The golden hourly rate

The golden hourly rate

A familiar situation: The customer gives the work order – a service plus small details if they arise. A few days later the customer comes and wants to pick up the car. When he is handed over everything is still fine, but when he is served the bill, his eyes darken. Several hundred euros – made up of materials and working time. With a new car this might be bearable, but with an old bowl? If you now put the service and repair costs in relation to the vehicle value, you can understand that customers are gasping for air. The question is therefore: has the pain threshold already been reached? Can a company even increase hourly rates without losing customers and therefore the necessary business?

Hard facts
Let's look at the numbers in detail: The Chamber of Labor's consumer protection department compared the hourly rates from 2003 with those from 2013. Only workshops in the Vienna area were observed - both independent and branded companies. The numbers are quite surprising: an average mechanic's hour has risen from around 82 euros including VAT to 115.22 euros. That's 40.5 percent more within ten years.
Plumbing hours rose from 95 to 144.12 euros - an increase of 51.7 percent. The painter's working hour rose from around 97 to 146.30 euros. Plus 50.8 percent. Roughly put: within ten years, mechanic costs for customers have increased by around 50 percent. This is a remarkable number because inflation - the annual rate of increase - was 24.7 percent over the same period over ten years. That's half.
For the workshop customer, the feeling is that the costs have increased disproportionately. Even if one assumes that contract employees have been compensated for inflation increases of an average of 2.47 percent, the hourly rate in the workshop is still around 25 percent higher than their own salary development.
For comparison: According to Statistics Austria, the current average net hourly wage of an employed Austrian, including vacation, special payments, sick days, etc., is around 12.50 euros. Anyone who has their car repaired has to work for around ten hours before the workshop hour is earned. A spicy misery – for both sides.

Clear words
Friedrich Nagl, Federal Guild Master of Automotive Technicians, finds clear words in the interview: “The pain threshold has not only been reached, it has already been exceeded.” When asked how it could be that the rate of inflation in the company is twice as high as inflation, Nagl also knows the answer: "There are several reasons: Firstly, the additional wage costs. These amount to 104 percent. If a company pays its employees three percent more, then it costs them six percent. If the company itself wants to earn something, the increase would have to be around eight percent. And that, with only three percent more wages for the employee. Seen in this way, companies have not had all the costs in the last ten years passed on, but swallowed some of it myself.” The Chamber of Commerce confirmed to us that for one euro more in wages, the company has to spend two euros. It is not just the mechanic's wages that drive the price in the hourly rates, but all operating costs must be taken into account. "In addition to wage costs, investment costs have also increased. In addition, modern vehicles are becoming more and more complex. This means that the training and further education of employees must be promoted - that also costs a lot of money," says Friedrich Nagl.

Change framework conditions
Erik Papinski, Federal Guild Master of Body Construction Technicians, sees it similarly to Nagl: "The non-wage costs are making Austria increasingly less attractive as a business location. Bear in mind that even Raiffeisen and Voest are openly talking about emigration." Papinski also believes that the pain threshold for customers has been reached: "Yes, definitely. Because you shouldn't forget that all additional costs are ultimately borne by the end customer. Be it for the butter or in the workshop." Therefore, according to Papinski and Nagl, the framework conditions must finally be examined and changed. The high additional wage costs are not only a burden for companies, but also for employees, as often less than half of the salary increases are received. So is the ball in the politicians’ court? Yes, to a large extent. But that's not all, as Papinski continues: "Some companies probably don't calculate completely correctly. But you can hardly blame them for that, since smaller and medium-sized companies in particular hardly have the capacity to deal with bank negotiations and detailed cost calculations in addition to their main business. It's not so much the understanding that is missing, but rather the time." Friedrich Nagl sees a great need for action: "In order to be able to make a correct calculation as a company, many aspects such as trade regulations, social security systems, tax conditions, etc. have to be taken into account. But who has the time for that? Especially when all of these factors are constantly changing."

And now?
Erik Papinski advocates a fundamental reorganization. "Take a look at America. The tax system there is much simpler than ours, and it still works. We have to go through the whole system and clean it up. That would help a lot." Friedrich Nagl sees the companies in a dilemma: "The motor vehicle companies can no longer pass on the additional costs to the customers because the pain threshold has already been exceeded. Therefore, they are on the brakes on investments, which can lead to a competitive disadvantage in the long term." Nagl doesn't have a panacea, but he does have some well-intentioned advice: "You can save to death and invest to death. The goal is the healthy middle ground. Reasonably calculated prices but just no usury or dumping offers." Because these would subsequently damage the entire industry. And no one can afford that right now.