Your role in the economy

The five central roles in an economy

As economic stakeholders, people participate in the economy in different roles. The same person can have different roles, depending on different situations and trade relationships. The five central roles in the economy are: 

• Citizen
• Consumer
• Employee
• Entrepreneur
• Investor or borrower (this is further explained in Saving and investing as well as Debt and credit)

Different roles come with different goals, opportunities, risks and options. Depending on your role, you will have different ways of influencing the economy. For self-determined economic participation, it is important to know about and deliberately chose your roles and opportunities. Economic agents also influence each other in their respective roles.

If you want your choices to be those of a self-determined and conscious economic stakeholder in the Austrian economy, you need to have these connections in mind. Some of the aforementioned roles are described in further detail below.

The role of the citizen

"Citizen" is a word that is frequently used in politics. In our everyday lives, we often overlook the fact that this term implies two fundamental rights. In democracies like Austria, being a citizen means having a right to participate in decisions that affect our obligations as citizens, i.e. the laws that apply to all of us. Then it also implies the right to participate in decisions about how compliance with these obligations is checked and how misconduct is sanctioned. This applies to both the economic and the social dimensions of our lives. As a political system, democracy and the general and free elections associated with democracy ensure that all citizens get a say in these decisions. 

Elections give citizens the possibility to vote for political parties and candidates who represent their interests. They can thus have an indirect influence on laws, rules and mechanisms that impact our economy. In Austria, elections take place at different levels. The smallest elected unit is the municipal council, which takes decisions at municipal level. Then there are elections at province level. Austria’s provinces are called the Bundesländer or Länder, their local government is the Landtag. Furthermore, there are elections for the National Assembly (Nationalrat) as well as presidential elections. All Austrian citizens over the age of 16 are allowed to vote in these elections. Furthermore, Austrian citizens also get to vote at EU level and decide who gets to represent them in the European Parliament. In Austria, anyone over the age of 16 has the right to vote in EU elections, provided they are a citizen of an EU country. 

Other democratic instruments that allow citizens to have a say in lawmaking are the petition (German: Volksbegehren), the non-binding (consultative) referendum (German: Volksbefragung) and the binding referendum (German: Volksabstimmung). 

If you want to influence the state’s economic and socio-political decisions, you need to vote in elections and voice your opinion through the instruments mentioned above.

As citizens get to participate in decisions about their own rights and obligations in Austria and the European Union, they also have a responsibility to adhere to Austrian and EU law. When it comes to the economy, this primarily means:

• engaging in legal economic activity and avoiding white collar crime or getting involved with the shadow economy 
• paying taxes, fees and social security contributions in order to contribute to a stable society and economy
• supporting the EU single market principles

As Austrian citizens are jointly responsible for Austria as a state and as an economic area, in principle, they get to participate in the economy on fair terms. 

Ich als Konsumentin oder Konsument

As consumers we find ourselves on the demand side of markets. As natural persons, all Austrians take on this role when they buy a product or service for private purposes. Compared to companies, consumers are seen in an economically and legally weaker position in Austria’s eco-social market economy. Therefore, various laws grant consumers in Austria special protection. Many of these laws are based on European directives and regulations that are drafted by the European Commission, the European Parliament and the 27 EU member states. Examples include regulations in the area of finance, unlawful contractual clauses, criminal business activities, package holidays, online sales, but also food safety. The most important national laws in this context are the Consumer Protection Act, the Data Protection Act in conjunction with the General Data Protection Regulation of the EU as well as Austrian legislation regarding consumer loans, distance selling and e-commerce. 

As a consumer it is worth finding out about your rights in advance. This is especially true for expensive purchases. 

Consumers play an important role for the Austrian economy in two respects.Firstly, they have an influence on pricing. In addition, their preferences and purchasing decisions determine the demand for different consumer goods. 

Austrians’ consumer decisions lead to the following breakdown of private household expenses: Around a quarter and thus the largest part is spent on housing and energy. Transport, food and leisure/sports/hobbies each account for around one-eighth.

Housing and energy fulfill basic needs and make up the largest block of expenditure, accounting for around a quarter of consumer spending. Transport and leisure/sports/hobbies are where Austrian consumers spend the second- and third-largest share of their money. They only partially count as basic needs. The fourth major area of consumption is food and nonalcoholic beverages which clearly are necessary to meet basic needs.

In total, all Austrian households’ consumption accounts for more than 50% of the country’s gross domestic product (GDP). Private consumption is thus the most important source of domestic income for the Austrian economy. A single consumer’s behavior usually only has a rather limited economic effect. However, all consumers together have a major influence on Austria's economy and markets. This is due to their combined purchasing power. If there is no demand for certain consumer goods in an eco-social or free market economy, these will quickly disappear from the market because no supplier will want to keep offering them. Conscious shopping therefore not only has an impact on your own household, but also on Austria's economy as a whole. Every consumer can consciously influence the demand side of Austria’s economy through their purchasing decisions.

