Inflation has eaten up the wage increases of Swiss employees. Keystone / Christian Beutler
The Swiss unions are demanding wage increases of up to 5% to compensate for the rising prices for consumption, energy and health care that have been going up for years. Are these demands justified in high-price Switzerland, where employees’ wages are already the envy of the world?
This content was published on 23 August 2024 – 06:00
There will probably be friction in the wage negotiations with the unions: the employers are already rejecting the demanded wage increase.
SWI swissinfo.ch takes a look at the opposing arguments and the possible outcome for employees and companies.
The demands
The Travail Suisse union is calling for a wage increase of 2.5% to 4% for the coming year. This is intended to offset the inflation that has eaten up all wage increases since 2021.
Wages in Switzerland rose by an average of 1.7% in 2023. However, the 2.1% increase in the cost of living led to a real wage loss of 0.4%.
The Swiss Commercial Association uses the same argument to justify wage increases of up to 5%. The Swiss Association of Salaried Employees is calling for a more modest increase of 2.2%.
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Negotiations between hospitality unions and employers failed in July and are now being heard before an arbitration tribunal.
The Swiss Federation of Trade Unions wants everyone who has completed training to earn at least 5,000 francs a month.
The reasoning
All unions cite the effects of high inflation to justify their wage demands.
Travail Suisse speaks of a “historically weak wage development” in recent years, which is due to inflation. “While the economy has grown by over 7% in real terms since 2021, real wages have fallen by over 3%,” says Thomas Bauer, Head of Economic Policy.
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The union also accuses companies of keeping the profits from productivity growth for themselves, while workers are having increasing difficulty covering their living costs.
Consumer prices have risen less in Switzerland than in the rest of the world. According to the International Monetary Fund, inflation in Switzerland was 2.8% in 2022, while worldwide it peaked at 8.7%.
But people in Switzerland are also suffering from rising health care costs, which have increased by 31% over the last ten years, while wages have only increased by 6%.
And people are annoyed about the growing gap between the super-rich in Switzerland and those on low incomes.
The trade union federation warns that inflation hits low-income earners harder because basic costs such as heating and electricity make up a larger part of their budget than those of wealthier people.
“Low and average earners have less to live on today after inflation than they did a few years ago. Conversely, the situation for top earners has improved significantly. Even after inflation, they have up to 3,000 francs more per month at their disposal,” Daniel Lampart, chief economist of the trade union federation, told Swiss television SRF in April.
The counterarguments
Industry associations have criticized the unions’ wage demands. Swissmem, the association of the electrical, mechanical and metal industries, described them as “dangerous and unrealistic.”
The association also rejects the unions’ argument that companies are benefiting from the improved economic situation at the expense of employees.
In the first three months of this year, exports of the 1,250 Swissmem companies fell by 8.5% compared to the same period last year, sales by 5.4% and incoming orders by 2.3%.
“The unions are turning a blind eye to the difficult situation the Swiss technology industry has been in for some time,” says Swissmem.
The Swiss Employers’ Association described the wage demands as “excessive” and argued that such wage increases could endanger the survival of some companies.
There are also signs that conditions for Swiss workers are improving. Inflation has fallen from its peak of 2.8% in 2022 to 1.3% this year, with 1.1% forecast for 2025.
In November, the Unia union boasted that it had negotiated wage increases of over 2.5%, and in some cases even above the inflation rate, in several sectors for 2024. “Wages are again keeping pace with inflation,” the union said at the time.
Possible results
According to a report by UBS last November, annual wage increases will average 1% between 2014 and 2024. In 2023, wages rose by 2.3% to offset the previous year’s massive rise in inflation. But last year, wage increases fell to 1.7%.
A recent survey of 4,500 companies conducted by the KOF Economic Research Institute found that an average nominal wage increase of 1.6% is expected in a number of sectors over the next 12 months.
The retail sector expects the smallest wage increases at 1.1%, while the hotel and restaurant industry expects 2.7%. According to the survey, wage increases in mechanical engineering are expected to be lower at 1.3% than in the IT sector (1.8%).
However, the same companies also expect higher inflation than the 1.3% forecast by the Swiss National Bank. The survey participants expect inflation to reach 1.6%. This would eat up the average wage increase.
Edited by Reto Gysi von Wartburg, translation from English: Christian Raaflaub
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