Executive Search in Austria – 2017 Outlook
Austria Moves to Benefit from Brexit
As the economy slowed last winter, the need to take action to drive economic growth overcame political party conflicts with concrete actions to recruit businesses. This was particularly in response to Brexit which resulted in shifting some business into German speaking countries, notably in banking and IT.
As the German economy continues growing, that in Austria grows by default. Recent forecasts have been cautiously optimistic about economic growth for the first time in years.
Austria´s economy is dependent on trade with the US, Germany, Russia and the Mideast. The US has become the most important trading partner for Austria thanks to the unsettling effect of the US election results. Another political hot point for Austria are the Russian sanctions. High-end retail, real estate, banking, and corporate investment have all been negatively affected, causing many businesses to close.
Support within Austria to drop the sanctions in order to revive the economy is growing as is evidenced by the recent meeting with US President elect Trump and his national security advisor, Michael Flynn.
Germany continues to be an important partner for Austria. With Brexit, opportunities for Germany to benefit are increasing and Austria is positively affected. On the counter side, we see a heavy investment in marketing by local UK trade and investment centers to help UK businesses export into Austria and Central & Eastern Europe.
Unemployment continues to be high and state subsidies for 100,000 refugees have strained the budget. The last few years have also shown a drop in educational credentials at the secondary school level, with PISA test results coming in very low on basic skills. This suggests highly skilled workers in the future may be need to be imported or those jobs will leave. In contrast, local Universities have significantly increased in quality and in world rankings, but keeping these standards up may require more foreign admissions.
The resurgence of “hubs” is starting to increase primarily in Banking and in Automotive. Corporate and investment banking is becoming a strategic focus for Asian and Latin American bank centers though these might be dovetailing on the high interest in corporate structuring and divestment.
The off-loading /sale of non-distressed/healthy Assets by “bad banks” (three bad banks exist in Austria) is continuing ahead of schedule and with more return on investment than anticipated. The automotive sector is rebounding slowly and is expected to increase next year.
Digitalization is the major transformation driver whether in FMCG, industry or banking. The focus is on cost control, managing a streamlined supply chain, minimizing the time between product development and sales and strategic decisions related to local production or near shoring.
Fintechs are of great interest but consensus style management hinders implementation. Most recruiting consultancies are now expanding as they take over functions which have been downsized internally. There is also a greater demand for strategic advisement and operational restructuring continues to be the buzzword for both consultancies and business as both focus on improved financial performance.
There is also a renewed interest in more risk taking to drive the business as both banks and industrials accept that without risk there is no growth. This is leading to different skill qualifications in leaders – more aggressive, with a greater risk appetite.
In the banking sector, the past year has seen major regional banks proactively restructure, with a renewed focus on the core business, a greater appetite for risk and an increased interest in Corporate and investment banking to get a bigger slice of the most profitable part of the pie.
This has resulted in a highly dynamic and rather public turnover on banking boards and consequently, the teams below. As a result, there are now only 2 larger regional banks in contrast to several a few years ago. This next year will bring even more dramatic changes: one major regional bank in Austria which has a significant impact on the economy, is required by regulators to restructure, while at the same time modernizing.
The job market remains very difficult for the educated over-50 but recent public appointments of older board members may open doors for older qualified executives. However, the elimination of a management level, a trend which started last year, has resulted in the demand for “hands-on” leaders, small teams and a high work load at every level, and thus a common concern is burn out.
In contrast, work life balance is demanded by the younger professionals who prefer a flextime or part sabbatical annually to the car package, providing a real challenge for many employers in the service industries. In several industrial sectors including hospitality and tourism, there is a severe shortage of qualified staff and a high turnover rate in many cantons.
The Vienna Stock Exchange (est. 1771 and thus one the oldest) has seen a market improvement following the complete management change-over in early spring
The real questions for Austria in 2017 rest on what changes will occur with President Trump as well as with the German election, just as it is starting to rebound.