Despite wars and crises: Wages in Switzerland will rise next year

Despite ongoing global conflicts and economic challenges, Swiss companies are demonstrating remarkable resilience, leading to optimistic forecasts for employee wages in the coming year. A survey by the KOF Swiss Economic Institute indicates that employees can anticipate higher real wages in 2027.

The KOF survey, which included approximately 3,500 private sector firms, projects an average nominal wage increase of 1.2% for 2027. While inflation is expected to erode some of these gains, the KOF forecasts an inflation rate of around 0.5%. This scenario would leave employees with a net real wage increase of just over 0.7%.

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The numbers are quite respectable given burdens such as American tariffs or the Iran war.

This projected real wage growth is a positive development when viewed in historical context. Between 2014 and 2023, Switzerland experienced an average real wage growth of only 0.2% per year. The anticipated increase for 2027 would mark one of the more favorable years for wage earners in recent times. Michael Siegenthaler, who leads labor market research at KOF, noted that these figures are encouraging given the pressures from factors like American tariffs and the conflict in Iran.

However, the survey also revealed a divergence in inflation expectations. Companies surveyed anticipate a higher inflation rate of 1.1%, which, if realized, would negate any real wage gains for employees. Siegenthaler acknowledged the uncertainty surrounding future inflation but pointed out that companies have historically tended to overestimate it. Furthermore, the long-term trend shows a decline in nominal wage increases, with companies expecting less growth in 2027 than in previous years.

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However, it has regularly been shown in the past that companies have had somewhat too high inflation expectations.