Swiss feel job cuts chill as economy turns

1st November 2011, Comments 0 comments

Waves from the eurozone debt crisis are hitting the safe-haven Swiss economy, with companies announcing thousands of job cuts this week.

"The economy is beginning to turn," said Daniel Kalt, economist at UBS.

"We are facing recessionary trends," he added.

Until now Swsitzerland has appeared largely sheltered from the crisis although the dark side of safe-haven status was an inflow of funds which pushed up the Swiss franc, hit competitiveness and forced the central bank to intervene.

The strong Swiss currency, the eurozone crisis and the poor international economic situation were all pushing the Swiss economy towards the negative end, Kalt noted, forecasting growth of 0.8 percent for 2012, after 2.0 percent for 2011.

"It is possible that we will book one or two negative quarters," he said.

The changing climate is evidenced by a series of job cuts announced recently.

Novartis last week announced that 2,000 jobs would go, including 1,100 in Switzerland, where two factories would be shut.

The group has promised to pay 18 months of salary in compensation to the retrenched but its move to reduce headcount despite posting profits has angered unions.

"We are in a situation of profit maximisation, it's an absolute lack of social responsibility of the company, it's absolutely scandalous," said Anne Rubin, a representative of the Swiss union Unia.

Novartis said it was necessary to cut jobs in order to remain competitive.

In the industrial sector, lift-maker Schindler also decided to slash 1,770 off its headcount.

The group said the reductions would affect mostly employees in Spain, Portugal and the United States.

Meanwhile, Kudelski, a major manufacturer of television decoders, said Monday it would also make 270 employees redundant.

Switzerland is to account for a third of the reductions, said the group, which employs 3,000 people.

A day later, the country's second biggest bank Credit Suisse also announced 1,500 job cuts, mostly in the developed world.

Even international agencies are examining job reductions.

The World Health Organisation's executive board is meeting this week to look at proposals including one that suggests cutting costs by "reducing the size of the secretariat staff at headquarters."

Between 75 and 80 percent of the agency's income comes in dollars, although about the same proportion of expenditure is in Swiss francs or currencies that have also appreciated against the US currency.

With the franc strengthening dramatically against the dollar, the agency has had to reduce jobs in recent months in order to cope.

Underlining the seriousness of the problem, Andrew Cassels, who is WHO strategy director, said: "We are looking quite hard at the costs of different locations, one of the most expensive locations is Geneva."

For Kalt, the trend is clear.

"More job cuts will come, it's inevitable," he said.

© 2011 AFP

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