of the country, also allow for the export of some dairy products. And, with around two-fifths of the country forested, there are also exports of timber.
Austria has a system of social partnership
Austria has enjoyed steadier economic progress than many other European countries. Much of this is due to its distinctive system of sozialpartnerschaft (social partnership). This involves regular discussions between employers, trade unions, academics, and agricultural representatives. Most major economic policies derive from this process of consultation which has contributed to stable labour relations, low inflation, and extensive welfare benefits—though it has also diminished the status of the parliament.
Until recently, consensus was also the major characteristic of Austrian politics. For most of the period since the Second World War, Austria has effectively been run by two parties generally in a coalition. From 1970 onwards, the dominant partner has often been the centre-left Social Democratic Party (SPÖ), which draws its support from labour and trade unions. In 1997, Viktor Klima took over as party leader and became chancellor—head of the government. The second party was the centre-right Austrian People's Party (ÖVP), led by Wolfgang Schüssel, which is linked to the Roman Catholic Church and draws its support more from the middle class and business.