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A thousand francs to lure jobless back to work

Is any job better than no job? Keystone

The city of Zurich is creating low-paid jobs to get the long-term unemployed back to work, an idea that has been well received, but which has its doubters.

This content was published on June 24, 2005 - 17:33

The trade unions fear that wages will be pushed down and economists warn that more complex solutions are required.

Every year the Swiss cantons and municipal authorities spend around SFr3 billion ($2.36 billion) on income support. Some 300,000 people depend wholly or partly on help of this kind.

And this is a growing trend. In 2004, the number of people receiving income support increased by ten per cent. In Zurich alone, every month an additional 450 people seek help from the public authorities because they cannot make ends meet.

For some, a return to full employment is an unlikely prospect. Even when there is growth in the economy, it makes little impact on the unemployment figures.

At the same time, many people cannot cope with increasingly stressful working conditions, or lack the qualifications to meet the changing demands of the labour market.

Those who are no longer entitled to claim unemployment benefit have no option but to apply for income support.

"People in this situation often have difficulty working their way out of it and it represents a considerable financial burden for the state," says economist Christian Marazzi.

"Zurich solution"

Concerned by the effects on the public purse, Monika Stocker, head of Zurich’s social-affairs department, decided she had to find a solution.

Some time ago, she floated a potentially provocative proposal: creating jobs paying SFr1,000 a month.

Her idea was that the public administration and the private sector should offer these low-paid, low-qualification jobs on a fixed-term contractual basis.

The public authorities would have to set up enterprises to implement the scheme.

The social-security department would continue to supplement the workers’ wages and would make incentive payments to ensure that those who agreed to work were better off financially.

"A partial income is still an income," explained Stocker in an interview with the Neue Zürcher Zeitung.

The scheme would have a number of advantages.

On the one hand, it would enable people who, for one reason or another, are excluded from employment to get back into work.

On the other, it would reduce the burden of social security on public finances.

This is not a new idea. Stocker had already put forward a similar proposal in the late 1990s, but at the time it was met with determined opposition from the trade unions and employers.

In the meanwhile, a similar model was introduced in Germany. Since last October, the long-term unemployed have been offered work for €1 per hour with local authorities and charitable organisations.

Cautious support

This time round, the Zurich proposals received a more positive response in business circles.

"Stocker’s idea is a good one - it is worth trying. Nowadays there are not enough low-qualification jobs in Switzerland," said Peter Hasler, director of the Swiss employers’ association in the daily Basler Zeitung.

However, Hasler added that certain conditions had to be adhered to: these new jobs must not be allowed to undermine the competitiveness of companies operating under market conditions.

Nor should there be too many of them, lest companies be tempted to replace workers earning normal wages with low-cost substitutes.

Fearing that wages would come down, the trade unions were more critical.

"In Germany, the one-euro-per-hour scheme has been a disaster," Paul Rechsteiner, president of the Swiss Federation of Trade Unions, told the Blick newspaper.

"Any full-time worker should be paid at least SFr4,000," he added.

One potential effect of Stocker’s proposal would be to make even more people dependent on state support, by pushing wages below the minimum required to live on.

However, Stocker is adamant that, by drawing up clear agreements with the companies concerned, it will be possible to avoid wage dumping.

Complex solutions

Beat Kappeler, economic-affairs editor of the NZZ am Sonntag, says that jobs offering lower wages were something that unemployed youths could benefit from.

"In their case, it might well be worth introducing a 'training’ wage below the existing minimum wages paid to workers," Kappeler said.

He was sceptical about applying this model to the long-term unemployed.

For Marazzi, given the way in which the labour market is changing, it is important to find new ways of responding to the problems of the welfare state.

"But with a scheme of the kind proposed in Zurich, it is vital that the state continues to support the workers and monitor the project on an ongoing basis," he said.

In other words, workers who agree to take on jobs for SFr1,000 a month should be given credit for the experience they have gained, to improve their chances of finding work in the "normal" labour market.

"Unless the state lays down a clear procedure for getting the unemployed back into work, the idea will just add to the reservoir of people living in precarious circumstances," Marazzi warned.

swissinfo, Andrea Tognina

Key facts

In Switzerland, 4.1 million people are in paid employment.
145,000 receive unemployment benefits and approximately 250,000 people depend on these benefits.
The overall cost is SFr6.7 billion per annum.
260,000 people receive benefits from the invalidity insurance scheme and 430,000 people are dependent on these.
The total cost of the invalidity insurance scheme is SFr10 billion per annum.
Income support is the responsibility of the cantons and municipalities.
Around 300,000 people receive help of this kind. The overall cost is around SFr3 billion per annum.

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