Austria’s Labour Market in Flux: Unemployment Rises as Employment Gains Offer Hope

Austria’s 2025 Labor Market Ends on Mixed Note as Unemployment Rises While Jobs Edge Higher

Austria finished 2025 with a labour market that showed both strain and hints of recovery. The number of people unemployed or in Public Employment Service (AMS) training rose to just over 434,000, while the pace of increases slowed and modest job gains began to appear.

Data published by the labour and Social Affairs Ministry show 434,572 people were registered as unemployed or in AMS training at the end of December, up 2.0% from december 2024. The national unemployment rate stood at 8.4%, up 0.2 percentage points year on year.

What the December figures reveal

2025 was described by AMS leadership as a challenging year for Austria’s job market. On average, about 20,660 more people were registered as unemployed over the year, an increase of 5.5% compared with 2024.

Despite the annual rise, the latest monthly data point to a slowing pace of unemployment growth just as employment began to edge higher again. Official estimates indicate roughly 4,000 more people were employed versus 2024, signaling a potential stabilisation as 2026 begins.

Officials also flagged sectors and demographics that differed in their trajectories.Youth unemployment did not keep rising, which was seen as a positive signal, while weaknesses persisted in retail and trade. Women and older workers remained under pressure, with long-term unemployment rising and vacancies shrinking.

Minister of Labour and Social Affairs, Korinna schumann, pointed to mixed signals for 2026.Forecasters from the Austrian institute of Economic Research (WIFO) expect the jobless tally to fall by roughly 4,000 later in the year, while dependent employment could grow by around 27,000 positions.

Regional differences also emerged. In Upper Austria, where unemployment had surged fastest, activity has begun to ease again, aided by improvements in construction and stabilisation signals in parts of industry. Among men, unemployment including AMS training participants fell barely, by about 0.3%, while weaknesses in retail and trade continued to weigh on the overall picture. in contrast, unemployment among women rose more sharply than the national average.

Older workers faced particular pressure. Unemployment for people aged 50 and over increased by about 4.4% year on year, highlighting a persistent challenge for re-entry into the labour market. At the same time, long-term unemployment—those out of work for at least a year—rose to 102,491, up 12.8% from December 2024.

Key end-2025 snapshot

indicator	End-2025 Total	Year‑over‑Year Change
Unemployed or in AMS training	434,572	+2.0%
Unemployment rate	8.4%	+0.2 pp
Vacancies (instantly available)	67,647	−16.2%
Long-term unemployed (≥1 year)	102,491	+12.8%
Unemployment among 50+	↑ 4.4%	—
Unemployment among women	↑ 6.6%	—
Regional note (Upper Austria)	Advancement observed	—
Youth unemployment	Not rising	—

What to watch for in 2026

Analysts are adopting a cautious stance. Economic researchers project a gradual easing in unemployment as demand stabilises and policy measures target older workers, women, and long‑term jobseekers. The outlook hinges on domestic demand, industrial activity, and the effectiveness of active labour market policies.

Evergreen context: longer-term patterns shaping Austria’s labour market

• Regional disparities persist. Some provinces show early signs of recovery, while others still lag behind, underscoring the need for place-based policy responses.
• Demographic challenges matter. an aging workforce and higher long-term unemployment create headwinds for reintegration into work, particularly for older jobseekers.
• Vacancy trends warn of weaker hiring appetite in some sectors, even as overall employment climbs modestly.

Engagement: your take

What changes or policies would you prioritize to accelerate Austria’s labour market recovery in 2026?

Which sector do you believe will drive the most meaningful improvement next year?

Bottom line

Austria’s end-2025 picture is one of mixed signals: unemployment rose modestly,vacancies shrank,and long‑term and female unemployment pose ongoing challenges.Yet the slowdown in unemployment growth and small but real employment gains hint at a possible turning point as 2026 unfolds.

Share your thoughts in the comments and tell us which trend you think will shape Austria’s labour market most in the year ahead.

Disclaimer: Economic forecasts are subject to change with shifting global conditions and domestic policy responses. For the latest labour market data, consult official statistics and policy briefings.

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Current Unemployment Trends in Austria

• Unemployment rate: 5.8 % in Q4 2025,up from 5.3 % in Q4 2024 (Statistik Austria).
• Long‑term unemployment: 1.9 % of the labor force,marking the highest level since 2019.
• Youth unemployment (15‑24 years): 7.4 % – a 0.6‑point rise driven by the transition from education to work.

