UBS Compensation Survey: Wages expected to rise by around 0.8 percent in 2013

UBS expects wages to rise 0.8 percent in Switzerland in 2013. Low inflation expectations and a weakening economy are keeping raises low.

Wages in Switzerland will rise by an average of 0.8 percent next year according to the annual UBS Compensation Survey. UBS expects inflation of 0.6 percent in 2013 to produce a real increase in wages of 0.2 percent. The surveyed companies also revealed that they had raised wages by 1 percent in 2012. With negative inflation of 0.5 percent, this equals a real increase in wages of 1.5 percent for the current year.

There are considerable differences among sectors. While chemicals and pharmaceuticals workers (plus 1.3 percent) and IT workers (plus 1.2 percent) did comparatively well in their wage rounds, those employed in tourism saw no increase. This is not only due to the poor business situation in tourism, but rather to a new blanket agreement in 2012 that saw a strong increase in minimum wages in the restaurants and catering segment and with it a larger payroll burden for companies.

The generally low increase in nominal wages in Switzerland is due to two factors: low inflation expectations and the development of the economy in Europe. Inflation has been negative every month this year, leading UBS to expect negative inflation of 0.5 percent for the entire year and only slightly positive inflation in the coming year. This means that there will be very little need, if any, to compensate for inflation, which will in turn put a check on the development of nominal wages.

The second factor is the economic development in Europe and, to a degree, in Switzerland. Sales have been falling for many companies in the current year, and the growing uncertainty about further economic development acts to brake rising wages. While the export industry is suffering above all from the strong franc in combination with the economic situation in the countries it trades with, the domestic economy is currently very robust. This is partially shown in the development of wages in various sectors, with those sectors focused on the home market expected to make most progress in wages. Because of these factors, the majority of companies surveyed expect economic stagnation in the coming year.

In general, the situation on the currency front appears to have had less impact on wage negotiations than was the case last year. This is partly due to the limit against the euro, now in place for a year, which has given companies some breathing space.

The climate of economic uncertainty in Europe has in the past only had a limited impact on the labor market in Switzerland. The majority of companies surveyed recorded no increase in the number of job seekers from Europe during the last twelve months. Partly, however, more applicants from the EU were registered, above all from neighboring countries but also Spain and Portugal. This increase in available foreign workers has not, however, led to more hirings of workers from these countries.

UBS has conducted the annual Compensation Survey since 1989. Some 378 companies, employer and employee representation associations in 22 sectors took part in the current survey held from 17 September to 10 October, 2012. These sectors represent over two-thirds of Switzerland’s working population. From 1989 to 2011 the average wage increases assessed by the survey diverged a mere 0.30 percentage points from the official average salary trends (nominal wage index and collective labor agreements) published by the Federal Office of Statistics (BFS).

The detailed results of UBS’s Compensation Survey for 2012 can be downloaded from:
UBS Compensation Survey 2012

UBS AG

Contacts

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

Sibille Duss, UBS CIO Wealth Management Research
Phone: +41 44 235 69 54, sibille.duss@ubs.com