Swiss Economy Braces for US Tariff Impact as Parliament Extends Short-Time Work Benefits
The Swiss economy braces for the full impact of US tariffs in the coming months, with companies heavily reliant on the US market expected to be hit hardest. Meanwhile, the Swiss parliament has extended short-time work benefits to 24 months, a move aimed at supporting businesses facing challenges from both the economic downturn and potential US tariffs.
Initially, the Federal Council increased the maximum duration of short-time work receipts from 12 to 18 months. Now, the parliament has further extended it to 24 months. This extension is set to benefit up to 86 companies in the next six months, including those already using short-time work for at least 12 months and those struggling with sales difficulties due to the European and Chinese economic downturns. The machinery and watchmaking industry, currently most affected by short-time work, is expected to be among the beneficiaries.
Short-time work allows companies to reduce employee hours or not pay them at all during a crisis, with the unemployment insurance covering 80% of wages. This measure helps businesses to avoid layoffs and maintain their workforce. In the German automotive sector, major suppliers and manufacturers are also resorting to crisis measures like short-time work and job cuts. As of September, 33,611 people were registered for short-time work, a slight increase from August but significantly lower than at the beginning of the year.
To mitigate the impact of US tariffs, companies are exploring strategies such as filling warehouses with US inventory, adjusting prices, relocating production, and employing transfer pricing strategies.
The extension of short-time work benefits to 24 months is a significant step by the Swiss parliament to support businesses facing multiple challenges. As the full effects of US tariffs become apparent in the coming months, companies are encouraged to explore mitigation strategies to protect their operations and workforce.
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