Switzerland: Retail Downturn May Lead to Hiring of More Temporary Workers

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The downturn in the Swiss retail manufacturing sector has hit luxury watchmakers who are requesting discounted rates from their suppliers, in order to cope with the cost of labor and deflated sales. The reduction in supplies and materials would watch producers retain their existing skilled labor who have afforded them success during the booms in the industry. Most suppliers have agreed to discount the cost of materials to watchmakers by a fraction, but likely not by the 15% requested by smaller watchmakers. However, these discounts may not be enough to offset the cost of experienced and technically skilled craftsman and other production workers.

Francois Matile, the secretary general of the watch industry employers' association, said about 1,000 jobs had been lost in about a year from the more than 59,000 in the Swiss watch industry. The actual figure was higher including temporary contracts not being renewed and staff attrition, he added. Watch materials suppliers expect approximately 10% decrease in sales while some smaller watchmakers are anticipating up to a 30-40% decrease in sales in 2016. Many watchmakers have brought more production in-house as a result, though top manufacturers would be even more exposed to changes in demand if they were to do the same and bring more production in-house.

As the employment rate for industrial jobs in Switzerland falls, the use of temporary work and contract positions is on the rise. The demand for these types of interim work engagements has been growing at an annual rate of nearly 10% for the past two decades across all Swiss industries. While just over half of the Swiss temporary workforce is female (52%), the average age of Swiss temporary workers is 42 years old. Approximately 61% have more than 10 years of experience and 70% hold a bachelor’s degree or higher. Temporary workers surveyed say that they are not only given more complex tasks than their previous full-time engagements but that they are accomplishing more work in less time for the most part. According to recent studies, temporary employment has impacted all the major economic sectors, including construction, industry and services, including banking, communications, healthcare, retail, transport, hotels and restaurants.

Although two-thirds of the companies who claim to hire temporary staff in Switzerland have fewer than 500 employees, the downturn in the retail industry may cause an increase in the use of temporary workers at larger companies. More major companies are expected to use a combination of contract work and temporary workers to remain in business through the crisis, without being required to bring the majority of their production in-house. Employers of temporary staff are also investing in the training of these workers, despite their lack of full-time engagements. Just over one-third (37%) of Swiss employers surveyed claimed to equally recruit temporary workers for the same positions that they usually fill with permanent employees.

Migration patterns are changing the landscape of temporary work across Europe. Roughly half of the temporary workers in the country are Swiss while the majority of migrant workers came from Germany, Portugal and the Balkans. As workers continue to seek opportunities outside of their country of origin the mix of nationalities may further diversify. However the number of Swiss-born temporary works is likely to rise as the Net Employment Outlook for Switzerland, according to the Manpower Employment Outlook Survey for the second quarter of 2016 is a mere +1%, remaining unchanged quarter-over-quarter but down three percentage points year-over-year.

“The relative stability of their hiring forecasts is undoubtedly a sign of how reluctant businesses are to invest. The rising Swiss franc and the sluggishness of the global economic recovery are still the main things unsettling employers,” says Patrick Maier, General Manager of Manpower Suisse. Although employers in the Wholesale and Retail Trade sector (-1%) have suffered an adverse result for the third quarter in a row, they have also seen the largest increase year-over-year (13 percentage points). According to recent news, most employers in the retail sector are cautiously optimistic about future increases in hiring despite the current standings.