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UBS Swiss Personnel Compensation Survey: 2003 wage round brings moderate increases

| Media Releases Switzerland

Bonus payments down at nearly 40% of companies

Wages in Switzerland look set to rise by an average of 1.3% in 2003, with 0.9% of the increase being individual and the rest general. Since survey participants are expecting inflation to average 0.7%, this translates into a further real increase in wages of 0.6% next year, despite the uncertain economic prospects. The findings are contained in the 14th UBS autumn survey of companies and employer associations in 19 sectors.

Once again, the biggest increases are in the IT services sector, with wages expected to rise by 2.4% despite the difficult business environment. Other sectors anticipating above-average pay rises are telecommunication (2.4%), chemicals and pharmaceuticals (2.1%), followed by hotels and restaurants, the retail trade and the cantons, with 2% each. Workers in the construction industry (0.3%), printing and graphics (0.6%) and banking (0.7%) are set to receive only modest increases.

Those in the lower income groups are likely to receive the largest rises. 45% of industrial companies surveyed indicated that low wages will probably rise faster than the overall average, while in the service sector, the figure is as high as 55%. Only 1% of firms are predicting a below-average increase in low wages.

Of the approximately 75% of companies which operate bonus systems, 56% expect bonuses to stagnate while 28% are predicting lower payouts, with a further 9% saying the fall will be sharp. Only 7% are anticipating a moderate rise. A larger number of workers in industry face reduced bonuses next year. 35% of firms in this sector are forecasting lower payouts (as against only 10% last autumn). In the service sector, bonuses will fall further at 44% of firms; this compares with 56% last year.

The level of bonus payments as a percentage of base salary depends largely on the function level of the employee concerned: for top management, the average figure is over 20% of base salary at 46% of companies and between 10% and 20% at 21%, while at 33% of firms the percentage is less than 10. At the vast majority of companies (89%), staff receive bonus payments amounting to less than 10% of their base salary. Only 11% of firms offer employees bonuses of between 10% and 20%, and none offer average payments in excess of 20%.

The majority of those surveyed (64%) expect the economic stagnation to continue in the 2003 wage round. 26% are predicting a modest upturn, and only 2% a strong recovery. 8% are anticipating a moderate recession.

The pessimistic assessment of the economy is also feeding through into staff planning. 21% of firms are intending to increase headcount, while 43% are planning a moderate or sharp reduction in staff. Around one third (36%) expect to maintain staff numbers at their current level.
The results were obtained during the annual UBS personnel compensation survey, which was carried out between 14 and 30 October 2002. The survey covers companies and employer associations in 19 sectors, which between them employ 57% of working people in Switzerland. In the years 1989 - 2001, wage rises predicted by survey participants deviated by an average of 0.34% from the official wage statistics published by the Swiss Federal Statistical Office.

Dr. Peter Buomberger, Group Head Public Policy & Research, UBS AG will today present the results of the 2003 UBS Swiss Personnel Compensation Survey at an event hosted by the Swiss-American Chamber of Commerce from 12 p.m. to 2 p.m. in the Hotel Widder, Zurich.

Zurich / Basel, 4 November 2002
UBS AG