PESTEL analysis of Austria
The aim of this article is to conduct a detailed PESTEL analysis of Austria. Austria is mostly a mountainous and landlocked country in south-central Europe. It is officially known as the Republic of Austria. Vienna is the capital and its largest city.
Political forces that affect Austria
Austria is a parliamentary representative democracy where the federal president is elected directly. The president works as the head of state, whereas the chancellor works as the head of the federal government. The country comprises of nine federal states/provinces, and the major political parties are the Austrian People’s Party, the Social Democratic Party of Austria, the Austrian Freedom Party, the Greens and the NEOS.
Austria was one of the major powers in Central Europe until the First World War. Things have changed over the years, yet it is a very important country in Europe. It is a member of the European Union, the United Nations, and many other international organisations. Indeed, Vienna is an excellent location and therefore a huge number of international organisations have their offices in there.
However, Ebner (2019) states that racism and corruption have become very normalised in Austria. The rise of far rights is concerning, and the Ibiza scandal has shocked the nation. In December 2020, a former Finance Minister of the country was also sentenced to eight years in prison because of his involvement in corruption.
Economic forces that affect Austria
A variety of economic factors impact on how companies operate in Austria. Austria’s economy did well in the last decade. The GDP in 2019 was worth $446.31 billion dollars (Trading Economics, 2020). However, it was estimated to go down by 8% in 2020. It is not estimated to go up significantly in the next few years (OECD, 2020).
It is not surprising that unemployment increased in 2020 because of the economic crisis and global lockdown. This resulted in weak tax revenues and the government had to offer economic support to people and companies. The government’s support has been useful to save a huge number of jobs and companies from going out of the market.
Austria is a highly developed country with a free market economy. It is one of the first countries that adopted the euro in 1999. Its service sector contributes 62.5% to the GDP (Import Export Solutions, 2020). Tourism plays a major role and brings in millions of tourists to the country every year. Other notable industries are agriculture, food & drink, construction, electronics, transportation, and mechanical engineering. It is worth noting that organic farming is very popular in Austria.
Social forces that affect Austria
Another issue to discuss in the PESTEL analysis of Austria is the country’s social environment. Austria is a highly developed and wealthy country. The standard of living is very high, and people usually have comfortable levels of household income. Austrians are well known as big savers as they usually have a high level of private savings.
The current population in Austria is just over 9 million (Worldometer, 2021). The official language is German; however, English is very widely spoken as well. The vast majority of the people are ethnic Austrians; however, Austria accommodates a number of ethnic minorities such as Germans, Swiss, Bosniaks, Turks, Hungarians, Croats, and Slovenes. Austria is famous for the Alps and winter sports are a favourite pastime (Zöllner, 2020).
There are some social challenges that need to be taken into account. Though the country is wealthy, it does not mean everyone is. Approximately 12% Austrian nationals and 33% non-national migrants are at risk of poverty. Families with three or more children are also badly hit by poverty. Likewise, income inequality is also a problem. For instance, Austrian women earn 23.4% less per hour than men, even though they are better educated than men (Global Dialogue, 2020).
Technological forces that affect Austria
Many industries in Austria are greatly benefitting from digitalisation. A number of research institutes and universities conduct advanced and intensive research in many areas and 3% of the country’s GDP goes to R&D. No wonder why companies such as Red Bull, PALFINGER, Greiner and Borealis, KTM, and Kreisel Electric are the global market leaders in their fields! However, it is worth mentioning that the rate at which start-ups are coming out in Austria is lower than in many advanced European nations.
Environmental forces that affect Austria
Salzburg Altstadt (UNESCO World Heritage Site), the Vienna Hofburg (Imperial Palace), picturesque small towns, cathedrals, waterfalls, medieval castles, stunning lakes, and many more attractions are in Austria. Skiing is very popular, so are mountain climbing and biking. However, industrial pollution has been a problem for a long time. Likewise, avalanches can sometimes become very disruptive for people living near ski resorts.
Legal forces that affect Austria
Judges in Austria are not subject to any government interferences. The Constitution ensures that all citizens are equal before the law. Under the Equal Treatment Act, both direct and indirect discrimination are prohibited in workplace. Employees are entitled to 25 day’s pay holiday per year in addition to 13 public holidays.
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Last update: 03 January 2021
Ebner, J. (2019) Austria’s crisis is a lesson for Europe: far-right parties are unfit to govern, available at: https://www.theguardian.com/commentisfree/2019/may/23/austria-crisis-europe-far-right-freedom-ibiza-scandal (accessed 01 January 2021)
Global Dialogue (2020) Inequality, Poverty and Prosperity in Austria, available at: https://globaldialogue.isa-sociology.org/inequality-poverty-and-prosperity-in-austria/ (accessed 25 December 2020)
Import Export Solutions (2020) Austrian Market: Main Sectors, available at: https://import-export.societegenerale.fr/en/country/austria/market-sectors (accessed 29 December 2020)
OECD (2020) Austria Economic Snapshot, available at: http://www.oecd.org/economy/austria-economic-snapshot/ (accessed 30 December 2020)
Trading Economics (2020) Austria GDP, available at: https://tradingeconomics.com/austria/gdp (accessed 30 December 2020)
Worldometer (2021) Austria population, available at: https://www.worldometers.info/world-population/austria-population/ (accessed 01 January 2021)
Zöllner, E. (2020) Austria, available at: https://www.britannica.com/place/Austria (accessed 28 December 2020).
Author: Joe David
Joe David has years of experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality and tourism management.