The average monthly number of jobless people in Switzerland increased 4.4% to 142,810 last year – that equates to an average 6,000 more people out of work each month from 2014, according to official government statistics.
The annual rate of unemployment rose from 3.2% to 3.3% as the effects of the strengthening franc started to kick in, Switzerland’s State Secretariat for Economic Affairs (Seco) revealed on Friday. According to Seco estimates, the worst is yet to come, with unemployment forecast to rise to 3.6% this year.
A monthly comparison also shows that the situation is getting worse. In December last year there were 11,260 more people out of work than the corresponding month in 2014.
The International Labour Organisation (ILO), which irons out national differences in recording unemployment with its own country comparison data, paints a bleaker picture. The latest ILO statistics show a 4.9% rate of unemployment in Switzerland in the third quarter of 2015, which for the first time surpassed Germany’s jobless rate of 4.5%.
Laurent Bakhtiari, an analyst at the Geneva-based IG Bank, said this made December 2015 the most severe month for unemployment increase in Switzerland since April 2010.
The strengthening franc has been mostly blamed for the increasing numbers of people out of work in Switzerland. The franc finished the year some 10% higher against the euro after the Swiss National Bank (SNB) pulled the plug on its franc-euro exchange rate peg last January.
The exchange rate fluctuation has piled pressure on Swiss exporters and the tourism industry as Swiss goods and overnight stays in Switzerland became more expensive for eurozone customers.
Another side effect of the SNB’s decision was a decrease in prices in Switzerland – a trend that was given further impetus by falling oil prices. Consumer prices fell 1.1% in 2015, according figures from the Swiss Federal Statistical Office, also released on Friday.
The downward momentum reflected the difficulties being faced by Swiss retailers, who are being forced to drop prices to combat the growing trend of Swiss consumers hopping over borders to shop in cheaper eurozone countries.
Last week, Credit Suisse bank estimated that cross-border shopping had increased some 8% in value in 2015, reaching CHF11 billion ($10.9 billion).
The decline in prices is in line with SNB expectations, which has also forecast deflation of 0.5% this year before prices recover into positive territory in 2017.
IG Bank’s Bakhtiari warned that the “SNB does not have much leeway to face any further deterioration in the Swiss economy” after setting interest rates into negative territory last January.