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The introduction of Social Insurance
In 1887/1888, the industrial accident and health insurance scheme for workers was introduced following the model of Bismarck’s social policy programme. The scheme would become the foundation of today’s social security system. These measures were first considered as early as 1882 and led to a new, previously unknown path being taken in Austrian legislation: the introduction of statutory mandatory insurance.
Social health insurance provided for free medical treatment, medicines and appropriate sick pay, while work accident insurance provided for injured persons’ and survivors’ benefits. Workers themselves funded two thirds of the costs of the system (mandatory insurance), while the other third was financed by employers. The social and health insurance scheme was administered by self-governing bodies and did not receive any government subsidies. In 1889, a law on miners’ associations was adopted which established health insurance and pension insurance schemes for workers in the mining industry. This law also fulfilled the demand for the separate management of the financial accounting of the two insurance branches. A further measures ensured that members were allowed to have their shares of the reserves of the previous fund transferred to the new fund when moving from own miners’ associations to another one.
One of the reasons for the introduction and the necessity of social insurance was the poor state of health of conscripts and the social situation of wage earners. The 1887 Workers’ Accident Insurance Act created for the first time a statutory insurance institution. This insurance institution was structured territorially and was run by a board of management under state supervision. In the same year, the Workers’ Health Insurance Act of 30 March 1888 was proclaimed. The organization of health insurance funds was in accordance with German law until the end of the First World War.
In the second half of the 19th century, private white-collar workers (private officials) - owing to the increasing number of large companies with bureaucratic organizations - started to constitute a separate social group. In two petitions to the Imperial Parliament, the introduction of mandatory pension, invalidity and surviving dependant’s was demanded and in 1906 the Act regarding Pension Insurance for Private White-collar Workers and some Public Employees received the Emperor’s official approval. It did not include either a payment guarantee on the part of the state or government subsidies. Notable aspects of this law are the principles of mandatory insurance and unlimited independent registration. Those liable for mandatory insurance were divided into six salary groups and contributions were paid as fixed premiums of varying amounts according to the salary groups. In the lower four salary groups, the liability to pay contributions was divided between employer and employee in a ratio of two thirds to one third; in groups 5 and 6 it was halved.
In 1918 there were a total of more than 600 health, pension and work accident insurance institutions in the territory of modern Austria alone. Hundreds of these were health insurance funds or blue-collar workers, white-collar workers in agriculture, commerce and trade, etc. This fragmentation was also reflected in a range of umbrella organizations which were organized according to professions, regions or other criteria. In comparison to today’s organizations, they only assumed a small number of common tasks.
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