Swiss SMEs: Strategies to Counteract the Shortage of Skilled Labor
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Swiss SMEs: Strategies to Counteract the Shortage of Skilled Labor

Credit Suisse has surveyed around 1,900 small and medium-sized enterprises (SMEs) in Switzerland. On the whole, they have a positive view of Switzerland as a place to do business. However, about half of all firms surveyed regard the shortage of skilled labor as a major cause for concern. The companies affected are responding to this challenge in different ways.

Overall, small and medium-sized enterprises (SMEs) consider Switzerland to be a place that promotes success. According to the companies surveyed, eight out of nine locational factors have positive effects on the success of their businesses, with "employees and qualifications" being the most important factor of all. Only the "foreign ties" factor has somewhat of a negative impact, which is likely to be primarily due to the persistent strength of the Swiss franc. Given the impression of a general improvement in the economic situation, the companies surveyed have a somewhat more positive opinion of Switzerland as a location overall than in 2016. They are also more optimistic than they were the previous year with regard to how local conditions will develop in the future. However, four out of ten companies expect the underlying regulatory conditions to deteriorate.

Eight out of nine factors are viewed as contributing to success

Eight out of nine factors are viewed as contributing to success

Significance (2016) and impact (2017) of success factors today: balance of weighted positive and negative responses

Source: Credit Suisse SME Surveys, 2017 and 2016

Around 90,000 SMEs acutely affected by the shortage of skilled labor

The shortage of skilled labor is a fundamental challenge. For example, economists at Credit Suisse have shown that more than half of companies seeking to recruit are having difficulty finding suitable candidates to occupy vacancies. Roughly a quarter of the companies surveyed are even acutely affected by the shortage of skilled labor. Extrapolated for the whole of Switzerland, this would be equivalent to some 90,000 SMEs. The likelihood of an SME being affected by the shortage of skilled labor depends on its location, among other things. Companies in large cities tend to encounter problems in recruiting less often than those in rural municipalities and mountainous regions. SMEs from Ticino and the Lake Geneva region are also less likely to have to contend with a lack of qualified employees. Companies from these regions are likely to benefit from the above-average number of cross-border commuters there.

Forty-five percent struggle to find candidates

Forty-five percent struggle to find candidates

Bar chart: Response to a question concerning the nature of the search for candidates
Pie chart: Response to a question concerning the reason for the shortage of skilled labor; FK = skilled labor

Source: Credit Suisse SME Survey, 2017; *have not recruited in the last five years

SMEs relying on continuing education

Swiss SMEs are responding to the shortage of skilled labor in different ways. Recruitment abroad is by no means the only option if larger SMEs and those situated in border regions make greater use of this strategy. Training and development come first. Approximately 80 percent of the SMEs surveyed provide support for basic and advanced training for their employees either sometimes or frequently, while 53 percent train apprentices. Considerably less emphasis is placed on methods such as actively seeking employees at job fairs, on job portals or via recruitment agencies, hiring temporary staff or freelancers, outsourcing, or encouraging employment beyond retirement age. However, there are some interesting differences. Companies that experience significant difficulties in recruiting skilled labor are more likely than average to get heavily involved in job fairs and more frequently use the services of recruitment agencies.

Companies need to prepare for demographic change

The two global megatrends of digitalization and the aging population will decisively shape the labor market, and therefore the skilled labor situation, in the years to come. The baby boom generation will be retiring in the next decade. Rather than 88,000 as in 2015, more than 125,000 people will reach normal retirement age in 2030. Accordingly, an increasing number of workers will need to be replaced regularly in the coming years. Despite this, Swiss SMEs largely estimate the additional need for skilled labor due to staff retirements as low to moderate. Only just under 15 percent of respondents expect their future requirements to rise sharply. However, Swiss SMEs will have no choice but to address the challenge of (at best) a stagnating and aging potential labor force. Employing staff beyond the statutory retirement age would be one strategy for covering the need for skilled labor. However, only a quarter or so of SMEs sometimes or often make use of this measure.

Digitalization enables skilled labor to be replaced but also leads to new requirements

Automation and digitalization could also offset the effects of the demographically induced stagnation of the working population. According to the calculations of the economists at Credit Suisse, around 49 percent of workers are currently engaged in careers with medium potential for automation and 6 percent with high potential. A quarter of the SMEs surveyed are already making use of digitalization and automation expressly as a means of countering the shortage of skilled labor. Yet digitalization is also leading to an additional need for skilled labor. According to the survey, 38 percent of Swiss SMEs expect digitalization to result in increased demand for workers with specific expertise, while only 8 percent anticipate a decline. However, whether digitalization will ultimately lead to a net increase or decrease in the need for skilled labor is something that is practically impossible to assess at present.