Switzerland cannot satisfy its labor shortage without foreign workers
According to Swissinfo.ch, the expert Federal Commission for Business Cycle Monitoring and Forecasting (Eidgenössische Kommission für Konjunkturfragen) has not released such optimistic reports in a long time. Everything is under control – or almost everything. Economic growth was 2.4%, and the unemployment rate fell to 2.4%. Swiss exports grew by almost 5% in the reporting period compared to the previous year 2017, federal budget expenditures increased by only 0.7%, and consumer prices rose by just 0.6%.
In May 2018, the number of people registered with regional employment offices (RAV) was less than 110,000, which is 18% less than in the previous year. The employment situation looks particularly good in the 15–24 age group, as well as in the category of “those over 50.” Neighboring countries can only envy this. So, everything is going great, everything is going according to plan? Not quite.
The fact is that in some sectors of the Swiss economy, such as electrical engineering, watchmaking, precision machinery and instrument making, which are currently on the rise, order books are bursting with customer requests, and one would think it's time to strike while the iron is hot, but no! Finding the right employees is becoming increasingly difficult. Labor shortages have even been recorded in Swiss agriculture and forestry. So why plant potatoes if there is no one to harvest them?
So, unemployment at 2.4% is practically full employment. It would seem, what could be better? Marx's theory of the constant impoverishment of workers is completely refuted by Swiss reality. Yet, such a situation can lead to very paradoxical consequences. “In the restaurant business, it's already hard to find service staff. So we would like to get rid of clumsy employees, but we can't, because it won't be easy to replace them,” says one owner of a beer bar in Lausanne.
One would think, what's there to think about: offer staff higher wages – and they will come running in droves. But clinics, for example, cannot afford this because their activities are governed by a huge number of regulations that they are not allowed to violate. In French-speaking cantons, unemployment is still slightly higher, and this is actually not so bad for the economy.
The share of job seekers among the working-age population reaches 4.5% in Neuchâtel, 4.3% in Geneva, 3.6% in the canton of Jura, and 3.5% in the canton of Vaud. But in the rural canton of Appenzell Innerrhoden, where this figure is only 1.0%, the search for labor is a real headache for employers. It would seem, practically communism – but there is simply no one to work according to ability and receive according to need.
In the canton of Obwalden, things are even “worse”: the unemployment rate has fallen to 0.6%, and this resembles a dried-up reservoir – there is nowhere to draw staff from. The current situation even forces small and medium-sized enterprises, which account for 99.6% of the country's GDP, to refuse orders or new projects.
The list of sectors in Switzerland experiencing a shortage of hands (and brains) is impressive: these include IT, law, metalworking and mechanical engineering, transport, construction, and healthcare. As for the IT sector, the situation should improve slightly after Nestlé announced at the end of May that it would cut 580 jobs in Switzerland, including 1,500 IT specialists in Vevey, Lausanne, and Bussigny.
Answering a question from the newspaper Tribune de Genève, the chief economist of Credit Suisse and author of the fundamental study “Possible Strategies in Combating the Problem of Skilled Labor Shortage,” Olivier Adler, explained that today half of the companies with open job vacancies find it very difficult to find their “dream employee.” “About a quarter of the surveyed companies – that is 90,000 small and medium-sized enterprises – even reported an acute shortage of new employees,” he told the Geneva newspaper.
“The overall shortage of skilled labor will have a particularly negative impact on Switzerland as a country that has traditionally been especially favorable for the development of small and medium-sized businesses,” writes Olivier Adler. By the way, speaking of skilled personnel, he emphasizes that we are not talking about graduates of the Federal Institutes of Technology in Zurich or Lausanne, doctors, and other “rocket scientists.” In Switzerland, in this case, we mean, first and foremost, experienced mechanics, adjusters, technical equipment maintenance specialists, etc.
Of course, as always in the matter of hiring new employees, the Confederation is confident that “abroad will help us.” Already today, more than 320,000 “commuter migrants” from neighboring countries, so-called “frontaliers,” work in Switzerland. However, this reserve is not, so to speak, “elastic,” and this figure is not inclined to grow exponentially, remaining stable at the same level.
And yet, the world around is huge, and surely somewhere abroad one could find a person willing to move to work in a country where a salary of $6,000 a month is considered more or less decent. The only problem is that from July 1, 2018, new regulations on the procedure for making job vacancies available to job seekers come into force in the country. These measures were developed in implementation of the will of the people, who adopted the so-called “Initiative against Mass Immigration” in a referendum on February 9, 2014.
The bill required the introduction of strict quotas on foreign labor, but the parliament, when developing the relevant by-laws, decided otherwise, namely not to isolate the Swiss labor market from the European market (which would have led to the collapse of the entire format of cooperation between Bern and Brussels), but to ensure that such precious vacancies go primarily to the Swiss themselves, as well as to foreigners already working here who have lost their jobs.
These measures, however, are not particularly revolutionary either, as they merely oblige employers to inform regional employment offices (RAV) about vacant positions in those sectors of the economy where the unemployment rate is above 8% as of July 1, 2018. Then, from January 1, 2020, this threshold will drop to 5%.
Etienne Piguet, a professor of economic geography at the University of Neuchâtel, recently wrote in his blog with bitter irony that “a Swiss employer will be able to hire a plasterer (11.4% unemployment in the sector) from a European Union country only after five days of interviews with local unemployed people, while a florist (1.6% unemployed) or a cheese maker (1.8%) from Poland or Portugal can be hired without delay.”
It is clear that all this will not have much effect. Nevertheless, this, albeit microscopic, restriction on the regime of free movement of citizens between the EU and Switzerland will provide at least some guarantee for Swiss unemployed people, who never tire of complaining that Swiss companies prefer to hire foreigners first.