UBS Compensation Survey: salaries to rise 0.9% in 2015

Next year salaries in Switzerland will rise by an average of 0.9%. This is the result of the compensation survey that UBS CIO Wealth Management conducted among 370 companies and employer and employee associations in 22 industries. Given the average annual inflation forecast of 0.3% for 2015, this means a real wage increase of 0.6%. The surveyed companies also reported that they had raised salaries by around 1% in 2014. The expected low inflation of 0.1% this year resulted in a real wage increase of 0.9% for 2014.

IT sector overtakes the chemical and pharmaceutical industry

Salary increases vary considerably among industries. Alongside the electronics sector, IT and telecommunications will be the only industries to increase salaries more in 2015 than in the present year. After a strong increase of 1.5% in the current year, the average salary increases in the chemical and pharmaceutical sector will be just 1.3% in the coming year. The IT industry will thus become the leading sector in this regard, since the latter will increase salaries by 1.6% in 2015. The tourism industry will see no pay increases in 2015. While it is true that nominal salaries rose slightly in 2014, this should be attributed to the adjustment of minimum wages. Tourism is feeling the effects of the strong Swiss franc and the weak economies in European countries particularly strongly. Rising labor costs would aggravate business conditions even further.

In general, the salary adjustments in 2014 resulted primarily from the requirement to adjust minimum wages and end salary discrimination. This led to increases among lower salary groups in particular. In isolated cases, individual salary increases were also carried out to retain specialists.

UBS economists expect low inflation of 0.3% for next year. There is thus little need to compensate for a rise in prices, but this hardly seems to be dampening nominal salary increases for 2015. The expectation of a moderate economic upturn both for the Swiss and the European economies could have encouraged the upcoming salary increases. However, the upswing in the Eurozone remains muted, and uncertainty regarding possible curtailment of the free movement of persons with the EU could cloud Switzerland's economy.

Increasing recruitment of women in the event of the elimination of the free movement of persons

Around half of the survey participants stated that they could be negatively affected by the possible consequences of the mass immigration initiative. The manufacturing sector in particular will suffer, as emphasized by over 60% of those surveyed. In the event of the elimination of the free movement of persons, the shortage of employees on the market could increase. As a consequence, 86% of all companies surveyed would employ women to an increased extent. In the first place, an increase is foreseen in the hours worked by women who are currently only employed part-time. The mobilization of women who are not gainfully employed appears to be less of a focus, especially as the rate of female employment in Switzerland is solid. Older employees would also be employed for longer by 35% of the companies surveyed. Most do not expect the elimination of the free movement of persons to affect wages in the long term.

Staff cuts at banks and insurance companies

Considerable differences are also evident between the sectors in terms of the development of staff numbers. The largest increases in personnel came in the public sector and among corporate services in 2014. By contrast, banks and insurance companies in particular saw large job cuts. In the coming year too, additional posts are expected to be lost in this sector – as in the metal, construction and media industries. On the other hand, the consumer goods and watchmaking industries are planning to increase staff numbers further.

Table: Nominal wage trends according to the UBS Compensation Survey 2015 (%)

UBS has conducted the annual Compensation Survey since 1989. Some 370 companies, employer and employee representation associations in 22 sectors took part in the current survey held from 11 September to 8 October 2014. These sectors represent over two-thirds of Switzerland’s working population. From 1989 to 2013, the average wage increases assessed by the survey diverged a mere 0.3 percentage points from the official average salary trends (nominal wage index and collective labor agreements) published by the Federal Office of Statistics (BFS).

UBS AG

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Daniel Kalt, UBS Chief Economist Switzerland
Phone: +41 44 234 25 60, daniel.kalt@ubs.com

Sibille Duss, UBS Chief Investment Office WM
Phone +41 44 235 69 54, sibille.duss@ubs.com

UBS publications and forecasts for Switzerland: www.ubs.com/investmentviews