ABSTRACT
Austria is among a handful of Western industrial nations whose social climate has remained benign in the face of worldwide economic crisis. That alone would be reason enough to look more closely into the methods and results of Austria's income policy. The role of the economic and social partners in modern Western industrial societies in the determination of income policy boils down to this: They can either interfere with or support the goals of official economic policy, but they can never become a substitute for policy. Austria's industrial build-up, productivity, and favorable foreign price structure—the basis of its competitive edge and export capability—can be maintained only in the absence of the sort of high-wage policy that has grown up among the other international trading nations. The goal therefore must be externally stable real-wage and real-labor costs that take into account the rising prices of their most important foreign competitors.
