ZURICH – Switzerland’s biggest aid package launched to fight the economic impact of the new corona virus epidemic must help the country avoid a massive surge of unemployment, the head of the government’s labor department said on Tuesday.
Although the unemployment rate will increase in the next few weeks, measures such as extended short-term work compensation schemes will ease the burden on companies and workers, Boris Zuercher said.
“I truly believe that a short-term work compensation scheme will prove its value and have already proven its value,” Zuercher said on the telephone with reporters.
“The steps that the government has introduced to expand and improve short-term work must enable us to avoid a wave of massive layoffs.”
Companies that employ 1.45 million workers – or nearly 29% of the workforce – have applied so far for short-term work compensation, said Zuercher, adding that does not mean all of these people will work shorter hours.
Under a scheme called “Kurzarbeit” – part of the Swiss aid package worth 62 billion Swiss francs ($ 63.7 billion) – employees get 80% of their wages from the government. The aim is to eliminate the burden of wage payments from companies, so that they can increase employment again after the crisis.
“The purpose of short-term work is to avoid job losses and stabilize the situation,” Zuercher said.
The unemployment rate in Switzerland rose to 2.9% in March from 2.5% in February.
The number of registered unemployed increased to 135,624 in March from 117,822 in February.
The increase is not comparable to countries like the United States, which does not have a short-term work scheme, Zuercher said. U.S. unemployment rate has been expected to rise past 10% in the second quarter.
Restaurants and hotels have been devastated in Switzerland, accounting for 20% of job losses in March, as the government ordered the closure of bars, cafes and restaurants to help reduce the spread of the virus.
Other areas that have experienced an increase in short-term employment are trade, buildings, and health workers who do not work in hospitals such as physiotherapists.
Zuercher said he expected unemployment to increase, especially if the crisis was prolonged.
The Swiss government and other fortune tellers have predicted a recession for 2020 because of the epidemic.
“The longer this situation lasts, the more difficult it is to get out. If it continues like this for another three or four months, it will also affect the solvent company,” Zuercher said.
(Reporting by Silke Koltrowitz and John Revill; Editing by Michael Shields)
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