HEPL blog series: Country Responses to the Covid19 Pandemic
The COVID-19 containment strategy shows effect. In mid-June, the government was applauded by a top rank official in an EIU report which compared the efficacy of response in OECD-countries. Strong inbound travel restrictions which were relaxed recently played an important role in the assessment. While Austria saw isolated outbreaks in some parts of the country at the end of June, the cumulative infection rate (241 in 100 000) at the end of July was about half the rate in France or in the UK. The number of deaths is largely constant since the end of April (8 per 100 000). The total number of tests performed per 100 000 (96) was lower than in the UK (134) but higher than in Italy (65). Research shows that infections and deaths due to the epidemic have no poverty gradient. Yet, the probability of infection on the level of districts rises with unemployment.
Recession has kicked-in, unemployment has soared, minor recovery in sight. To weather the COVID-19 shock to the economy, the government established a recovery fund aimed at e.g. stabilizing health care provision, revitalizing the labour market and cushioning revenue losses. In mid-May the fund was allocated about 25 billion EUR and was elevated to 41 billion EUR in mid-June to bolster the recovery.
As regards securing the liquidity of enterprises, commentators and the opposition criticized the bail-out of “Austrian Airlines”, the national carrier, as a giveaway to the mother Lufthansa without safeguarding enough national interests. While companies lay off people or file bankruptcy, employment has slightly increased thanks to summer tourism in the last weeks of July. At the European Council meeting in July, Austria has successfully lobbied for higher paybacks in light of increased Member States contributions following the exit of the UK from the block. Austria also pushed for reduced transfers in the “Next Generation EU” programme and proudly presented its prominence as a “frugal country”.
A recovery fund for health is not yet defined. Estimates suggest that 2.5 billion EUR is needed to reimburse extra spending for providing protective measures in federal states. Expected revenue losses in health financing would add another 1.1 billion EUR in 2020. Health related provisions of the recovery fund tentatively foresee 4 % of the assigned 41 billion EUR. Thus far, there are no plans to boost demand by public investment in health and care. This is overdue as improved access and better-balanced quality care are needed.
Legislation to guide public behaviour is criticized to lack accuracy. There is an ongoing debate about the quality of government legislation. For example, police fined people for disobeying the law even though its content was not accurate. Claims are partly dealt with by the People’s Attorney who promised to help find compensation even if fines were already paid. On July 24 the mandatory use of face masks in supermarkets was restored as infection rates partly started to trend upwards. Legal experts consider this unconstitutional as it does not apply to all other shops. The Ministry of Health argues that groceries are a necessity while buying shoes is not. While also the legality of distance rules is questioned, the Minister of Health asks to keep one-meter distance, corresponding to the size of a “baby elephant”. On August 1, a traffic light system was introduced to regionalize alerts. Federal states endorse the system, guidelines are in the making.
“Salzburger Festspiele” are a show case for comeback of the arts and events. The lessening of shut down measures started on May 1 and was cautiously phased in to keep infection rates under control. At the start of June concert halls could hold events with a reduced number of visitors. The biggest classical festival “Salzburger Festspiele” was opened on August 2 with tight measures to prevent the spread of infections. Still, the whole branch organizing events remains in limbo. There are a variety of summer outdoor events that are required to keep records of the personal information of visitors. Contact tracing appears widely accepted on such occasions. Still, the acceptance of a “StoppCoronaApp” seems low. There is general nervousness – health wise and in economic terms – on how the pandemic will evolve in the autumn. This is reinforced by the announcement to drop restrictions, e.g. that gatherings can be held for up to 10,000 people.