Swiss president warns of labour impacts from supply chain bottlenecks

Containers have been piling up at ports amid truck driver shortages and full warehouses in many parts of the world. Keystone / Jim Lo Scalzo

Concerns are mounting over the ripple effects of supply chain issues brought on by the Covid-19 pandemic. Swiss president Guy Parmelin warns that the country may need to cut back on work hours as employers wait for deliveries.

This content was published on October 24, 2021 - 11:45

In an interviewExternal link in the German-language media SonntagsBlick, economics minister Guy Parmelin, who also holds the Swiss presidency this year, said that if the supply chain crisis worsens in other countries Switzerland will be affected. While the economy is doing well, he said, more Swiss companies face problems from supply chain disruptions.

“It is possible that Switzerland has to resort to partial unemployment again next year,” said Parmelin. “It’s not because there isn’t enough work, but because spare parts are missing to finish products.”

Swiss public television SRF reportedExternal link earlier this week that some Swiss firms supplying parts to the automotive industry have already resorted to partial unemployment because of delays in receiving semiconductors. This includes companies like Autoneum, SFS and Feintool but not all suppliers are equally affected according to the Association of the Mechanical, Electrical and Metal Industry (Swissmem). Direct suppliers are suffering most while those further up the supply chain have suffered less.

Partial unemployment benefits help cover the shortfall if an employer needs to cut back in labour hours. This can prevent layoffs. It was used frequently during earlier waves of the Covid-19 pandemic when many businesses had to close their doors temporary under the partial lockdown.

How does partial unemployment work?

During an economic crisis, when a business faces a downturn in demand, it can – as long as the staff concerned are in agreement – reduce working hours. In these cases, the employees will receive benefits from the state coming to 80% of the lost revenue. So, if the employer reduced the work-rate from 100% to 50%, the business would pay one-half of the salary, the unemployment insurance would pay 80% of the other half, and the employee would end up receiving 90% of his or her initial salary.

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Switzerland hasn’t thus far been severely affected by global supply chain bottlenecks and delivery delays. Last Saturday, the head of the logistics company Galliker transport AG told the SonntagsBlick that the country was in a better position than the rest of Europe and that there was no fear of a shortage of truck drivers.

Parmelin also noted that the fate of partial unemployment in the context of Covid-19 will be up to voters. Switzerland is set to vote on November 28 on changes to the Covid-19 law, which includes among other things the use of the Covid-19 certificate and the extension of partial unemployment benefits to 2 years.

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