When the Nazis took power in Germany the Socialists changed their view on the Anschluss, which took place in 1938 and brought Austria into the Second World War.
During this period, the grand coalition combined with the "Proporz" system – whereby important posts throughout the government were shared out between members of the two main parties – evoked rising discontent.
It was united in 1889 as the Social Democratic Workers' Party of Austria (German: Sozialdemokratische Arbeiterpartei Österreichs, SDAPÖ) through the work of Doctor Victor Adler.
By January 1918, strikes were breaking out, calling for an end of the war and the terrible suffering that the people, especially the worker's families, had to endure.
[3] The party clearly wanted to steer Austria towards political union with Germany, calling the new Austrian republic "Deutsch-Österreich" (German-Austria).
The socialist-led city government built the first Gemeindebauten for the working class, such as the Karl-Marx-Hof, Sandleitenhof, and the public housing estates on the Gürtel ring road, and instituted social, healthcare and educational reforms.
[5] Within the grand coalition, the parties were able to agree on a package of reforms such as the 8-hour-day (8-Stunden-Tag), the worker's council law (Betriebsrätegesetz) and negotiations for a new republican constitution, which came into force on 10 November 1920.
The Communist Party of Austria (KPÖ) formed its Red Brigades and the conservative CS followed suit, founding its Heimwehr (Homeland Protection Force).
The existence of armed political militias and vigilante groups, alongside the regular police and army forces, did not bode well for the stability of the young republic.
The burning of the Palace of Justice and the bloodshed surrounding it symbolised a break within the republic, marking the coming end of democracy.
The socialist militia resisted the police force, and during the course of the week armed fighting broke out in Vienna and other SDAPÖ strongholds such as industrial areas.
Nazi Germany was increasing the pressure by scheming and manipulating political events, as well as planning and carrying out terrorist attacks on infrastructure within Austria.
The successor of Dollfuss, the conservative chancellor Kurt von Schuschnigg, tried a new round of talks with the outlawed social-democrats and even the monarchists, in order to stabilise the situation again.
On 12 March 1938, the weakened Austrian government under Chancellor Schuschnigg was forced to step down by Hitler under the threat of war, and Austria was annexed into Nazi Germany.
Although democracy was not in sight, at least Hitler's policies promised more work and equality for many workers and labourers, as well as further socialist reforms and political stability.
The traumatic experience under German rule brought a swing in domestic opinion away from Pan-Germanism and towards the idea of Austria as an independent, sovereign and democratic country.
Renner tried to convince a sceptical Stalin in a letter, where he expressed his mea culpa for his previous support of the Anschluss, at the same presenting himself as the only credible Socialist politician left able to reach an agreement with the Communists.
With Soviet support Karl Renner and Leopold Kunschak proclaimed a provisional Austrian state government on 27 April 1945 in the parliament building in Vienna.
Historic photographs show Renner reading out the proclamation in the old imperial Chamber of the House of Representatives (Abgeordnetenhaus), with Soviet officers sitting in the back benches.
This alarmed the western allies, who feared a plot by the Soviets to establish a people's republic, a tactic that worked in Hungary and East Germany, where the social democrats there were forcibly integrated with the communist party.
Nevertheless, on 4 January 1960, Foreign Minister Bruno Kreisky was able to sign the accession treaty of Austria into the European Free Trade Association (EFTA).
In the National Council elections of March 1970, the SPÖ won with a relative majority, but was only able to build a minority government that counted on support from the Freedom Party of Austria (FPÖ).
The success of the economy and the international high-profile Austria was enjoying due to its neutrality ushered in another victory for Kreisky and the SPÖ in the legislative election of May 1979, where the party won 51% of all votes.
Chancellor Vranitzky tried to repair the damage to Austria's international image caused by the presidential election of the controversial Kurt Waldheim.
He was the first chancellor who, in a speech in front of parliament, clearly spoke of the guilt Austrians carried during the Second World War, something that was until then a topic that was taboo at home.
This system worked well in the post-war period, however with the end of the Cold War and Austria's entry to the EU, people's perceptions and opinions changed strongly.
Although federal president Thomas Klestil gave the Social Democrats the order to form a new government, no coalition partner could be found.
This prompted a huge outcry at home as well as abroad, leading even to sanctions by the EU and Israel pulling out its ambassador in protest against the far-right FPÖ.
President Fischer repeatedly made statements that stood in contrast to the official stance of the government, such as the speaking out for the equality of homosexuals as well as calling for better treatment of immigrants.
Due to the banking scandal of the BAWAG, which was close to the unions, confidence has been greatly shaken that the party will separate financial dealings from politics.