Strong Swiss franc alarms unions and exporters

Recent cases of Swiss firms paying cross-border workers in euros or slashing salaries to cope with a strong Swiss franc are not isolated, warn unions.

The franc has appreciated by ten per cent against the euro since the start of 2010, much to the disquiet of unions and exporters. But economists say the impact of a strong franc on Swiss firms is not black or white.

At the beginning of September the Swiss logistics firm Stöcklin, based in Dornach, south of Basel, sent letters to 120 of its cross-border workers who live in France and Germany proposing a new contract with a six per cent salary cut – or SFr300 per month.

The management argued that they had benefited from a 12 per cent rise in their purchasing power as their salaries were paid in Swiss francs. Ten workers who refused this measure were sacked.

Swiss printing firm Karl Augustin went even further. At the beginning of August the company, based in Thayngen in canton Schaffhausen, decided to pay its 15 cross-border workers in euros rather than Swiss francs – and using a SFr1.55 per euro exchange rate calculation, while the present rate stands at SFr1.34 per euro.

“After pressure we managed to change this to the current rate,” chief economist of the Swiss Trade Union Federation, Daniel Lampart, told swissinfo.ch, adding that the federation was considering court action over a related dismissal.

Although these are the two main cases that have recently come to the public’s attention, the federation has indications that there are others involving firms paying in euros to try to “make profit on the back of employees”, especially cross-border workers, said Lampart.

“This is illegal,” he warned. “By opening our labour market to the free movement of EU workers we guaranteed the Swiss people that Swiss salaries would be paid in Swiss francs – it’s the law.”

In the 1990s Swiss unions denounced similar salary dumping moves by Ticino clothing firms, which tried to pay their staff in Italian lire after the currency slumped.

“It hurts”

Although Swiss manufacturing exports have started to pick up in recent months, the strong franc continues to eat into margins, particularly for companies that send the lion’s share of their goods to the European market.

The euro zone is Switzerland’s biggest trading partner and industry groups have warned that the franc’s rise against the euro could force companies to move production outside Switzerland.

“It hurts us that the Swiss franc appreciates because we produce nearly everything in Switzerland,” Friday’s Swiss daily Blick quoted Swatch chief executive Nick Hayek as saying.

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