swissstaffing - Verband der Personaldienstleister der Schweiz
Swiss Staffingindex: Weakening Economic Climate Impacts Staffing Service Providers
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Labor shortages and gloomy export prospects are leading to fears of stagflation - initial signs of a slowdown apparent in the growth region of Basel.
If you look at the latest quarterly figures for staffing service providers in Switzerland, everything could appear rosy: according to the Swiss Staffingindex, the number of working hours accumulated by temporary employees has risen by a robust 8.8 percent compared to the previous year and turnover from permanent position placements is up 8 percent. However, a look at the monthly figures for the permanent staffing sector shows a clear trend of slowdown. The growth rates have been falling since March and were far below the quarterly growth in June at just 2.6 percent. Hardest hit has been the economic region of Basel where the staff leasing sector actually recorded a downturn with growth of minus 3.9 percent.
Paradoxically, labor shortages and a slower global economy are making life difficult for staffing service providers, especially in the Basel region. In the second quarter, the demand for chemical-pharmaceutical products fell by 400 million francs, as reported by the Federal Office for Customs and Border Security (FOCBS) on July 19, 2022. Although this decline only corresponds to 1.2 percent of the chemical and pharmaceutical industry's total exports, it can partly explain the decline in demand for temporary workers in the Basel region as these cover short-term peaks in work. This correlation may also negatively affect the industry's growth nationwide in Switzerland. According to the KOF Economic Barometer, foreign demand as a whole is currently faltering. However, this is only half of the story.
Is Basel a Trend Indicator for Switzerland?
The persistently strong economic climate has depleted the Swiss labor market. Dr. Marius Osterfeld, an economist at swissstaffing, comments: "A lack of staff prevents companies from seizing growth opportunities." Furthermore: "To create firmer ties between employees and companies, many hiring companies are converting staff leasing relationships into permanent positions or instantly opting for permanent position placements." This is most clearly evident in the region of Basel, which has developed particularly strongly to date: in the second quarter, the turnover from permanent position placements rose by 31.1 percent, whereas that of the staff leasing sector fell by 1.7 percent. This is a clear indicator that the region's economic sector, including the pharmaceutical and chemical industry, is looking to the future with optimism and trying to retain employees.
Impending Stagflation
In view of the current labor shortages, rising inflation, and the imminent economic slowdown due to the global goods shortage, there are high chances of stagflation, a situation where the economy stagnates despite high inflation rates. This is because the labor shortage is enabling employees to make salary demands, thereby triggering a dangerous wage-price spiral that further drives inflation and makes it part of the economic system. Even in the case of economic stagnation or a slump, it is difficult to stem the tide of inflation once it has begun. In this context, the strengthened Swiss franc and rising interest rates as potential means of slowing inflation are initially likely to be no more than a drop in the ocean.
In the new cockpit, users can select and analyze the Swiss Staffingindex http://www.swissstaffing.ch/staffingindex data on an interactive basis.
More statistics can be found at this link.
Updated 3.08.2022 9:05
Contact:
Marius Osterfeld, Economist
Tel: 044 388 95 70 / 079 930 45 25
marius.osterfeld@swissstaffing.ch
Blandina Werren, Head of Communications
Tel: 044 388 95 35
blandina.werren@swissstaffing.ch
www.swissstaffing.ch