Why unemployment in Switzerland is increasing more than elsewhere in Europe

The banking sector has been particularly affected by redundancies. Dominik Baur / Keystone

The number of people in Switzerland who are out of work increased for the second year in a row. This contrasts with the situation in the European Union, where unemployment rates have remained stable. What are the reasons behind this? 

Switzerland is often portrayed as an island of full employment in the heart of Europe. While the unemployment rate is still comparatively lower than in most neighbouring countries, the gap is no longer as great as it used to be.  

Between the third quarter of 2024 and the third quarter of 2025, the unemployment rate as defined by the International Labour Organisation (ILO) rose from 4.7% to 5.1% (+0.4 percentage points) in Switzerland. 

The increase was slightly less pronounced in Germany (+0.3), France (+0.3) and Austria (+0.2). In Italy, unemployment remained constant at 5.6%. The average for the 27 EU member states has also stayed stable (at 5.7%).  

“Switzerland is highly dependent on its exports, so the global economic situation can have a greater impact than in EU countries, whose economies are less reliant on trade with the rest of the world,” says Giovanni Ferro-Luzzi, a professor of economics at the University of Geneva and the Geneva School of Business Administration.  

Being so export-reliant, Swiss industry has been particularly affected by the uncertainty surrounding the additional customs tariffs of 39%, and then 15%, imposed in 2025 by the United States, Switzerland’s second-largest trading partner after the European Union.  

“Companies are having to react fast by cutting back their workforce or freezing hiring. As Switzerland has an open and mobile labour market, the effects are quickly reflected in the unemployment rate as calculated by the ILO,” says Stefan Heini, head of communications at the Swiss Employers’ Association. 

Strong franc and merger of Credit Suisse and UBS

The export industry is also being penalised by the appreciation of the Swiss franc, which is sought after as a safe haven in times of economic and geopolitical uncertainty – like today. At the end of January, the Swiss franc reached its highest level against the US dollar (0.76 centimes to the dollar) since 2015. 

“The strength of the Swiss franc is putting a lot of pressure on the metal and mechanical industries, as well as watchmaking,” says Daniel Kopp, central secretary of the Swiss Trade Union Federation. In these sectors, recourse to partial unemployment – in which shorter working hours are topped up by state benefits – has helped limit the social fallout. In the watchmaking industry, only 835 jobs were lost last year, although the sector saw a decline in exports for the second year running.  

The pharmaceutical and life sciences industries, on the other hand, have been hard hit by layoffs. In 2025, this sector had the highest redundancy rate (nearly 30% of the total), according to the Labour Market BarometerExternal link published in late January by the employment agency von Rundstedt Switzerland.  

“The reason is primarily cyclical, although long-term, structural upheaval cannot be ruled out if the US administration keeps stepping up pressure on this sector in the years ahead,” says Ferro-Luzzi. Relocating the pharmaceutical industry to the United States is one of the priorities of Donald Trump’s administration. 

Unemployment has also gone up in the financial services sector, mainly as a result of the Credit Suisse-UBS merger (which has already cost more than 36,000 jobs worldwide in the last three years, according to an analysis by Swiss public television SRFExternal link). This is compounded by restructuring announcements by other banks and insurance companies. Forecasters at the State Secretariat for Economic Affairs (SECO) therefore expect the unemployment rate to continue to rise in 2026, albeit at a moderate pace.  

Long-term unemployment on the up

In 2023, as Switzerland emerged from the economic crisis generated by the Covid-19 pandemic, employment prospects were exceptionally good. The country registered some 70,000 long-term unemployed according to the ILO definition, compared to nearly 110,000 two years earlier.  

Today, however, the threat of long-term unemploymentExternal link once more looms over workers. In 2025, nearly 84,000 people had been without a job for over 12 months. Although the proportion of long-term unemployed compared to the total number of unemployed remains relatively low (less than 10%, according to SECO), this situation is difficult for those concerned.  

“This is a problem because it is well known that being out of the job market for a long time makes it more difficult to return to work,” says Ferro-Luzzi. “Motivation gives way to discouragement among the unemployed, and employers see the length of unemployment – very often wrongly – as a ‘sign’ that the person is less attractive as a candidate.”  

Fewer job vacancies 

As a corollary to this situation, the number of job vacancies is also decreasing. Back in 2022, Switzerland faced a record labour shortage, with nearly 130,000 openings listed. By 2025, this figure had fallen to below 90,000. 

The experts interviewed by Swissinfo ascribe this drop mainly to the worsening economic climate. For 2026, SECO has forecast GDP growth of only 1.1%. However, structural labour shortages, mainly triggered by demographic ageing, are expected to increase again, and to weigh heavily on Swiss companies in the coming years. “The biggest shortages are expected in the healthcare, construction and catering sectors,” says Heini.  

As for the arrival of artificial intelligence (AI) in the world of work, its impact on employment remains difficult to determine.  

“AI is above all changing the way we work,” says Françoise Tschanz, a spokesperson for SECO. “In Switzerland, for example, over the last two decades digitalisation has led to an increase in activities that cannot be automated, while automatable activities have declined in importance. However, this change has been gradual, and overall employment has continued to grow.” 

While there are signs of increasing unemployment in sectors particularly affected by AI – information technology, banking, administration – the trade unions believe that this new factor will play a “secondary” role in the future job market. “We do not think that AI will lead to mass unemployment,” says Kopp.  

Edited by Virginie Mangin. Adapted from French by Julia Bassam/gw.