Unemployment rise prompts few concerns

Almost 150,000 people are without a job in Switzerland photopress

The number of jobless went up slightly in December and for 2010 as a whole. While most experts feel there is little to worry about, the strong franc is a concern.

The State Secretariat for Economic Affairs (Seco) reported on Friday that there were 148,636 people without a job in December, representing 3.6 per cent of the labour force when adjusted for seasonal factors (3.8 per cent unadjusted).

This represents an increase of 6,968 jobless compared with the month of November.

For 2010 as a whole there were on average 151,986 jobless, which represents an annual rate of 3.9 per cent. It was 3.7 per cent in 2009.

“Internationally viewed the figures are quite low, unemployment didn’t rise very much… I would say the labour market is in good shape so in that respect it’s been a rather successful year,” George Sheldon, a professor at Basel University who specialises in labour markets, told swissinfo.ch.

Daniel Lampart, who is chief economist at the Swiss Trade Union Federation, agrees that Switzerland “is doing better than its neighbours, but it’s a fact that we have an unemployment rate that is much higher than we had in earlier years.”

“That means that in Switzerland the unemployed are suffering hard.”

“Outstanding”

Sheldon says that compared with its neighbours and other members of the European Union, the Swiss jobless figures are “outstanding”.

“Spain is up at 20 per cent… but of course there they had a real estate bubble as they did in the United States. They also had problems in Ireland with unemployment rising, in France it’s hovering at about ten per cent, so I would say that Germany, Switzerland and the Scandinavian countries have done quite well.”

However, Lampart believes there are two main problems the Swiss will have to face in the coming months on the unemployment front. He notes that in April a new unemployment law will become effective with the result that 50,000 unemployed will not receive any benefits from then on. Many, he says, are elderly and do not have any chance of getting a job.

The second cause for concern is the strong Swiss franc which will aggravate matters in 2011 “mainly in the export sector, that means tourism and the machinery industry”.

“For those sectors special measures have to be taken now to stabilise the franc/euro exchange rate at a reasonable level,” he told swissinfo.ch.

At the federation’s annual news conference on Wednesday in Bern , Lampart had warned that speculation about the franc could jeopardise as many as 100,000 jobs.

Good reasons

There seem to be a few good reasons why Switzerland on the face of it has fared better on unemployment than most EU member states.

“You didn’t have an over-extended  capital market, you don’t have the problems of Greece where their fiscal policy has not been sustainable or Italy which has the same problem, and you don’t have the real estate bubble that you have in Portugal, Ireland and Spain,” Sheldon said.

The question therefore is whether Switzerland can be considered a success model. Sheldon is in no doubt about that.

“Right now they’re successful but when you think of a success model, you’re thinking more on a long-term basis.

“I would say it is a success model by all counts if you’re looking at economic performance and the unemployment rate. In international comparison that’s been the case in the last two decades; there’s no question about that.” 

No cause for concern

Analysts interviewed by Reuters news agency felt there was little cause for concern at the December jobless figures.

“The rise in the headline number is not worrisome, seasonally adjusted the numbers have actually declined,” commented Ursula Kubli at Bank Sarasin.

“The rise is also expected in winter months as there are seasonally fewer jobs in areas like construction.”

David Marmet at the Zurich Cantonal Bank also had few concerns but noted that the December jobless rate showed “that the decline in unemployment we’ve seen in 2010 is coming to an end”.

“Unemployment may fall a little bit more in 2011 , but the big move is behind us,” he said. 

Unemployment comparisons

German unemployment unexpectedly rose in December for the first time since June 2009 as the coldest weather in more than 40 years led companies to shed staff.

The number of people out of work rose to a seasonally adjusted 3.15 million, the Nuremberg-based Federal Labour Agency said on Tuesday this week. The adjusted jobless rate was unchanged at 7.5%.

The equivalent rate in Spain was 20.7%, while the average rate for the then 16 states of the euro region was 10.1%.

Greece’s unemployment hit a 10-year high in the third quarter. The jobless rate rose to 12.4% in the three months to September, from 11.8% in the second quarter.

France’s unemployment rate jumped to 10% in the fourth quarter, the highest level in a decade, the national statistics office reported.

Italy’s jobless rate declined to 8.3% in the third quarter as the country’s economy expanded.

According to OECD data,  the unemployment rate in the United States was 9.8%  in October. 

Swiss unemployment forecasts

KOF Swiss Economic Institute – 3.8% (2010), 3.3% (2011)

BAK Basel Economics – 3.8% (2010), 3.4% (2011)

UBS – 3.9% (2010), 3.4% (2011)

OECD – 4.6% (2010)

Credit Suisse – 3.9% (2010), 3.7% (2011)