Employment is increasing again in Switzerland
The COVID-19 crisis has taken a heavy toll on the Swiss labor market. In the second quarter of 2020, amid the first lockdown, total employment was down 0.9% year-on-year on a seasonally adjusted basis – the sharpest quarterly drop in nearly 30 years. Following a temporary setback during the second lockdown in early 2021, employment has been picking up again since the spring. In fact, it was already about 0.9 percentage points above its pre-crisis level by the end of September 2021.
Swiss companies are struggling to hire staff
The ongoing recovery in the jobs market is also reflected in the search for personnel – in other words, an increase in labor market tightness. The latter refers to the ratio between job vacancies and unemployed persons, and is an indicator of how difficult it is to fill vacancies from the employer's point of view. A figure above 1 shows that – simply put – the demand for labor outweighs the supply. A value below 1 indicates that the opposite is the case.
The number of vacancies in the Swiss labor market in the third quarter of 2021 was only slightly short of the number of unemployed persons – meaning that in recent quarters it has once again become more difficult for companies to fill vacant positions with the right personnel. The labor market is particularly tight in the IT industry, but also in parts of the industrial sector (such as chemicals/pharmaceuticals and mechanical engineering) as well as healthcare and social services, with many companies currently experiencing recruitment problems.
Evidence of a mismatch on Swiss labor market
The increasing difficulty faced by Swiss companies in terms of finding suitable employees is not solely down to a lack of personnel. The fact is that in many cases the profiles of job-seekers either partly or completely fail to match the job advertised.
This mismatch may be in terms of sector, qualifications, or regions. The main reason for the mismatch at the moment is likely to be the divergent trends in individual sectors. In other words, the sectors in which the number of vacancies has seen the fastest growth in recent quarters are not necessarily those in which an especially large number of persons are looking for a job.
Major mismatch and plenty of career changes in hospitality
Recent quarters have brought to light a mismatch between vacancies and job-seekers in the hospitality sector in particular. As well as possible discrepancies between the professional skills and qualifications in demand and on offer, career changes are likely to play a key role in this context. In terms of the statistics, unemployed persons are assigned to the industry in which they last worked – although, of course, this does not mean that they are also looking for a new position in that sector. Our analysis shows that an above-average number of people in the hotel and catering sector switched industries or quit the labor market altogether in 2020 (in order to start a training program or continuing education, for example).
In view of the increasingly tight labor market, companies in Switzerland are currently experiencing greater recruitment difficulties than they were a few quarters ago. This also increases the pressure on them to offer better working conditions and higher wages in order to attract the right workers. All in all, we expect nominal wage growth of 0.8% in 2022.
In addition, employment is expected to show average annual growth of 1.2% (in full-time equivalents) in 2022, with a rise of 0.4 percentage points likely this year.