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Wages set to rise despite economic downturn

Workers in the IT sector are still faring best Keystone Archive

Salaries look set to rise by up to four per cent in Switzerland next year, despite a slowdown in the Swiss economy.

This content was published on November 2, 2001 - 15:08

Wage negotiations at some of Switzerland's larger companies, including telecommunications operator Swisscom, healthcare giant Roche and retailer Migros, have already resulted in salary increases of between three and four per cent.

However, Switzerland's largest bank, UBS, published a study this week which is more conservative in its outlook.

A survey among firms representing 55 per cent of the country's workforce indicated that Swiss employees would enjoy an average salary increase of 2.3 per cent next year. Taking inflation of one per cent into account, the real rise is around 1.3 per cent.

But UBS chief economist, Peter Buomberger, who presented the annual study at the Swiss-American Chamber of Commerce in Zurich, said that this might be an understatement of true increases, because bonuses were not taken into account.

Effects of September 11

He also made the point that wage increases next year would be affected by the terror attacks in the United States in September.

"The interviews for this year's survey were held after the tragic events of September 11...From the interviews, we can conclude that wages would have grown by 0.5 per cent to one per cent faster without the events," Buomberger told the Chamber.

The director of the Swiss Employers' Association, Peter Hasler, also believes that wage rises could go up by up to four per cent, arguing that profitable companies should have no problem in compensating for the 0.6 cost of living increase and raising wages.

However, he added that firms in difficulty would not be able to follow the trend.

Unions want four per cent

Switzerland's main unions are also counting on wage increases in the order of four per cent, arguing that they are merited not only to cover the rise in the cost of living, but also to take account of the rise in productivity.

UBS's Buomberger said that looking at statistics, real wages in Switzerland grew by just 0.1 per cent between 1995 and 2000, while productivity surged by more than six per cent.

But he said that the issue should be looked at in a wider context.

"Between 1990 and 1997, unemployment surged in Switzerland. This implies, from a market point of view, that real wages must have been too high relative to the weak economy in that period," he said.

"It was just recently that the labour market recovered. We can therefore conclude that the wage moderation of the past years has served as a necessary adjustment of earlier excesses," he added.

IT wages likely to grow most

Looking at industry trends for wage increases next year, the information technology services industry is set to come top of the league, despite a difficult market situation.

Businesses in the chemical and pharmaceutical industry are also expecting increases well above the average, as are the retail trade, food and beverages, and hotels and restaurants.

At the other end of the wage increase scale, where there will be only nominal rises in the textile and garments industry, and the watch-making sector.

With wage increase negotiations in full swing, not everyone can see light at the end of the tunnel.

Positions between employers and unions representing the construction industry are far apart for the second consecutive year.

And there are rumblings of discontent at Swiss Post and the Swiss Federal Railways over current employer offers.

Staff of the Federal Railways have held protest demonstrations in several cities after management offered them a 0.5 per cent cost of living adjustment next year but no real wage increase.

swissinfo with agencies

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