Why Did Austrian Business Oppose Welfare Cuts? the Role of Organizational Structures in Shaping the Attitudes of Economic Interest Groups towards Social Policy Retrenchment

In recent decades, business interests became protagonists of welfare retrenchment in many countries. In contrast, Austria’s national business organization, the WKÖ, defended welfare programs and social partnership against government initiatives to dismantle them. Drawing on interviews and media reports, this paper analyses the reasons for this deviation, focusing on reforms in two fields: (a) public pensions, and (b) social insurance administration. The paper suggests that the institutional setup of interest representation in Austria explains this stance better than alternative explanations that focus on competitive advantages. The paper identifies compulsory membership, equal voting rights and encompassing organization as the relevant features of the institutional setup. These features shaped the WKÖ’s social policy attitudes in two ways: first, by ensuring a strong role for small firms, and second, by reducing the vulnerability of the organization to discontented minorities. The findings point to the importance of organizational structures in shaping associational policy preferences.