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UBS wage survey: 2007 wage increases highest in five years

Zurich/Basel | | Media Releases Switzerland

Average growth of 2.0% in basic wages expected

According to the latest UBS wage survey, nominal wages are to increase by 2.0% in 2007 following this year's wage negotiations, which were based on an average inflation rate of 1.3% to compensate for past inflation. As UBS expects an inflation rate of 0.9% in 2007, the outcome is likely to be an effective real wage increase of 1.1%, the highest in five years. These are the main results of the 18th UBS wage survey, which is conducted annually among companies in 19 sectors in Switzerland.

The highest wage settlements this year are expected in the IT sector (+3.0%), with large increases also anticipated for the high-demand operators in energy (+2.5%) and banking (+2.4%). Falling below the national average are the wage increases in textiles/clothing and media (+1.0%) and Federal Government (+1.4%). These figures refer to basic salaries and do not include performance-related, non-guaranteed wage components (bonus payments).

Of the companies that have bonus systems in place (around 75%), only 4% anticipate paying out less in bonuses, as opposed to around 36% expecting to pay higher bonuses. This trend is likely to generate effective wage growth of over 2%.

A majority of survey participants were optimistic with regard to economic performance going forward. Around two thirds of companies expect the economic upturn to continue moderately in 2007.

The positive economic outlook is also reflected in companies' human resources planning. Of the companies surveyed, 44% plan to increase their headcount, while only 17% expect to reduce staff numbers. UBS anticipates a 0.6% increase in personnel for 2007. Together with the wage increase, this is likely to help make real consumption growth of 2% possible next year, which will in turn continue to support economic expansion.

UBS conducts this wage survey on an annual base. The latest survey was carried out between 25 September and 24 October 2006 at around 100 companies and employer and employee associations in 19 sectors. These organizations employ 64% of the working population in Switzerland. Between 1989 and 2005, wage increases estimated from survey data deviated by just 0.33% on average from the official wage figures published by the Swiss Federal Statistical Office (SFSO).

The detailed results of the 2007 UBS wage survey are available online at www.ubs.com/research.

Nominal wage increases in selected Swiss sectors (in %)

Contacts

Klaus W. Wellershoff

Chief Economist UBS Global Wealth Management & Business Banking

Tel: +41 44 234 67 03

Daniel Kalt

Economic Research, UBS Global Wealth Management & Business Banking

Tel. +41 44 234 25 60

Hans-Peter Hausheer

Economic Research, UBS Global Wealth Management & Business Banking

Tel. +41 44 234 67 32

UBS

Wealth Management Research