The latest consumer price index has revealed that salaries in Switzerland are struggling to keep up with the rising cost of living. Living in Switzerland is now 2,4 percent more expensive than last year, with the alpine nation recording the highest inflation rate since 2008.

Salaries will not keep up with cost of living in Switzerland in 2022

The latest data from the Economic Research Centre of ETH Zurich has found that international companies and domestic businesses are planning average wage increases of 1,6 percent over the next 12 months. At the same time, the cost of living in Switzerland has increased by 2,4 percent in the last year, with the war in Ukraine and supply issues forecast to make the situation worse.

Jan-Egbert Sturm, director of the centre, said, “In 2022, nominal wages will not adapt to the economic situation caused by the war in Ukraine – to the price increases that it caused.” For 2022, Sturm said that the Swiss will have to tighten their belts.

Printing and manufacturing the worst affected

The report found that, while no individual sector’s wages will keep up with price hikes, some jobs in Switzerland will be better off than others. IT, hospitality, warehousing, vehicles, lumber and engineering will see the strongest wage growth of around 2 percent over the next year.

On the other hand, the lowest increase is expected to be in the printing industry, with salary growth of only 0,5 percent. According to Blick, in sectors like goods manufacturing and real estate, a majority of workers assume that their salaries will not increase at all.

Swiss trade unions call for cost of living wage rises

Swiss Trade Union economist Daniel Lampart called for “general wage increases” to cope with the loss in purchasing power. He cited federal statistics on corporate income which show that business profits have increased by 35 percent since 2010, with wages only rising by 10 percent over the same period. 

He called on employers to make sure their workers are adequately compensated as the cost of living rises. After weathering the shock of the pandemic, Lambert said that companies were now stable enough to adjust salaries to cope with price rises.

Employers say no need for salary increases

In response, Simon Wey, an economist for the Swiss Employers’ Union, said that employers do not base salaries on prices but on “the financial room for manoeuvre available to companies." He made the point that businesses are also facing higher prices for raw materials and that a wage increase would have to be compensated for by people losing their jobs or having their posts automated.

In regard to company profits, Wey said that higher tax receipts don’t necessarily mean higher income as more people have started a business in the country since 2010. He asserted that real wages have already risen fairly steadily over the past few years and that, “Contrary to the assertions of the unions, there is no catching up to be done in terms of wages."