Real wages are falling more than they have since 1942

Wages in Switzerland are rising faster than they have in almost 15 years. Workers in Switzerland can expect an average wage increase of 2.2 percent in 2023, as the large UBS wage survey shows. “2.2 shouldn’t lead to many cheery jumps among employees,” says UBS economist Florian Germanier.

The high inflation rate is to blame. The Swiss National Bank expects 3 percent inflation this year. “We currently expect real wages to fall by 1.8 percent in 2022. This is the highest loss of income since 1942.”

Real wages are also likely to stagnate next year, as the inflation rate is likely to remain well above 2 percent. Therefore, UBS does not expect to make up for the loss in wages this year. “Against this background, a wage increase of just 2.2 percent is staggering,” says Germanier.

Gastronomy and accommodation with a significant increase in wages

UBS surveyed 290 companies from 22 industries for the salary survey. The survey provides a detailed overview of the situation in the country, with more than 90 percent of workers in these jobs.

This shows that wages have increased significantly in some sectors. The biggest winners are those who work in the watch and jewelery industry, wholesale and IT industry. There is an average increase of 3 percent for them.

But wages also rise significantly for low-paying jobs in the tourism industry. Employees in the hospitality and gastronomy field also receive 3 percent more. “The lack of staff has led to an above-average increase there,” says Germanier.

Shortage of skilled workers is hitting companies more and more

UBS attributes the companies’ failure to increase their wages to the pessimistic economic outlook. A third of companies expect a recession – compared to just 3 percent a year ago. According to Germanier, the impact of the economic situation on wage increases should not be underestimated. What’s also said about higher wage increases among companies: Many expect inflation to come down next year.

On the other hand, the ubiquitous shortage of skilled workers has had a positive impact on workers. Last year, about 66 percent of companies said they had problems filling open positions. This year it was already 80 percent. Only 7% of companies are able to fill open positions within the scheduled time.

The payout round will help determine how inflation will unfold in Switzerland next year. “Inflation is currently primarily driven by energy prices. Wages could become the main driver depending on the wage round,” says UBS economist Alessandro Bee. However, the 2.2 percent wage increase does not threaten the wage-price spiral, according to UBS.