A new report from the KOF Swiss Economic Institute at ETH Zurich has revealed how salaries in Switzerland are expected to rise in the next year. Experts at the university found that while wage rates will rise faster than inflation for the first time since 2020, the gains will be far below what is being demanded by unions and associations.

Real wages in Switzerland forecast to rise after three-year slump

It’s safe to say that the last few years have been a struggle for workers in Switzerland. Despite maintaining some of the highest salaries in the world on average, the KOF noted that average wage rates have failed to keep up with inflation for three years in a row.

Now, the association has predicted that salaries will rise faster than inflation for the first time since 2020. According to their analysis, which surveyed 4.500 international companies and domestic Swiss businesses, wages will rise by an average of 1,6 percent next year.

After deducting expected annual inflation, workers in Switzerland can expect a positive (but rather watery) wage increase of 0,6 percent when their work contracts come up for renewal.

Why are Swiss salaries rising so slowly?

Speaking to the Neue Zürcher Zeitung (NZZ), KOF labour market expert Michael Siegenthaler explained that global economic uncertainty meant that most firms in Switzerland are not keen to offer inflation-busting wage increases. "The strong franc and the turbulence on the global markets are clouding the outlook," he explained.

Siegenthaler added that the real financial situation for Swiss workers may be better than what is indicated by the data, claiming that working hours in Switzerland have continued to decrease even as wages rise - though full-time hours in the alpine nation remain the longest in the world. The amount of paid leave has also been rising consistently, a phenomenon the KOF expert described as a “hidden form of salary increase.”

Finally, he argued that the idea of wage increases being the be-all and end-all for workers is no longer true, especially for high earners. "Instead, flexible options such as home office are desired. A good working environment and meaningful work are also important for satisfaction," he concluded.

Swiss unions baulk at 0,6-percent wage rise

Nevertheless, the idea of 0,6 percent real wage increases has not gone down well with unions in Switzerland. According to NZZ, Travail Suisse, a trade union umbrella organisation that represents over 40.000 employees, is set to call for a 5 percent wage increase in 2025. 

"Companies complain about the lack of skilled workers. Nevertheless, they are putting the brakes on salaries: the increase in salaries over the last 10 years represents a historic negative record," noted organisation president Adrian Wüthrich. According to the Federal Statistical Office, real wages in Switzerland in 2024 remain below the levels recorded in 2016.

Employees Switzerland, a staff advocacy group, has called for a 2,2 percent rise, with managing director Stefan Studer calling the increase a “necessary investment.” He said that companies that don’t offer higher wages “risk falling behind in the coming years. This pay increase is an unmistakable sign of appreciation and economic foresight."

In a forecast of how negotiations for both collective labour agreements and individual work contracts are expected to go this year, Swiss Commercial Association head of social partnership Michel Lang told the NZZ: "The cumulative [real wage] backlog in many cases is more than 3 percent. We expect employers not to postpone this inflation compensation any longer."

Thumb image credit: Michael Derrer Fuchs / Shutterstock.com