Nationalized Industry

   The nationalization law of 26 July 1946 made the Republic of Austria the sole shareholder in 70 privately owned mining and manufacturing concerns throughout the country. These included all of the country’s coal, iron, lead, and copper mines; oil fields and refineries; electrical power plants; and the chemical industry. In terms of overall employment, the nationalization measure made the government the controlling force in about one-fifth of the nation’s industry. The three major investment banks—the Creditanstalt, the Länderbank (Provincial Bank), and the Mortgage and Credit Institute—were also affected. The purpose of the legislation was to give Austria control over economic resources that had become German assets after the Anschluss and that were not governed by Austrian legislation immediately after World War II. Industries in the Soviet zone were under the direct supervision of the occupier and were therefore not subject to the nationalization measure until the Austrian State Treaty of 1955. A second law—of 26 March 1947—covered electrical power plants owned by the various provinces and other power-producing installations.

   Until around 1965, the state played an active role in the management of these industries. Inefficient though they sometimes were, their productivity did rise, spurred on by profits from an expansive export market in which global competition was weak. The relatively quick pace of economic recovery in Austria, along with philosophical differences over the role of central planning in the economy between the dominant political parties in Austrian coalition governments, led to a restructuring of the arrangement in 1970. The government became the largest shareholder in the Austrian Industrial Management Corporation. The management of the firms within this organization was largely in the hands of their individual directors, though these people were often closely tied to the major parties, the Socialist Party of Austria and the Austrian People’s Party. The function of the nationalized undertakings was not only to show a profit, but to keep Austria employed and socially harmonious. By 1972, the state industries accounted for 20 percent of Austria’s Gross Domestic Product and employed 29 percent of its labor force. No country in Western Europe had a higher percentage of its productive capacity under state control. In terms of absolute size, the nationalized segment of the Austrian economy in non-Soviet Europe was second only to that of France.

   Until the middle of the 1970s, social goals and economic realities ran on parallel courses. However, the worldwide energy crisis of that decade, along with shrinking markets for the output of heavy industry, upset this relationship. Austria’s nationalized industries received much criticism from those who thought that state control was an open invitation to bureaucratic inefficiency, political favoritism, and outright corruption. A mounting national debt contributed to the persuasiveness of their arguments.

   From 1975 to 1985, intensive consolidation and reorganization of the state industries took place, though employment remained at acceptable levels. In December 1993, a new law was passed opening the way for a privatization process that is still going on. Many industries have been downsized, disbanded, or sold off to private owners. Although some state-held businesses still remain and do well, others continue to underperform.