Unions attack SNB over cap removal

Daniel Lampart, chief economist of the Trade Union Federation, warns of rising unemployment in Switzerland Keystone

Swiss unions have criticised the Swiss National Bank’s (SNB) decision to axe its CHF1.20 exchange rate peg against the euro, warning that it could lead to falling prices and greater unemployment in Switzerland. 

“If the Swiss franc remains strong, prices will fall. Unemployment will rise. The SNB has clearly not fulfilled its mandate,” warned Daniel Lampart, chief economist of the Trade Union Federation, in the Tages-Anzeiger and Bund newspaper on Tuesday. 

Under Swiss national banking legislation, the SNB’s mandate is to guarantee price stability and take into account the development of the economy.

The SNB’s unexpected decision on January 15 to abandon the currency’s limit on the euro has been received with shock by traders, businessmen and unions. The central bank said increasingly divergent monetary policies would make it impossible to continue with the franc cap. 

The union federation believes up to 80,000 jobs could be lost if the Swiss franc remains at parity with the euro, saying the increase in the value of the Swiss franc would put pressure on salary levels and employment. Economists believe that prices could fall by 3-4% in 2015.

In an interview in SonntagsZeitung on Sunday, Roland Müller of the Employer’s Organisation said entrepreneurs needed greater flexibility to cope with the new situation.

“In this current exceptional situation, businesspeople need room for measures such as extending working hours or reducing wages,” he said.

‘Counter-productive’

Corrado Pardini from the leftwing Social Democratic Party, who is also a member of the Unia union, described such comments as “counter-productive”.

“These kinds of statements just fuel uncertainty and make things more difficult to find workable solutions,” he told the Berner Zeitung on Tuesday, adding that unions and employers should sit down together to work out a pact to agree on urgently needed special measures.

The salaries of cross-border workers from France, Germany, Italy and Austria – an estimated total of 280,000 – who travel to Switzerland every day are of particular concern.

Pierre Castella, the director of the Locle firm Dixi, told the Swiss News Agency that he planned to reduce cross-border workers’ salaries by 10-15%.

During the financial crisis in 2008-2009, several Swiss firms lowered the salaries of cross-border workers before the SNB introduced the exchange rate peg with the euro in 2011.