Unemployment in Switzerland rose to its highest level in 2 years in January, data showed on Friday, as companies axed jobs at a faster rate in reaction to the economic downturn.
The increasing unemployment adds to a recent string of dire news from the economy, piling more pressure on the Swiss National Bank to take unconventional measures to support the economy, which is facing its deepest recession in decades. The unemployment rate rose to 3.3 percent, up from 3.0 percent in December and the highest level since January 2007, the State Secretariat for Economic Affairs (SECO) said.
The total number of unemployed rose to 128,430 in January, also the highest in 2 years. When adjusted for seasonal swings, the unemployment rate inched up to 2.9 percent from 2.8 percent in December. Analysts had expected an adjusted rate of 2.9 percent and an unadjusted rate of 3.2 percent. "Short-time work has risen further, also indicating that unemployment is rising.
And this will continue, probably at a faster rate," Sarasin analyst Alessandro Bee said. "So far the Swiss economy has kept up pretty well. The strong decline is just starting now," Bee said. The SNB had anticipated the downturn in time, slashing its target for the 3-month Swiss franc LIBOR aggressively to just 0.5 percent, but it might sill have to turn to unconventional easing measures to help the economy, he said.
The Swiss central bank has already flagged it might use means such as intervention to weaken the Swiss franc or the purchase of government and corporate bonds. Export-oriented manufacturers such as textile machinery and car parts maker Oerlikon and Rieter or chemicals group Clarianthave announced to cut thousands of jobs as foreign demand for Swiss products is dwindling fast.
Many more firms have announced short-time work, a government subsidised measure to reduce overall working hours and usually a last resort for companies to avoid lay-offs. The Seco said the number of workers receiving payment for short-time work more than doubled in November compared to October. On Friday, Swiss electronics group Cicor Technologies became the latest firm to announce the introduction of this measure in one of its division.
"This should have two effects: it will match capacities to the lower demand, and it will help protect the jobs of Cicor's highly skilled specialists, thus maintaining the company's technological leadership," the group said. So far, low unemployment has bolstered consumer confidence and spending and cushioned some of the slump in exports.
The central bank forecast in December that Switzerland's economy may shrink by 0.5 to 1.0 percent this year, which would be the deepest recession for the country in decades. But indicators such as the KOF growth barometer tumbled to all-time lows, prompting economists to cut growth forecasts. Bankruptcies in Switzerland rose 27 percent from a year ago to 375 in January, financial information publisher Dun & Bradstreet said on Friday, the fifth monthly rise in a row.
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