What the Austrian backpack is
It is the nickname for Abfertigung Neu, the severance model Austria introduced in 2003. Instead of the company paying a large severance sum at the time of dismissal, it contributes a percentage of the salary to an account in the worker's name, month by month, throughout the employment relationship.
The name backpack comes from its key feature: the account is individual and portable. If you change jobs, the backpack goes with you. It is not lost or reset, unlike traditional severance pay.
How Abfertigung Neu works
The company contributes 1.53% of gross salary each month to a fund managed by a specialised entity, the Mitarbeitervorsorgekasse. The money is invested and generates returns, and the worker is the account holder.
That contribution replaces classic severance pay. The company does not pay a huge sum upon dismissal, but a small, predictable instalment each month, which reduces the one-off cost of dismissing and facilitates labour mobility.
When the money can be withdrawn
After three years of contributions, if the company dismisses you, you can choose: take the fund as severance pay or leave it invested. If you leave voluntarily, you cannot withdraw it, but the money remains yours and stays in the fund until retirement.
On retirement you can take it as a lump sum or as an annuity. It can also be redeemed in some cases, such as becoming self-employed. The idea is for the worker to have a cushion linked to their career, not to their current company.
Why it is discussed in Spain
The Spanish severance system is one of the most expensive in Europe, with 33 days per year for unfair dismissal. The Austrian backpack is proposed as an alternative: monthly contributions to an individual account, cheaper and more predictable for the company, and portable for the worker.
For now it is only a recurring debate among economists and political parties. It has not been applied in Spain, and its implementation would require a long, negotiated transition, because it would be necessary to decide what happens to severance rights already accrued.
Advantages and disadvantages compared with the traditional model
The main advantage is portability and predictability: the worker does not lose accrued severance pay when changing jobs, and the company does not face a concentrated payment upon dismissal. It also encourages dismissals to be decided on productive criteria rather than the cost of severance.
The drawback is that, because the money accumulates gradually, a worker made redundant after a few years receives much less than with a traditional severance payment. And in crises, the fund depends on market returns, not on a guaranteed amount.
