Medical protection supplies from China unloaded from a Boeing 747 cargo aircraft at Geneva Airport amid the spread of the coronavirus in Switzerland. Picture: POOL/AFP/SALVATORE DI NOLFI
Medical protection supplies from China unloaded from a Boeing 747 cargo aircraft at Geneva Airport amid the spread of the coronavirus in Switzerland. Picture: POOL/AFP/SALVATORE DI NOLFI

Zurich — Switzerland’s largest ever aid package launched to counter the economic effect of the coronavirus pandemic should help the country avoid a huge wave of joblessness, the head of the government’s labour department said on Tuesday.

Though the unemployment rate will rise in the weeks ahead, measures such as 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 have introduced to extend and improve short-time working should allow us to avoid a huge 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 this did not necessarily mean all these people would work shorter hours.

Under the “kurzarbeit” scheme — part of Switzerland’s 62-billion Swiss franc ($63.7bn) aid package — employees get 80% of their wages from the government. The aim is to remove the burden of paying wages from companies, so they can 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 is not comparable with countries such as the US, which do not have a short-time working scheme, Zuercher said. The US 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, cafés and restaurants to help curb the spread of Covid-19.

Other areas seeing an increase in short-time work have been trade, building, and health workers not employed in hospitals such as physiotherapists.

Zuercher said he expects unemployment to increase, especially if the crisis is prolonged.

The Swiss government and other forecasters have already predicted a recession for 2020 due to the pandemic. Said Zuercher, “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.” 

Reuters