UBS wage survey: no real wage growth expected in 2024
Published: Wednesday, Nov 8th 2023, 10:51
Updated At: Thursday, Nov 9th 2023, 00:54
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Purchasing power in Switzerland is likely to remain under pressure next year. Although companies surveyed by UBS want to pay their employees more for 2024, the higher salaries will not be able to compensate for inflation.
Specifically, the 389 companies, employer and employee associations surveyed expect an average wage increase of 1.9 percent for 2024. Taking into account inflation, which is expected to be around 2 percent, real wages are therefore unlikely to rise next year, according to the conclusion of the wage survey published by the major bank UBS on Wednesday.
"Although the majority of companies are compensating for inflation, they rarely go beyond this," says UBS economist Florian Germanier, summarizing the survey results. Real wages are therefore likely to practically stagnate on average in 2024. This will be the fourth year without real wage growth. Cumulatively, real wages have even fallen by just under 2 percent since 2020.
Loss of purchasing power expected
In the end, despite wage increases, the population will not have more in their wallets, but less. If the health insurance premiums, which are not included in the national consumer price index and therefore do not count towards inflation, are also taken into account, the result for 2024 is another loss of purchasing power.
The reason given by companies for not wanting to increase wages more is weak demand from abroad and increased financing costs as a result of higher interest rates. This limits companies' financial scope for more substantial wage increases, they say.
Wages not a driver of inflation
According to UBS, the expected wage increases will not prove to be an additional driver of inflation. The increase is not strong enough for this. "However, the higher salaries will ensure that inflation does not fall faster," explains UBS chief economist Daniel Kalt.
Growth will also vary depending on the sector. In the public sector, UBS experts expect an average increase of 2.2 percent. In the media sector, however, an increase of only 1 percent is expected.
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