The people of Switzerland are facing the biggest loss in purchasing power since the Second World War, according to a new study by UBS. The bank explained that Swiss salaries have failed to keep pace with inflation, as everything from energy to health insurance gets more expensive.
According to the study, international companies and domestic Swiss businesses plan to raise nominal wages by an average of 2,2 percent in 2023. It amounts to the biggest rise in wages Swiss workers have seen for 15 years.
Swiss jobs in all the 22 sectors analysed by UBS will see wages rise in 2023, with the sharpest increases (3 percent) expected in the tourism and hospitality, wholesale trade, watch, jewellery, IT, internet and telecom industries. The slowest wage growth will be in conventional heavy industries and the media at just 2 percent.
However, while the increase in wages is significant, UBS said that it will not be enough to make up for the inflation felt in 2022, or the expected inflation in 2023. While the Swiss economy is expected to fare better than other European nations - the Netherlands recently recorded inflation of over 14 percent - the bank predicted that inflation will still rise to 2,9 percent by the end of the year.
As health insurance costs continue to rise and families and individuals have to pay more for energy and general goods, when real wage rises are compared with inflation, Swiss workers have seen their purchasing power fall by 1,8 percent in 2022, the sharpest decline since 1942. This has also been reflected in public opinion, with one-third of residents now concerned about their finances.
While purchasing power will decline in the short term, there is some good news on the horizon. In concluding their report, UBS predicted that the worker shortage recorded in Switzerland is likely to make wages more competitive in the long term.