Hundreds of jobs laid off: Is the Swiss labor market in a new crisis?

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Around 30,000 banker jobs could be eliminated when Credit Suisse is integrated into UBS. 600 workers will fall victim to the austerity program of construction supplier Arbonia, and 300 to 900 workers at textile machinery manufacturer Rieter will remain at the border.

Layoff reports are piling up. Does this now mean a turning point in the labor market? Are the aforementioned layoffs a harbinger of a recession and rising unemployment?

No, there is still no apparent trend reversal in the labor market. Layoffs in CS are the result of repetition and layoffs, but have nothing to do with economics. Arbonia is particularly affected by declining construction activity in Germany due to rising interest rates. Things are going well in Switzerland.

Layoffs at Rieter are an isolated case

Layoffs at Rieter are also an isolated case. At most, they testify to the fact that things in the industry are no longer doing as well as they were last year. As the pandemic subsides, demand shifted from goods to services.

The Purchasing Managers Index PMI has been showing this for several months. Industry orders are falling, but companies are reluctant to lay off employees because they know how difficult it is to find good people. Companies that are hiring and companies that are leaving roughly balance each other out.

As a result, jobs continue to be created in the service sector, which is more important to the economy. But finding skilled workers is difficult. For employers, the labor market has dried up.

A strong wind is blowing against the industry

According to the results of the SNB survey, around 40 percent of companies across all industries still believe that their workforce is understaffed.

The surveys and interviews took place between April and early June. But more recent data, such as the weekly updated job postings summarized in the Swiss Job Tracker by the economic research center at ETH Zurich (Kof), reflect the same picture. The index remains at a record level. Accordingly, there are still 60 percent more job postings across Switzerland than at the beginning of 2020.

Layoffs at Rieter and Arbonia are not yet a new trend. One thing is certain, a strong wind is blowing against the sector as foreign demand weakens.

As hard as the layoffs were for those affected, the Federal Reserve would have preferred a slightly less warm labor market right now. This is because the scarce supply of workers and the large number of vacancies support higher wages and therefore increase inflation.

Source :Blick