Unemployment among foreigners likely to drop over time

Despite the SECO report, Switzerland still has a low unemployment rate when compared internationally. Keystone

The State Secretariat for Economic Affairs (SECO) recently announced the highest unemployment rate in six years. But a Swiss economist argues that the situation isn’t as bleak as it may seem.

SECO reported that in January, the overall unemployment rate had reached 3.8%, and that 163,644 people were registered as unemployed at regional job centres in Switzerland. Among foreigners, the unemployment rate was 7.6%.

But George Sheldon, an economist from the University of Basel, told the SonntagsBlick newspaper on Sunday that he believes the situation is bound to improve.

Despite reports of job cuts at Swiss companies like Credit Suisse, Swisscom, Zurich Insurance Group and Bucher, Sheldon argues that the core unemployment rate in Switzerland has remained at a stable 3% since the 1990s. The core unemployment rate refers to people who have been without work for a long period of time, and who are unlikely to become employed even when the job market is good.

Sheldon noted that in an international comparison, the time it takes to find a job in Switzerland is low.

“Half of unemployed people find a new job three months after losing their previous job”, he told the SonntagsBlick.

By way of explanation, Sheldon pointed out that restructuring policies of the 1970s and 80s saw many Swiss businesses recruit less qualified or even unskilled foreign employees – workers who today are insufficiently trained to fulfil current job requirements.  

But since the 1990s, he says, immigrant workers present a much different profile when it comes to professional qualifications – 60% currently have a college degree. Thus, the risk of these people finding themselves without a job in the long-term is low, suggesting an eventual reduction in the foreigner unemployment rate.

In an interview with the NZZ am Sonntag, Jan-Egbert Sturm, director of the Swiss Economic Institute (KOF) at the federal institute of technology, ETH Zurich, gave a different view. He said not only is the Swiss economy growing more slowly than Europe’s, but he predicts economic output will grow by 1.1% in the current year in Switzerland, and 1.8% in Europe.

While unemployment is increasing in Switzerland, it is falling in Europe. Jobless rates went down in Germany from 7% to 6.7% in January this year. The unemployment rate also decreased in Sweden, Denmark, the Netherlands and Italy, a different story from what has been seen in Switzerland.