Labor market gradually feels economic slowdown
Published: Thursday, Jun 6th 2024, 11:10
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The number of unemployed people in Switzerland fell slightly again in May. And yet the sluggish economy is now more evident on the labor market.
Specifically, 105,465 people were registered as unemployed with the regional employment centers (RAV) at the end of the month, as reported by the State Secretariat for Economic Affairs (Seco) on Thursday. This was 1492 fewer than in April. The rate remained at 2.3 percent.
So much for the good news. But there is also bad news. "The decline was once again less pronounced than usual at this time of year," said Boris Zürcher, Head of the Labor Directorate at Seco, during a conference call.
Unemployment normally falls significantly in the spring because there is more work in construction than in winter due to the warmer temperatures and because business in tourism gradually picks up again after the off-season. However, economic effects are now overshadowing the usual seasonality.
Seasonally adjusted rate increases
Adjusted for seasonal effects, the number of unemployed people rose by 2,201 in May, according to Seco calculations. And the adjusted unemployment rate rose from 2.3 percent to 2.4 percent.
The extent of the increase came as something of a surprise to Seco man Zürcher. However, it fits in with the picture of recent months. "The seasonally adjusted number of unemployed people has been rising for over a year," he said. For comparison: a year ago it was just under 92,000, currently it is almost 109,000. As a look at the statistics shows, the increase in May was also above average.
The main reason for the increase is the subdued demand for labor in the wake of weaker global economic growth. According to Zürcher, this primarily affects the export-oriented mechanical, electrical and metal industries.
Still at a low level
However, Zürcher did not want to dramatize this. Unemployment in this country is still at a "very, very low level", he emphasized. He continues to see the increase as a gradual normalization, which follows a historically very low unemployment rate in the previous year. At that time, it was almost heading towards signs of overheating. He also pointed out that Seco considers a rate of 2.8 percent to be "cyclically neutral".
For Zürcher, the development of the long-term unemployed is also evidence of the good state of the labor market. At around 12 percent, their share of all unemployed people is still extremely low. "This means, for example, that when people change jobs, they don't make the connection or there is a short waiting period," says Zürcher. "But it is not the case that unemployment has hardened significantly and is therefore becoming a structural problem."
Zürcher did not want to look into the future at the moment. In just under two weeks, Seco will issue a new economic forecast including predictions for the labor market. Previously, Seco had assumed an average unemployment rate of 2.3% for the current year 2024.
©Keystone/SDA
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