Switzerland Sees Slow Job Growth Ahead

Posted on 02 November 2008 by ThomasP

According to diverse institutes and Swiss research centers, Switzerland will enter recession in 2009. The Créa – a macroeconomic institute based in Lausanne — is predicting growth of –0.6% for 2009. The Créa analyzed the deceleration of the economies in the USS and continental Europe and concluded that if emerging economies have so far avoided the consequences of the global financial crisis, they will not continue to do so for long.

Their opinions are not unanimously shared. The BAK and the KOF are predicting anemic growth of .7% and .3% respectively. The Seco – the federal government’s organism – has predicted growth of ‘less than 1%’. Credit Suisse analysts are predicting growth of roughly 1%, and UBS analysts say that growth in Switzerland in 2009 will be roughly 0.2%. (Whatever growth there may be, all commentators agree that is unlikely that UBS will contribute anything to it.)

The Swiss economy will take a big hit in 2009, say analysts, due to strong drops in exports, as well as to the inexorable rise of the Swiss franc, as flight from less fiscally reliable currencies creates a run up in the national currency. The decline in exports and the ensuing decline in company order Seco Building Switzerland

books is likely to result in more unemployment and less consumer spending, meaning that jobs in Switzerland may be fewer and work may be less well paid.

Pundits say that the economy will not return to health until 2010, when growth is expected to rise above 0.5% and job growth should recur (the BAK predicts 1.7% growth for 2010). The optimism for 2010 is partly attributed to the Swiss Federal Government’s generous gift of more than $60 billion of public money to UBS, to stave off their bankruptcy and prop up their ledgers, in return for which the public will have a claim on just under 10% of the Bank’s stock should they return to health.
Economists and commentators are deducing that if the Federal Government is willing to hand over in cash about 20% of the entire market capitalization of UBS in return for 10% of the stock, this must mean that Swiss government is willing to spend prodigally to get the country out of the crisis.

The other signs that are encouraging analysts is the real estate market, which has so far been largely spared of a large speculative bubble, and Swiss industry.
The same analysts now conclude that the financial sector, which previously provided a large percentage of work in Switzerland, will decline to roughly 2% of Swiss jobs by the end of next year. For the Lausanne – Geneva axis, the BAK predicts a growth of 1.9% this year and 0.7% in 2009. According to the same analysts, jobs in the luxury watch industry will continue to grow due to new demand from emerging economies, though the growth will be less dramatic than the double digit growth experienced over the preceding years.

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