Wage theft and social dumping: the current situation and countermeasures

Wage theft and social dumping gained significant importance in Austria at the latest in the wake of the opening of the labour market in 2011 for the so-called new EU member states. The Wage and Social Dumping Prevention Act (LSD-BG), which came into force at the same time, represents a legislative milestone in the fight against dumping practices and distortion of competition, and its provisions are the subject of ongoing efforts to further develop and adapt them.

In this context – and following on from a series of previous studies the Vienna Chamber of Labour has commissioned a study to examine the topic of “Wage theft: status quo and legal countermeasures” from various perspectives, starting in 2025.

• Study 1 dealt with the assessment of the effectiveness of penalties for underpayment as a result of the LSD-BG reform in 2021. To this end, a comparative analysis was carried out of the severity of penalties imposed in relation to the extent of underpayment in legally binding penalty notices in the construction sector from 2020 and 2022 (see research report).
• Study 2 analysed the extent and distribution of the percentage wage theft based on reports in the construction sector from 2024. The extent of the percentage of wage theft plays a key role in the implementation of the LSD-BG, as it has a decisive influence on the level of the penalty applied for and imposed, in addition to factors such as the duration of the underpayment and the number of underpaid employees.
• Study 3 focuses on investigating current patterns and manifestations of social fraud and wage theft as well as challenges in combating them, drawing on the expertise of key players in this field.