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Swiss SMEs: One in Four Companies Suffering From Shortage of Skilled Labor

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08/26/2017 | 01:54pm CET

ZURICH, Aug. 24 -- Credit Suisse, a financial services provider, issued the following news release:

The economists of Credit Suisse have today published the study Success factors for Swiss SMEs - Strategies against the shortage of skilled labor. As in the previous editions of the series of studies, the approximately 1,900 SMEs canvassed altogether consider the Swiss business location to promote success. However, the shortage of skilled labor is seen as a major cause of concern. More than half of SMEs seeking to recruit are having difficulties finding suitable candidates for vacancies. Around a quarter are likely to be acutely affected by the shortage of skilled labor - extrapolated for Switzerland this amounts to some 90,000 SMEs. There are major regional differences though. The two megatrends of digitalization and the aging population will in future significantly shape the demand for and supply of skilled labor.

As in the preceding years, Swiss SMEs altogether consider the Swiss location to promote success. Asked about the most important locational factors, SMEs only regard "foreign ties" altogether to exert a negative impact, which should be among other reasons attributable to the ongoing strength of the franc. Under the impression of a general improvement in the economic situation, the companies surveyed altogether view the Swiss location somewhat more positively than in 2016 and are also more optimistic than in the previous year regarding the future development of locational conditions. However, four out of ten companies expect a worsening of the underlying regulatory conditions. "The Swiss business location continues to offer very good conditions for the success of Swiss SMEs. But there are also some challenges. Many companies are concerned about the increasing regulatory burden. And while employees represent a central pillar for the success of Swiss SMEs, many companies are struggling with the shortage of skilled labor," says Andreas Gerber, Head of SME Business at Credit Suisse.

Around 90,000 SMEs acutely affected by shortage of skilled labor

As the study illustrates, more than half of companies seeking to recruit are having difficulties finding suitable candidates for vacancies. Around a quarter of the companies surveyed are even acutely affected by a shortage of skilled labor - extrapolated for Switzerland this is equivalent to some 90,000 SMEs. According to the survey, the shortage is particularly pronounced in terms of technical expertise and management and project management positions. However, the likelihood of an SME being affected by the shortage of skilled labor depends relatively strongly on its location. Companies from large towns and cities less frequently have recruitment difficulties than those in rural municipalities and Alpine regions. SMEs from Ticino and the Lake Geneva Region also struggle less frequently with a lack of skilled labor. Companies from these regions are likely to benefit in part from the above-average number of cross-border commuters working there. The greatest recruitment difficulties are experienced by SMEs in Eastern and Central Switzerland.

SMEs focusing on training

Swiss SMEs are responding in different ways to the shortage of skilled labor. Recruitment abroad is by no means the only option, even if larger SMEs and those situated in border regions make greater use of this strategy to combat the shortage of skilled labor. Training and education come first. Around 80% of the SMEs canvassed support the training and additional training of employees sometimes or frequently and 53% train apprentices. Considerably less use is made of active searching at career fairs, on job portals or via recruitment agencies, the hiring of temporary staff or freelancers, outsourcing or the promotion of employment beyond retirement age. But this does not apply to all SMEs: Companies experiencing major difficulties in the recruitment of skilled labor display above-average activity at career fairs or more frequently make use of the services of recruitment agencies.

SMEs would like to see more apprentices

The survey confirms the generally good reputation of the Swiss education system. Sixty-two percent of the companies surveyed believe that the Swiss education system is very well or well aligned to their skilled labor requirements. However, this result is not without blemish: A quarter still remain that find it only moderately aligned to their needs. A majority of 64% of SMEs would in future also like more young people than today to opt for an apprenticeship rather than continuing at high school and possibly to continue their education at a later stage at a university of applied sciences or higher technical college. However, the economists at Credit Suisse think it would be misguided to deduce from this calls for a reduction in the share of young people completing the Matura school-leaving examination. For instance, in the dynamic and innovative IT sector, almost half of SMEs would like to see the high school and university model have more or the same significance in future compared with today.

Companies need to prepare for the demographic change

"The two global megatrends of digitalization and the aging population will decisively shape the labor market and therefore the skilled labor situation in the years to come," says Oliver Adler, Chief Economist at Credit Suisse. The baby boom generation will be retiring in the next decade. Instead of 88,000 persons as in 2015, almost 126,000 people will reach ordinary retirement age in 2030. An increasingly large amount of labor will therefore constantly need replacing in the years to come. Despite this, Swiss SMEs largely estimate the additional need for skilled labor due to staff retirements to be low to moderate. Only just under 15% of the survey participants expect their future requirements to rise sharply. Nevertheless, according to the authors of the study, Swiss SMEs will have no choice but to address the challenge of (at best) a stagnating and aging labor force potential. One possible strategy in this regard comprises the employment of staff beyond statutory retirement age. However, across all the companies surveyed, only just under a quarter of SMEs sometimes or often make use of this measure today to secure their skilled labor requirements.

Digitalization enables skilled labor to be replaced but also leads to new requirements

Automation and digitalization could also offset the effects of the demographically induced stagnation of the working population. According to the calculations of the economists at Credit Suisse, around 49% of workers currently pursue a job with medium and 6% one with high automation potential. A good quarter of the SMEs canvassed already make use today of digitalization and automation as an explicit means for combatting the shortage of skilled labor. However, digitalization is also leading to an additional need for skilled labor. According to the survey, 38% of Swiss SMEs expect digitalization to result in an increased need for workers with specific expertise and only 8% anticipate a decline. However, whether digitalization ultimately results in a net increase or decrease in the need for skilled labor is something that it is practically impossible to assess today.

About the study

There are around 600,000 SMEs operating in Switzerland and together they provide employment for more than two thirds of the country's working population. As part of the Success factors for Swiss SMEs series of studies, the economists of Credit Suisse conduct an annual analysis of the assessment of the Swiss location by SMEs. We once again canvassed 1,900 Swiss SMEs this year on the factors and underlying conditions contributing to their success in Switzerland. This year's study focuses on the availability of skilled labor as the most important underlying condition.

The publication Success factors for Swiss SMEs - Strategies against the shortage of skilled labor is available on the internet in German, French, Italian and English at www.credit-suisse.com/publications (Markets & Trends - Swiss Economy)

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