ZURICH (Reuters) - The Swiss government expects the cost of jobless benefits and short-time working compensation arising from the coronavirus crisis to jump to some 20 billion francs ($20.51 billion) this year from 6-7 billion normally, an official said on Thursday.
The country’s economy faces uncharted territory with an uncertain outcome, said Boris Zuercher, from the State Secretariat for Economic Affairs (SECO). He added that the crisis unleashed by the global pandemic defied comparison but that it conjured images of the Great Depression of the 1930s.
“We will need another 14 billion in additional financing for the unemployment fund in 2020,” Zuercher told reporters. “That’s our current forecast, although I don’t have a crystal ball.”
He said the officials would seek the extra money from the government so the scheme had leeway to deal with rising unemployment and the flood of applications for short-time work - a programme meant to mitigate fluctuations in demand without mass layoffs - and ensure the fund did not run out of money.
The Swiss unemployment rate rose to 3.3% in April - compared with an average 2.3% in 2019 - with 153,000 people registered as jobless. It rose again to 3.4% at the start of May, Zuercher said, as companies struggled with collapsing demand and the hospitality industry went into shutdown mode.
The COVID-19 respiratory disease has killed 1,505 people in Switzerland, with more than 30,000 people testing positively, although the infection rate has slowed in recent days, allowing the government to begin relaxing restrictions.
Hairdressers, beauty salons and doctors’ surgeries are now fully open, while shops and restaurants will reopen next week, albeit with restrictions such as physical distancing.
Still, for 2020 as a whole, Zuercher expects the unemployment to rise, forecasting an average jobless rate of 3.9%, up from 2.3% in 2019 and its highest level since 2004.
The rate in December is now expected to be significantly more than 4%, with well over 200,000 jobless in the affluent Alpine republic.
The number of people applying for short term work has rocketed from 11,000 in February to 1.9 million by the end of April, and will continue to rise, he added.
Zuercher described the increase in short time working as a positive as it had slowed the rise in unemployment, adding that mass lay-offs have not yet materialised.
“The short-time work program is a bet on the future. Just how long the situation lasts is decisive...But the programme can’t go on forever,” he said.
“Our expectation is that the Swiss employment market will make it through the crisis with a black eye, but the costs will be immense,” he said. “We will all be a bit poorer.”
Reporting by John Revill and John Miller; Editing by Mark Heinrich