UBS Outlook Switzerland: Liberal labor market – what next?
One of the reasons for the Swiss economy’s high level of competitiveness is its open and highly flexible labor market. The details of the future quota system will determine whether the recently adopted mass immigration initiative will impair this Swiss strength. According to a survey conducted by UBS, just over half of companies interviewed expect negative consequences.
Zurich/Basel, 16 April 2014 – In a survey of companies conducted by UBS economists, around half of the enterprises stated that they expected negative effects from the acceptance of the mass immigration initiative. "Just over half of the companies are concerned that if a quota is set for foreign employees, they will have increased difficulties finding qualified staff", said Lukas Gähwiler at a media event in Zurich. This could push up salaries in Switzerland.
Due to aging populations and dwindling birth rates, the working population in many industrialized countries is shrinking. Though Switzerland has been able to escape this trend so far thanks to immigration, it is likely to be affected by a manpower shortage in the long run. Depending on the details of the future immigration regulations, the shortage could intensify in the not too distant future. Common ways of counteracting the shortage will include increasing the participation of women and older people in the labor force. At 41%, Switzerland’s level of full-time female employment is relatively low compared with that of other developed countries.
In many cantons immigration plays a minor role in relation to employment. In absolute terms, 45% of the country’s immigrants are concentrated in the cantons of Zurich, Geneva and Vaud. Moreover, the border cantons are highly dependent on cross-border commuters. For example, almost all newly created jobs in Jura and Ticino have been staffed with foreign employees domiciled abroad. But even in the canton of Geneva, half of all jobs created since 2001 have been staffed with cross-border commuters. Due to the great differences it is therefore important to grant the cantons a major say in the determination of the quotas.
As the main features of immigration regulations will only come into effect in two to three years, UBS economists remain optimistic with respect to Switzerland’s economic performance in the shorter term. They expect GDP growth of 2.1% this year and 2.4% in 2015. They also expect it to be more balanced than last year, when private consumption and the domestic economy primarily fueled the expansion. The export sector, thanks to the recovery in Europe, is expected to contribute noticeably, as are domestic investments.
In developing the UBS CIO WM economic forecasts, UBS CIO WM economists worked in collaboration with economists employed by UBS Investment Research. Forecasts and estimates are current only as of the date of this publication and may change without notice.
Daniel Kalt, UBS Chief Economist Switzerland
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Veronica Weisser, UBS CIO Wealth Management Research
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Sibille Duss, UBS CIO Wealth Management Research
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