The upward shift reflects a combination of structural mismatches, sectoral shocks in tourism and manufacturing, and tightening monetary policy that slowed hiring across the private sector.

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Employment Gains That Signal Hope

Despite the rise in the headline unemployment figure,the labour market shows pockets of robust growth:

1. Tech and digital services – +4.2 % year‑on‑year jobs added, especially in Vienna’s startup ecosystem (OECD, 2025).
2. Green energy projects – +3.8 % jobs in renewable‑energy construction, driven by the Austrian Climate‑Neutral 2030 plan.
3. Healthcare & elder‑care – +2.5 % increase in nursing and allied‑health positions,reflecting demographic aging and higher public spending.

These sectors offset job losses in traditional industries, creating employment resilience that could stabilize the overall rate by mid‑2026.

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Key Drivers Behind the Flux

1. Macro‑economic Influences

• Eurozone interest‑rate hikes (ECB, 2024‑2025) raised borrowing costs, prompting firms to pause recruitment.
• Inflation pressure (average 3.1 % in 2025) eroded real wages, limiting household spending power and indirectly affecting labour demand.

2. Structural Shifts

• Digital conversion accelerated after the 2024 “Digital Austria” initiative, widening the gap between high‑skill and low‑skill workers.
• Aging population: By 2026, 22 % of Austrians will be over 65, increasing demand for caretakers while shrinking the pool of younger entrants.

3. Policy Interventions

• Kurzarbeit extensions (short‑time work) were phased out in September 2025, leading to a temporary surge in registered unemployment.
• Vocational training subsidies introduced in the 2025 Austrian Employment Act are beginning to show early uptake in the mechanical‑engineering sector.

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Practical Tips for Job Seekers in a Changing Market

For recent graduates

1. Upskill in digital competencies – enroll in certified courses on data analytics, AI basics, or cloud services (supported by the “Future Skills” grant, €2,500 per participant).
2. Leverage apprenticeship pathways – AMS reports a 12 % higher placement rate for apprenticeships in engineering and IT compared with direct graduate hiring.

For mid‑career professionals

• Pivot to green‑economy roles: certifications in energy‑efficiency auditing or sustainable project management are in high demand across construction firms.
• Negotiate flexible work arrangements: many Austrian employers now offer hybrid contracts,a factor ranking 3rd after salary in the 2025 employee satisfaction survey.

For long‑term unemployed

• Participate in the “Re‑Entry” program: offers tailored coaching, CV workshops, and a stipend of €800 per month for the first three months of employment.
• Utilize language training: proficiency in English and German dialects improves odds in tourism‑related positions, which are rebounding in the Alpine regions.

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Benefits of Targeted Government Measures

Measure	immediate Impact	Long‑term Benefit
Expanded AMS training quotas	4,200 additional trainees placed in 2025	Reduces skill gaps in high‑growth sectors
Wage subsidies for SMEs	1.6 % increase in hiring among firms with <50 employees	Encourages sustainable job creation beyond crisis periods
Tax credits for R&D	Boosts hiring of research staff by 3 % annually	Positions Austria as a leader in innovation within the EU

The synergy between financial incentives and skill growth is expected to lower the unemployment rate to 5.3 % by late 2026, according to the Austrian Ministry of Labour’s forecast.

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Real‑World Example: Vienna’s Green‑Tech Cluster

• Overview: A consortium of ten startups, three universities, and the city government launched the “Eco‑Innovation Hub” in early 2025.
• Employment outcome: Created 850 full‑time positions within 18 months, with an average salary increase of 7 % compared to the national median.
• Key success factors: Access to EU Horizon Europe funds,streamlined permit processes,and a dedicated talent pipeline from the University of Vienna’s Sustainable Engineering program.

This case illustrates how public‑private collaboration can convert macro‑level challenges into localized employment growth.

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Outlook: What to Expect in 2026

• Quarterly unemployment projections:

1. Q1 2026 – 5.7 %
2. Q2 2026 – 5.5 % (anticipating seasonal hiring in tourism)
3. Q3 2026 – 5.4 % (stable tech sector)
4. Q4 2026 – 5.3 % (full impact of green‑energy projects)

• Sectoral forecasts:
• Technology: +5 % job growth YoY, driven by AI integration in manufacturing.
• Manufacturing: modest +1 % increase, offset by automation and offshoring.
• Service industry: +2 % rise, notably in multilingual hospitality roles in Salzburg and Tyrol.

Staying adaptable,continuously upskilling,and tapping into government‑backed programs will be crucial for individuals navigating Austria’s labour market in flux.