Employees under 55 fare better in mass layoffs

Keystone

What happens to people who lose their job in mass redundancies in Switzerland? According to a Lausanne University study, most people find another position quickly - unless you are in the last phase of your working life.

Switzerland has one of the lowest unemployment rates in Europe – 2.9 per cent on average in 2012. But that does not mean that factory closures and outsourcing do not happen in Switzerland. Around 10,000 employees lost their jobs in mass layoffs last year.

The State Secretariat for Economic Affairs (Seco) asked two Lausanne researchers to investigate the career paths of employees who suddenly found themselves out of work. Daniel Oesch and Isabel Baumann questioned 750 former employees of Swiss industries who lost their jobs in mass redundancies in 2010.

Oesch talks to swissinfo.ch about the initial results of the survey.

swissinfo.ch: Your findings will only be published in a few months, but you already have some surprising results.

Daniel Oesch: Two thirds of those who lost their job in mass redundancies in 2010 – when export industries were suffering due to the strong Swiss franc versus the euro – found a job within two years of being made redundant. We did not expect such a high rate of reemployment. Around 17 per cent are still unemployed, while 11 per cent took early retirement.

We were also surprised that 70 per cent of the men and 60 per cent of the women questioned had found another job in the industrial sector – we expected a bigger swing to the service sector.

More than eight out of ten of those who found a new job have been given a permanent contract, mostly with an equivalent or even an improved salary. These results seem to be due to the good health of the Swiss industrial sector, which continues to create new jobs despite the slow trend towards deindustrialisation in the western world.

swissinfo.ch: Can we conclude that employees who lose their jobs in mass redundancies find work again more easily than those who lose their jobs at an individual level?

D.O.: Those who are fired as a group find themselves suddenly unemployed without any black marks against their characters or professional skills. It is certainly less stigmatising to be made redundant as part of a group rather than on your own, and companies are less reticent about employing such people.

When some businesses shut down, as was the case with Merck Serono in Geneva, direct competitors jump at the chance to recruit the best employees who are suddenly available. Sometimes, small teams will be transferred intact, along with the equipment they worked on. In this way, the new employer benefits from the collective memory and existing working relationships of the employees.

swissinfo.ch: Does that mean that we tend to exaggerate and dramatise the effect of mass redundancies on employees?

D.O.: Mass redundancies are a product of structural changes to the work market. Every year in the OECD countries, around one in five jobs disappear and roughly the same number are created. But that doesn’t mean it’s not a problem. An employee who gave their all for an employer for ten or 20 years but who is then thrown onto the scrapheap without any warning feels betrayed.

The majority of employees who lose their job in this way certainly do end up finding another one, as our results show. But they still live for months in a stressful and precarious situation, which can have negative effects on their health. And let’s not forget the large minority of employees who are unable to find another job and often are not eligible for unemployment benefits.

swissinfo.ch: Who is more likely to remain unemployed after mass redundancies?

D.O.: To our great surprise, age seems to be a much bigger obstacle than a lack of qualifications, or someone’s immigration status. There is a paradox here. Companies have many experienced workers on their books who are very diligent and entirely meet expectations. But when older people suddenly find themselves out of work, they are stigmatised. The traditional internal career trajectory, where loyalty and internal promotion are valued, doesn’t encourage firms to take on these workers.

swissinfo.ch: What lessons do you take from this?

D.O.: In Switzerland, discussions around social policies have long focused on raising retirement age. But in fact the market imposes a lot of suffering on all these older people who spend years looking for work unsuccessfully. Those who do not have not set enough aside in the pension fund have to use up their savings or ask for state financial aid. This problem looks like it will only get worse.

We hope that our conclusions will be taken on board and will help influence some public policies. For example, we should make flexible early retirement easier to take. And these results should also be taken on board by companies who are closing the shutters. When Merck Serono closed in Geneva, the unions drew up a compensation plan that put early retirement at 56. Looking at our results, that now seems like a very wise move.

Life after mass redundancy

Daniel Oesch and Isabel Baumann, researchers at the Institute of Social Sciences at Lausanne University, are leading the study on the closure of 5 large industrial employers in Switzerland. They want to find out what the social and economic effects were on those who were made redundant.

A questionnaire was sent to 1,200 employees of five companies that closed down in 2010. 750 people agreed to reply.

The firms in question were in the machinery, metals, plastics, chemicals and printing sectors and located in the cantons of Geneva, Bern and Solothurn, with each having between 170 and 550 employees.

Diverging views of job security

Experts interviewed by swissinfo.ch made a range of sometimes contradictory predictions for the Swiss job market in 2013.

Klaus J. Stöhlker, a communications and management consultant, predicted more dramatic job cuts than in 2012, coming as a result of restructuring and the outsourcing of services to Eastern Europe. He also claimed that there is a hidden crisis among small and medium-sized businesses, with many “scraping along on the verge of bankruptcy.”

Hans-Ulrich Bigler, director of the Swiss Trade Association, disagreed. Companies with 249 or fewer employees, which represent 99.7 per cent of all businesses in Switzerland, are generally well off at the moment, and in a recession they lay off proportionately fewer employees than large firms, he said.

Daniel Lampart, chief economist with the Swiss Federation of Trade Unions, expected to see job cuts in the machine, printing, textile and metal industries, in finance, in computer science, and in hospitality.

Thomas Daum, director of the Swiss Employers Association, predicted “no dramatic developments” for 2013, and a slight increase in unemployment to 3.3 per cent from 2.9 per cent in 2012, as predicted by the government. Still, he described the situation as “extremely unstable” due to the European debt crisis and the strong Swiss franc.

Permissive legislation

In Switzerland, mass redundancies are not illegal. Legislation concerning them boils down to four articles of the Swiss Code of Obligations.

In theory, the employer has to launch a consultation procedure with personnel when redundancies of more than ten per cent of the workforce are planned. But the law doesn’t specify how long this procedure should last.

The employer has to give workers at least the possibility of formulating propositions for avoiding redundancies, or for reducing their number and mitigating their effects. According to the code, the employees have the right to access information concerning the company’s financial health.

The employer also has to give written notice of mass redundancies to the cantonal employment office, and must give employees a copy of this letter. But even when this procedure is not followed step by step, redundancies can still go ahead.

Source: Swiss News Agency

(Translated from French by Victoria Morgan)