Switzerland “suffers” from full employment

Economics, like life, is full of paradoxes. The situation in Switzerland illustrates this. The unemployment rate is very low, 1.9%, which is a source of satisfaction and envy for others, but not all of them are advantages. As revealed a few days ago Corriere del TicinoEmployment offices are forced to lighten their staff and even lay off employees and not renew contracts due to lack of work. This happens in Ticino and in other cantons such as Solothurn or Bern. In the latter, the unemployment rate is 1.4%, which is a record low.

As in other western countries, Switzerland has many vacancies and not enough candidates to fill them, especially in sectors such as healthcare and hospitality. Additionally, as a result of the pandemic, the digitization of the economy has accelerated and there is a huge demand for computer technicians. 22% of small and medium enterprises admit that they suffer from a shortage of qualified workers.

the situation

Unemployment was less than 2% in October, a sign of prosperity, but also of a labor shortage

Some imbalances attract attention. According to the latest official data, unemployment in the Swiss Confederation is 7.2% among young people under the age of 24. On the contrary, among those over 50 years of age, the number of unemployed is limited to 0.8%.

Stability and high wages have always been a feature of a thriving Swiss economy. Hence the strong emigration and growing phenomenon of cross-border workers, those people who commute daily from neighboring regions in neighboring countries. At the end of September there were 374,000, more than half French, just under 25% Italian and the remainder German.

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Bahnhofstrasse shopping street in the center of Zurich

Arnd Wegmann/Reuters

Switzerland continues to lead the ranking of countries that attract talent, according to the Global Talent Competitiveness Index 2022. The Alpine country is ahead of Singapore, Denmark and the United States in that order. However, there are dark clouds on the horizon. A recent study by Travail Suisse revealed that although Swiss employees have little fear of losing their jobs – in part because it would be so easy to find a new one – stress is a growing concern. Six years ago, 37.8% of employees cited stress as their main problem. Today they are 43%.

As for unemployment, economists – ever since the legendary John Maynard Keynes in the 1930s – have always warned that there is a devilish relationship between extremely low unemployment, inflation and loss of productivity and competitiveness. This means that excessive affluence carries with it an almost automatic correction in the opposite direction. Under a certain level of unemployment, the system may become inefficient. Experts coined the term slack , differential or adverse structural mismatches. What then is the most correct level of unemployment? A perfect number cannot be given because conditions influence and change from country to country.

Ramifications

The legendary economist Keynes had already postulated that a very low level of unemployment could lead to inflation

For Andrea Pasanini, an employment economist at the Organization for Economic Co-operation and Development (OECD), based in Paris, Switzerland’s specific problem is that its employment rate (the percentage of working-age people in the population) is lower. More now than before until the covid crisis. This, combined with the very low unemployment rate, indicates that a large number of people, for various reasons, have voluntarily stopped working.

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“The record low level of unemployment in a situation where the employment rate is not skyrocketing but falling is a sign of great difficulty in hiring workers and therefore limits Switzerland’s ability to grow,” Pasnini said. vanguard.

As possible incentives for jobs that can be accepted, the expert cited various measures such as facilitating more immigration, promoting wage increases – unions demand a monthly minimum wage of 4,500 francs (about 4,600 euros) – and better work quality in low-paying sectors such as hospitality.

The apparent Swiss paradise is therefore imperfect and could be improved upon.

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