Faced with the many options for consumption, many consumers are tempted to spend amounts that are higher than their respective household incomes. Therefore, conscious purchasing decisions are important. If you buy a consumer good and do not pay for it immediately, you incur consumer debt or take out a consumer loan. Consumer debt that you cannot repay is a burden in several respects. First of all, you will have to pay interest and fees for overdue consumer loans. Furthermore, where household expenses are not covered by corresponding income, this represents a major psychological burden. Consumer debt is also a burden on the economy as a whole. After all, companies lose revenue when their clients do not pay them for their consumer goods. This revenue is what entrepreneurs will then lack when they want to make purchases themselves, which would increase overall domestic demand. We can try to avoid accruing consumer debt through conscious planning. However, it may be unavoidable when unexpected crises occur. A budget plan can be helpful to avoid foreseeable consumer debt. You can use it to track your income, consumption, investments and how much you would like to save, in order to get an overview of your budget. It may equally be helpful in managing debt accrued following a personal crisis experienced through no fault of your own, if you are unemployed or going through a divorce, for example.

The role of the employee

In our economy, some opt to become entrepreneurs, while others may work as employees. Employees are people who work for employers (companies and other forms of organizations) and receive pay from them in return. Some of them are blue-collar workers, some are white-collar workers, and others have free service contracts. The pay they get for their labor is also called remuneration. This remuneration is referred to as wage for blue-collar workers and salary for white-collar workers.

Almost 4,000,000 people in Austria earn their income as employees. Employees in Austria receive a statutory pension upon retirement. Their pension allows them to continue to participate in the economy and act as consumers. Employees’ work makes a significant contribution to Austria's economic output. Therefore, employees enjoy a lot of legal protection in Austria. For example, if you lose your job after having been employed in Austria for at least six months, the statutory unemployment insurance replaces part of your previous pay in the form of unemployment benefits. However, employee protection does not only include unemployment benefits or other social benefits after the loss of a job.

There are also various legal regulations that protect people in active employment. For example, there are legal regulations regarding discrimination, health and safety at work, working hours or termination without notice. In part, these regulations also protect applicants for an open position throughout the application process. For further information about these laws and regulations, see the Austrian government’s detailed overview.

In addition, 98% of employees in Austria are covered by collective wage agreements that set out basic rules for their sectors and professions. These rules govern how work is to be organized as well as a minimum pay. In Austria, these agreements are negotiated by the social partners. They are a distinctive feature of the Austrian labor market. Only a small number of jobs are not subject to a collective wage agreement. On the website of the Austrian Economic Chamber, you can see whether there is a collective wage agreement for a certain job or profession, or not. Many companies have staff agreements in addition to the collective wage agreements. These are contracts between employer and employees within a specific company that regulate the organization of work in detail. Furthermore, there are individual agreements for every single employee which regulate their individual employment relationship. This must be a written agreement, either in the form of a service note or of an employment contract.

The role of the entrepreneur

Entrepreneurs run companies. A company is an organization that engages in independent economic activity over an extended period of time, either for profit or not. Around 500,000 people in Austria are self-employed entrepreneurs, which is how they earn their income. The majority of them operate as one-person businesses, which means they have no employees other than themselves. 

Entrepreneurs also play an important role as part of the Austrian economy. In addition to creating jobs, they also assume certain economic risks and responsibilities. These are associated with the success or failure of entrepreneurial plans in the various markets of the Austrian and international economy. Their investment and willingness to assume responsibilities are important for innovation which can generate new business opportunities in Austria. Ultimately, it's entrepreneurs who seek, establish and maintain export and import relationships with businesses and customers abroad. Without import and export, Austria's economy would not survive. 

Especially in an eco-social market economy like Austria’s, entrepreneurs have to be ambitious and apply their knowledge of the economy to implement projects that respect our environment and serve our society. They need to align the economic requirements with the ecological and social dimensions of Austria’s economic system. Healthy progress can then be aligned with simultaneous economic growth. Last but not least, by paying taxes, fees and other contributions, entrepreneurs and companies in Austria play an important role for the stability of the social and economic system.

Working as an entrepreneur means having a lot of responsibility but also freedom of choice. Entrepreneurs often bear the economic risks associated with their decisions, while also being under great performance pressure and having to invest a lot of time in their companies, especially during the first years. If you are considering setting up a business, you should properly think your decision through, even in a stable economic area, such as Austria or the EU. For further information, see setting up businesses.

A difficult situation that can arise for entrepreneurs and private individuals alike is insolvency. Unpaid bills, taxes, fees and other open payment obligations can cause financial damage to all citizens and the economy as a whole because other citizens will, in part, have to compensate the state as well as the economy for the resulting financial loss. Though, insolvency can also be a way for companies to remain in business and save jobs. Whether insolvency is the best decision for all stakeholders must be considered carefully and on a case-by-case basis. In any case, becoming a responsible entrepreneur is a great way of getting involved in actively shaping Austria as a business location.