Companies in Switzerland are not expecting wages to rise significantly anytime soon. According to a wage survey by the economic research institute KOF, there should be a zero round in the next twelve months, adjusted for inflation, if at all. Specifically, companies are anticipating an average over the course of the next year wage increase of 2 percent.
At the same time, the companies surveyed expect inflation to be over two percent. Consequently, real wages should not rise or even fall. This means that wage expectations have weakened slightly compared to earlier surveys.
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In July, as part of the quarterly economic survey, the KOF asked almost 9,000 companies in the private sector about their wage expectations and, according to the information, received answers from around 4,500 companies.
It is striking that more domestically oriented sectors expect slightly higher wage increases than export-oriented companies. For example, companies in the hospitality industry assume that wages in the industry will increase by an average of 3.8 percent. This makes the hospitality industry the only industry that expects not only a nominal but also a real increase in wages over the next twelve months.
It actually needs wage increases of five percent.
Meanwhile, things look bleaker in industry and wholesale. According to the KOF, the expected wage increases there would be comparatively low. For the next year, for example, the manufacturing industry is expecting an increase of 1.5 percent and wholesale 1.6 percent. If the expected inflation of 2 percent were to occur, wages in these sectors would fall in real terms.
Hot wage autumn is probably imminent
Daniel Lampart, chief economist at the Swiss Federation of Trade Unions, told SRF that there was a need to catch up on wages. “Companies have been raising prices for more than three years, wages have not risen with the prices. We already have a wage arrears of CHF 2,000 per employee in Switzerland. It actually needs wage increases of five percent.”
The Swiss Employers’ Association sees things differently. Its chief economist, Simon Wey, explains to SRF: “The last two years, i.e. 2021 and 2022, were not as rosy as it was often portrayed.”
The margins are not yet sufficient to allow wages to rise as substantially as the unions would like
The corona pandemic and the Ukraine war had hit the companies hard. “So far, the margins have not been sufficient to allow wages to rise as substantially as the unions would like.”
Caption: Two Migros bakers in the branch on Zurich’s Limmatplatz (02/17/22) KEYSTONE/Michael Buholzer