In EU, Austrians have the most cash to spend on the finer things in life

A study on public services and quality of life shows that Austrian citizens spend only 30% of their income on housing, transport, education and health, compared to the EU average of 50%

The Vienna Institute for International Economic Studies (wiiw) published a study on 17 August claiming that, in the European Union, Austrians have the most money to spend on consumer goods and services outside of the basics, such as housing, transport, education and healthcare.

This is due to the quality, reliability and affordability provided by the public sector in all Austrian cities. Citizens’ income that is not tied up in basic services ends up in the consumer economy and this is what drives the standard of living up.

According to a press release by the City of Vienna, Austrians have the opportunity to enjoy more of the finer things in life, compared to their Anglo-Saxon and Southern and Eastern European counterparts.

The unholy four: rent, transportation, healthcare and education

Exploding rent prices, traffic chaos, crushing healthcare bills and educational misery – according to the study, this is the case for many cities across the EU. The pandemic exacerbated these problems even more, with the quality of life dropping as many citizens experience unemployment.

According to wiiw, the citizens' welfare is largely dependent on affordable public services in housing, transportation, education and health – exactly what Austrian cities have been investing in for years now.

Mario Holzer, the director of wiiw, explained that because welfare states in Scandinavia and continental Europe invest a lot more heavily in these particular services, they can offer a better quality of life and, at the end of the day, citizens have considerably more disposable income. This is what ends up driving a higher standard of living.

The finer things in life

Austria's major cities are at the top of the list when it comes to social housing. In Vienna, 25% of the total housing stock is owned by the city and it serves as a significant buffer to market fluctuations and speculation. Essentially, they blunt any volatile drops and rises in rent prices.

Consequently, a city with a heavily commercialised housing market makes the people vulnerable to rent increases, especially during times of crisis. At the same time, citizens have to save from private consumer spending in order to create this rent buffer themselves. According to Holzer, Italy is a good example of this trend.

The study mainly examined what people in major EU cities spend their money on. It showed what proportion of household income has to be spent on basic needs like housing, transport, education and health. Any income outside these basic needs goes into the consumer economy.

According to Holzner: "It also indirectly determines how much money people save for vacation, restaurants, culture or sport - that is, the finer things in life".

The study reports that around 70% of Austrian citzens’ income is not spent on basic services, such as housing, healthcare, transport and education. This makes them the absolute leader in the European Union.

France holds a not-so-close second place - their population has around 65% of their income not tied into basic services. The Netherlands rank third with 63%.

The past and the future

European cities have seen an increase in the prices of basic general-interest services in the recent 40 years and this trend shows no signs of slowing down. In the 1980s, the average European spent only 30% of his income on housing, transportation, education and health. That number jumped to 50% until the 2010s.

Austria exhibits similar trends. In 1999 citizens spent only 23% on basic services, with the number rising to 30% until 2015.

Public services of general interest have been getting more expensive over the years and this is no doubt due to the mortgage debt crisis to some extent, with austerity measures hitting the most vulnerable population. However, it is also due to gradual privatisation and chronic underfunding in the public sector.

The study’s author Mario Holzer doubled down on the idea of expanding the social housing system, as a way to free up income for citizens, thus providing a higher standard of living.

This is one of the key sectors where public spending can have the most impact, as everyone needs a place to live, while housing tends to eat up most of people's earnings.

Renate Brauner, Head of the Office for Services of General Interest and Municipal Services of the City of Vienna was quoted, saying: "The present study proves that the massive investments by the public sector in the areas of housing, health, education, transport, etc. also benefit each and every individual personally. To put it bluntly: the best general-interest public services give everyone more leeway for everyday conveniences".