Swiss Wage Growth Will Slow in 2026 Amid Growth Doubts, UBS Says
(Bloomberg) — Swiss wage growth will slow next year though it’s still likely to outstrip inflation, according to a survey of companies conducted by UBS Group AG.
Employers will raise salaries on average by 1% in 2026 after 1.4% this year, economists at the bank said in a presentation to reporters on Wednesday. That reflects weak price dynamics and the pressure Switzerland is facing from US tariffs, they added.
“As inflation declines, economic uncertainty takes center stage in wage setting,” said Meret Muegeli, who was in charge of the poll.
While pay is set to rise by the least in half a decade in nominal terms, the increase will still amount to a real-terms gain for employees, the UBS analysis showed. Their survey encompassed 388 companies from 22 different sectors, as well as employer groups and worker associations.
The report is likely to present Swiss National Bank officials with mixed signals. On the one hand, it shows how uncertainty is weighing on the economy at a time when inflation is already at the lower end of their target range. On the other hand, even though wage growth is weakening, they may take comfort from the prospect that it’s still set to outpace consumer prices.
Data this week showed inflation unexpectedly slowed to just 0.1% in October, reigniting speculation that the SNB might need to cut interest rates below zero at their meeting in December.
Policymakers have been sanguine, while also declining to rule any move next month. Rate setter Petra Tschudin said that the current level of borrowing costs is appropriate, but that it’s “hard to say” what will happen then.
“The world is changing so fast,” she observed in a television interview broadcast on Tuesday. “There is a great deal of uncertainty at the moment.” Tschudin is set to give a speech later on Wednesday.
SNB President Martin Schlegel this week repeated the expectation that consumer-price growth will average 0.4% in the fourth quarter. The gauge should rise slightly in the quarters ahead, he said.
At their last meeting, officials argued that a further reduction in borrowing costs was unnecessary because earlier cuts would feed through in due course. They also stressed that, given the harm negative rates inflict on the financial system, any decision to deploy them would require a higher bar than for a normal move.
“As long as the growth outlook does not deteriorate significantly, the SNB is likely to keep its key interest rates stable at 0% over the next 12 months,” said Daniel Kalt, UBS’s chief economist for Switzerland.
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