Categorized | Banks, News, Workplace

Swiss resiliency ?

Posted on 27 December 2012 by Klebnikov

Signs indicate that previous Swiss resiliency to European troubles is now wearing off.

On the one hand, Swiss residents are caught between the hammer and anvil of dropping salaries (and higher unemployment) from cheaper labor entering Switzerland from neighboring EU countries and rising cost of living, principally from enormous inflation in housing costs, health insurance premiums, and transport costs. The result has been a steep decline in the standard of living of Swiss residents since the introduction of the bilateral agreements ushering in labor mobility and removal of border controls.

And the latter has also engendered substantial costs for middle and lower class residents, who bear the major impact of the steep increase in criminality.

The construction industry, which was doing well through most of 2012 has now slowed as banks are toughening their criteria for new real-estate loans. The Swiss National Bank’s maintenance of artificially low rates, combined with aggressive creation of new money (mainly to buy up euros and dollars to manipulate the Swiss Franc exchange rate) has fueled a real-estate asset bubble as investors seek to shelter liquid assets from the inflation caused by monetary policies.

Statistics from Q3 and Q4 of 2012 show continued increases in unemployment – where the term is defined as those unable to find employment – throughout the major urban areas.

The largest contraction in 2012 has been the financial and banking sector, hard hit by multiple assaults on banking secrecy and scandal. The sector continues to downsize and adapt to a new emerging paradigm.

The sector that continues to outperform in Switzerland is the luxury industry, with expensive watches and jewelry defying any possible strengthening of the Swiss Franc. The luxury sector added jobs during 2012 and is expected to continue to grow in 2013, a result of growing markets in Asia and emerging economies.

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