Several US and Japanese multinationals have recently announced downsizing in Geneva. Is it part of a larger trend for the current local business climate and job market?
In recent gloomy business news from Geneva, the head of the Swiss-American Chamber of Commerce (Amcham), Martin Naville, warned that the canton was struggling to attract new US firms and pointed to a 10% reduction in staff at US multinationals over the past decade. This was partly due to “new uncertainties linked to Swiss political life”, as well as stiff competition from places like the Netherlands and Ireland, he said.
High costs in Switzerland are clearly a challenge for big foreign firms, said Sjoerd Broers, chief executive of Auris Relocationexternal link.
“Companies are laying off people due to cost pressures and the costs in Geneva are relatively high,” he said, adding that similar things were happening in Zurich.
“For certain jobs it no longer makes sense to stay in Switzerland.”
Pierre Maudet, Geneva’s cantonal economic development ministerexternal link, thinks otherwise. He rejected Naville’s claims and downplayed the news.
“These are individual choices responding to quite distinct logic and needs,” he told swissinfo.ch, adding that JTI and Coty had reaffirmed their close ties to Geneva.
Guillaume Blanchin, director of the specialist recruitment consultancy Robert Walters Switzerlandexternal link, said Coty’s decision to concentrate two-thirds of its staff in Amsterdam was complex and should not be viewed simply through a financial lens.
He also rejected the idea that Geneva had problems attracting new US businesses.
“In recent years firms have moved decision-making centres back to the US, resulting in less autonomy here in Geneva and a rationalisation of financial positions,” he noted.
According to the most recent economic promotion figures, the western Swiss region remains an attractive destination for new foreign companies – albeit at a smaller scale than in the past. This spring, the Greater Geneva Bern Area (GGBa) business development agencyexternal link reported 92 new firms, including many start-ups, setting up in the region in 2018.
“You still have companies establishing and developing here,” said Julien Gibert, executive director of the Geneva branch of the Michael Page recruitment firmexternal link. “But not at the same levels as 10-15 years ago when multinationals arrived with 200 people. They now come with ten people, then recruit ten more and 15 the following year.”
It is hoped Facebook’s decision to base part of its Libra cryptocurrency project in the city will give a huge boost to the region’s credentials surrounding blockchain technology.
Where’s the talent?
At the macro level, Switzerland’s export-led economy has slowed, with growth of only 0.8% expected this year, followed by 1.7% in 2020, as it copes with global trading pressures. However, the national unemployment rate remains among the lowest in Europe. Last year it fell to 2.5%, the lowest reading since 2002, and stood at 2.1% in July this year. Among the cantons, Geneva had the highest unemployment rate at 3.8%.
Yet most local recruitment agencies swissinfo.ch contacted reported a “dynamic” and “promising” labour market that is growing steadily. The problem, they say, is finding the right talent, especially for specialist management, engineering, technical, administrative support and IT positions.
“It’s a relatively flat market, volume-wise, compared to a year ago, but there is still a dearth of candidates,” said Blanchin of Robert Walters Switzerland.
Michael Page's latest Swiss Job Indexexternal link published last month reported a post-summer holiday boom in job vacancies across the country (20%) over the past year - up 19% in the Lake Geneva region.
‘Trading is back’
Around 60% of Geneva’s tax income comes from the watchmaking, finance and commodities trading sectors.
From 2009, the erosion of Swiss banking secrecy hit the prosperous finance sector hard. In Geneva, the number of banks has shrunk by a quarter over the past decade. But Switzerland remains the world’s largest wealth management centre for international assets.
However, finding a finance job in Geneva is hard right now.
“Today if you put a finance analyst position on [a job site], in one week you will get 100-200 CVs as there are lots of people on the market,” said Nicolas Lutter, who leads Nordwand’s IT, finance and executive recruitment in Geneva.external link “On the other hand, IT people get four or five offers every month and if they want to move jobs they just have to click the button, basically.”
Geneva is also an important commodities trading centre with firms like Trafigura and Vitol contributing around 22% of the canton’s tax receiptsexternal link.
While US agribusiness firm Bunge announced recently it had laid off a dozen grain traders in Geneva as part of its global restructuring to cut costs and reduce market exposure, Total SA says it is moving about 200 power, gas and liquified natural gas (LNG) traders to Geneva from London and Paris to join 300 other staff.
“Trading is back and has been doing well for the past year. You have new companies arriving which was not the case two to four years ago,” said Gibert.
This all comes after voters agreed earlier this year to revamp Switzerland’s corporate tax system. Many cantons have reduced their headline tax rates to make up for having to ditch special perks for multinational companies that locate offices and subsidiaries in Switzerland. Geneva’s corporate income tax rate was lowered from 24.2% to 13.99%.
It is too soon to say what impact this tax change will have, but observers like Broers are optimistic. He said uncertainty surrounding the corporate tax reform had forced many companies’ investment decisions and moves to be “put on hold”.
“But that insecurity has now gone, so we should see some movement again. There are some signs that a couple of things may be picking up but that takes time,” the relocation expert declared.