By Silke Koltrowitz and John Revill
ZURICH (Reuters) – Switzerland’s largest ever aid package launched to counter the economic impact of the new coronavirus epidemic should help the country avoid a massive wave of joblessness, the head of the government’s labour department said on Tuesday.
Although the unemployment rate will rise in the weeks ahead, measures like the extended short-time working compensation scheme will ease the burden on companies and workers, Boris Zuercher said.
“I do believe that the short-time working compensation scheme will prove its worth and is already proving its worth,” Zuercher told a call with reporters.
“The measures the government has introduced to extend and improve short-time working should allow us to avoid a massive wave of job cuts.”
Companies employing 1.45 million workers – or nearly 29% of the entire workforce — have applied so far for short-time work compensation, Zuercher said, adding that did not necessarily mean all these people would work shorter hours.
Under the so-called “Kurzarbeit” scheme – part of Switzerland’s 62 billion Swiss franc ($63.7 billion) aid package – employees get 80% of their wages from the government. The aim was to remove the burden of paying wages from companies, so they could ramp up employment again after the crisis.
“The point of short-time working is to avoid job losses and stabilise the situation,” Zuercher said.
Switzerland’s jobless rate rose to 2.9% in March from 2.5% in February.
The number of registered unemployed increased to 135,624 in March from 117,822 in February.
The rise was not comparable with countries like the United States, which do not have a short-time working scheme, Zuercher said. The U.S. unemployment rate has been forecast to rise past 10% in the second quarter.
Restaurants and hotels have been particularly badly hit in Switzerland, accounting for 20% of job losses in March, as the government ordered shutdowns of bars, cafes and restaurants to help curb the spread of the virus.
Other areas seeing an increase in short-time work have been trade, building, and health workers not employed in hospitals like physiotherapists.
Zuercher said he expected unemployment to increase, especially if the crisis was prolonged.
The Swiss government and other forecasters have already predicted a recession for 2020 due to the epidemic.
“The longer this situation lasts, the harder it is to get out. If it continues like this for another three or four months, it will also affect solvent companies,” Zuercher said.
(Reporting by Silke Koltrowitz and John Revill; Editing by Michael Shields)
