Swiss to Earn Less Due to COVID-19

Lower Salaries

                The coronavirus pandemic has significant impact on the global and Swiss economy with months of lockdown causing losses for business and bigger unemployment. Also, Swiss franc exchange rate is getting higher as investors are eager to buy Swiss francs in difficult times. This hurts, for instance, export of the country. According to new analysis, made by BAK Economics, based in Basel, COVID-19 will cause damage to salaries of employees as well as incomes of self-employed people and lower income from assets. This situation will take place both for 2020 and 2021. Altogether people in Switzerland are predicted o lose CHF1,700 income till end of 2021. Losses will result from lost jobs but also from shorter working hours imposed by many organizations that have huge impact on salaries. Recompensations for shorter working hours will reduce only part of losses. For this year earnings will contract by 2.5% per BAK Economics. Stagnation will be observed also next year, even though situation will get slightly better. Comparing incomes versus those predicted without COVID-19 pandemic losses will reach value of CHF15 billion for this and next year, which translates to CHF1,700 per working person in Switzerland.

Worse in Some Sectors

                Losses in incomes will be bigger in some sectors. The most affected are said to be hotel, tourism and events industries, as well as some parts of public transport sector. Global economic slowdown will have impact on finance and export sectors with many employees possibly redundant.

What To Do?

                BAK economists offered some quite pessimist outlook – what advices they have for Swiss policy makers in order to minimize negative economic effect of COVID-19? They recommend implementing continuing measures to maintain earning, as well as planning out new strategy to prevent second wave of infections. Also new measures to support the economy might be useful, like the aid package for billions of CHF injected by Swiss government.

Industry Is Bouncing Back

                In better news, Swiss industry and orders activity is showing signs of recovering from COVID-19 slump. Industry indexes and orders activity has returned to level pre-crisis, as redirecting supply chains as a response to COVID-19 pandemic has proved to be successful. In July Purchasing Manager’s Index rose to 49.2 points, not far away from 50 points growth threshold. As the survey shows more than a one third of businesses decided to purchase more in Switzerland and in neighbouring countries, members of European Union, as a reaction to disruptions due to pandemic. “In general, companies have also been aiming to diversify their supplier base more broadly,” as can be read in the survey mad by procure.ch. “Every second company plans to restructure its supply chain in future to focus predominantly on suppliers from the EU.”