UBS Compensation Survey: Wages to rise by 0.8 percent in 2020

Zurich, 30 October 2019 – The 335 companies surveyed by UBS expect an average nominal wage adjustment of 0.9 percent year-to-date. The wage increase may be slightly higher than 2018. However, UBS is expecting a significantly lower annual inflation of 0.4 percent for 2019, which will lead to real wages increasing by 0.5 percent this year. The economic slowdown could lead to wage increases also not being as high next year as they were in past years. For 2020, the UBS Compensation Survey shows an average nominal wage growth of 0.8 percent and a somewhat higher inflation of 0.5 percent, which could lead to a slightly lower real wage increase of 0.3 percent.

The tourism industry is in last place with a nominal wage increase of merely 0.5 percent for 2019 and an expected 0.3 percent for 2020. The lower inflation as well as wage increases led to the fact that, in 2019, real wage increases can be expected across all industries. However, slightly higher inflation and lower nominal wage increases will make real wage increases somewhat lower for 2020. Next year, wages are expected to increase the most in the chemical and pharmaceutical industry. There will be a zero percent increase in real terms for the automobile, electrical engineering and metal industries.

However, it should be noted that the situation has been the opposite for several years since 2009. From 2009 until 2016, employees enjoyed the highest average real wage increases in the past approximately 30 years because of the low, sometimes negative inflation that persisted for a number of years.
 

Estimates of economic performance have been lowered compared to the previous year. Almost two thirds of the surveyed companies expect the economy to stagnate in 2020. Nine percent even expect a recession. UBS has also substantially reduced its expectations and expects a significantly lower growth of 0.7 percent for 2019 and 0.9 percent for 2020 after strong economic growth of around 2.8 percent in 2018. Sixty percent of the survey respondents expect the unemployment rate to remain unchanged at 2.5 percent. The proportion of companies that expect unemployment to increase, however, rose from nine to 32 percent. UBS forecasts that unemployment will remain at around 2.5 percent for 2019 and 2020. This rate is almost equivalent to full employment.
 

This year, UBS also surveyed companies about their attitude towards the federal government’s supporting measures (flankierende Massnahmen) to protect workers and about how strongly they are affected by them. The result: Only one third of companies indicated that they are directly affected by the supporting measures. However, a majority of the companies affected is overall in favor of them.

Nevertheless, many survey respondents see a need for action to be taken. More than 40 percent of the companies directly affected feel that the administrative burden is high and are in favor of reducing it. The corporate service, metal and textile industry are among those most strongly affected. Almost half of the companies see the supporting measures as a suitable way to guarantee wage protection and to prevent working conditions from worsening. Almost 40 percent see them as an important protection for employees. However, over 15 percent consider the measures an excessive regulatory intervention in the labor market by the government.

The supporting measures are also one of the controversial items for concluding the framework agreement with the European Union. Approval for the framework agreement is high among the surveyed companies at a good 60 percent. Almost one third support concluding the framework agreement with the existing supporting measures, and around one fourth support concluding the framework agreement with more moderate supporting measures. These opinions permeate almost all industries.

UBS has conducted the annual Compensation Survey since 1989. Some 335 companies, employer and employee representation associations in 22 industries took part in the current survey, which was conducted from 12 September to 9 October 2019. These industries represent over 86 percent of Switzerland’s working population. From 1989 to 2019, the average wage increases assessed by the survey diverged by a mere 0.29 percentage points from the average salary trends (nominal wage index and CEA) published by the Federal Statistical Office (FSO).

UBS Switzerland AG