Zurich, 26 October 2017 – The 341 companies surveyed by UBS expect nominal wages to increase by an average of 0.7 percent next year, the same as in 2017. UBS economists anticipate inflation of 0.5 percent for this year, which should lead to real wage growth of 0.2 percent. UBS anticipates slightly higher inflation of 0.6 percent next year. On average, this would have a greater impact on real wages and lead to a rise of only 0.1 percent.
Media sector brings up the rear
The media sector, with a projected pay freeze, looks to be the worst performer next year. Also to be found near the bottom of the ranking list are materials and building materials, the construction industry and architecture, the automobile sector, consumer goods, health care and social services, and retail trade. Here, the wage increases cannot keep pace with expected inflation. Employees will therefore have to accept a drop in wages in real terms.
In contrast, employees in the chemical and pharmaceutical industries, machinery, electrical engineering, wholesale trade, IT services and telecommunications, tourism and culture, and the public sector should expect a nominal salary increase next year of 1 percent, and consequently a real gain of 0.4 percent.
The expected real wage rise appears low. The reason for this is the wage policy of recent deflationary years. Companies refrained from reducing wages then and are now hesitant to raise them much.
Low unemployment rate in future
Companies expect the economic trend for Switzerland to improve even more compared to 2017. Almost three-quarters of those surveyed see a moderate boom occurring in 2018. They view the trend in the unemployment rate with similar optimism. While more than one-quarter of companies had foreseen greater joblessness for 2017, only 11 percent expect it to rise in 2018 and almost one-fifth even see it sinking. At 3.2 percent this year and 3.0 percent next, UBS economists also forecast unemployment to drop slightly. Such levels equate to virtually full employment.
Solutions for the demographically related lack of skilled workers only partly utilized
A good half of companies surveyed face a lack of skilled workers. The ongoing demographic shift could further aggravate the problem. In the next 10 years in Switzerland, more than 1.1 million people will reach the retirement age of 65. Many companies are willing to afford their older employees more flexibility in arranging their work schedules to keep them employed longer. Across the country, 24 percent of companies say that they are assigning older employees to new roles, and around 13 percent are promising to relieve them of physical work.
Furthermore, half of companies are granting older employees reduced working hours on request. In the public sector, it is as high as 89 percent. In contrast, 44 percent of companies say that fewer than 10 percent of their older employees work part time. It appears that the problem of the demographically related lack of skilled workers has been recognized and proposed solutions are already in place at many companies. To ensure that they are used more often, acceptance of flexible models by employees and employers alike must presumably increase.
Nominal wage growth according to UBS Compensation Survey 2018
Wage development 2017 | Expected wage development 2018 | |
|---|---|---|
Chemicals & pharmaceuticals | 1.00% | 1.00% |
Machinery | 0.70% | 1.00% |
Electrical engineering | 0.80% | 1.00% |
Wholesale trade | 0.70% | 1.00% |
IT services & telecommunications | 1.00% | 1.00% |
Tourism including culture, sport and education | 0.50% | 1.00% |
Public sector | 1.00% | 1.00% |
Energy, utilities & waste disposal | 0.80% | 0.80% |
Financial services | 0.80% | 0.80% |
Food | 0.50% | 0.80% |
Corporate services (including real estate) | 1.00% | 0.80% |
Switzerland | 0.70% | 0.70% |
Metals | 0.50% | 0.70% |
Logistics | 0.50% | 0.70% |
Watches and jewelry | 0.20% | 0.70% |
Textiles | 0.50% | 0.70% |
Retail trade | 0.50% | 0.60% |
Materials & building materials | 0.30% | 0.50% |
Construction & architecture | 0.50% | 0.50% |
Automobile sector | 1.00% | 0.50% |
Consumer goods | 0.60% | 0.50% |
Health & social services | 0.90% | 0.50% |
Media | 0.00% | 0.00% |
UBS has conducted the annual Compensation Survey since 1989. Some 341 companies, employer and employee representation associations in 22 sectors took part in the current survey, held from 7 September to 4 October 2017. These sectors represent over 85 percent of Switzerland’s working population. From 1989 to 2016, the average wage increases assessed by the survey diverged a mere 0.29 percentage points from the official average salary trends (nominal wage index and collective labor agreements) published by the Federal Statistical Office (FSO).
The detailed results of UBS’s Compensation Survey for 2018 can be downloaded from: UBS Compensation Survey 2018.
UBS Switzerland AG
Media contact
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
