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Anyone who has been to a restaurant recently may have been surprised by the new prices, and shopping from retailers has also become significantly more expensive. And now with the rent shock, high rent surcharges are likely to fly into many mailboxes over the next few weeks. It is important not to forget the increase in premiums, which again poses a threat to basic insurance in the coming year.
With all the price increases, not much is left of the wage increases in recent years.
Worse still, many employees have literally less money in their wallets and their purchasing power is declining. This does not have consequences for the economy.
The Swiss Trade Union Confederation (SGB) has made a calculation and, based on the Federal Statistical Office’s (BfS) wage index, paints a bleak picture: real wages have fallen in many sectors and are sometimes at the same level as in a decade. before.
Construction and consumption suffer
Workers in the shipping and warehouse logistics areas, as well as postal, courier and express services workers are particularly hard hit (see chart). Real wages in these sectors are significantly lower than in 2016. Real wages and thus purchasing power also fell in all sectors. After all, there were also a few years when a little more money really remained in the pay package.
The unions say the real wage loss is currently around 2,000 francs per year when measured against the average wage in Switzerland, which is about 6,600 francs. “It’s a lot of money for one person,” explains Daniel Lampart, 54, SGB’s chief economist. “In the long run, domestic demand may fall and we will clearly feel it in consumption and construction.”
There are growing signs that the unions’ fears may come true. The master builders association expects “slightly less construction activity in the next one to two years than in previous years.” This is partly due to rising interest rates and construction costs.
Real wages continue to fall
Consumption has already started to give alarm signals: Retail sales fell in April and consumption, which is an important pillar of the economy, is slowing down.
“Private consumption will grow more slowly, but not crash,” says Michael Siegenthaler, 38, labor market expert at the ETH Zurich Center for Economic Research (KOF). Because immigration can still compensate for the loss in purchasing power.
However, real wages in Switzerland are likely to continue falling. It’s not just something unions say, it’s official so to speak. BfS has released its first forecast of wage developments this year. It is true that wages will rise by 1.8 percent in nominal terms. But with an expectation of 2.5 percent inflation, there is a real loss of wages as a result. Just like the previous two years.
needs more salary
Even employers have to accept this. “Even if real wages were temporarily negative due to inflation, the wage round for 2023 was significant,” says Simon Wey, 47, chief economist at the Employers’ Association. And put that into perspective: “Overseas, the situation is different, sometimes there are big losses in purchasing power.”
However, declining purchasing power is now starting to hurt many people in Switzerland as well. The recipe of the unions is clear: “All employees need an inflation correction and something more is needed” Lampart demands a 2023 wage cut. “General wage increases are needed in times of inflation. When it comes to individual wage increases, many fall short.”
It also has to do with the way we are used to thinking in terms of nominal wages. After a long period without inflation, we need to get used to inflation again: “Swiss SMEs don’t realize very quickly that they have less money in their wallets,” says KOF’s Siegenthaler. The result: “Many employees ask for very little during wage negotiations.”
First the costs go up, then the wages
However, employers sometimes lower expectations: “Salary is only one criterion for an attractive employer. Better working conditions, such as part-time work or working from home or more vacation options, are becoming increasingly important for workers,” explains Wey. And contradicting unions, who see a lot of room for wage increases due to increased margins. “This is only if companies can adjust prices for inflation. it is true. First of all, most of them have higher own costs because of inflation,” says chief economist of the employers’ association. “It is still entirely clear what falling wages will look like.”
The economic situation will also decide what will happen in the wage negotiations in 2023. At least: Unlike some neighboring countries, Switzerland is not in danger of recession and the economy has had a good start to the year. But Siegenthaler also warns against exaggerated expectations: “Contractually agreed wages will have to reach historic proportions to make up for all real wage losses in recent years.”
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
