The KOF Employment Indicator has fallen again in the second quarter of 2025 and is now at its lowest level since the beginning of 2021, when the Swiss labour market was still being affected by the COVID pandemic. The Swiss labour market is expected to see subdued growth in both the current quarter and the next.
The boom years on the Swiss labour market appear to be over for the time being. The KOF Employment Indicator stands at 0.6 points in the second quarter of 2025, down from 2.7 points in the first quarter of this year (revised from 2.6 points). This is the indicator’s lowest level in four years. Analysis for the second quarter of 2025 is based on the responses of around 4,500 firms that were surveyed in April 2025 about their employment plans and expectations. As the KOF Employment Indicator is a leading indicator of actual employment trends, its current value points to a moderate employment outlook for the Swiss labour market over the coming months.
The decline in the employment indicator is attributable to both of its sub-components: the firms surveyed rate both their current staffing levels and the employment outlook for the next three months less positively than they did in the last quarter. While their assessment of their current staffing levels remains positive on balance, the employment outlook for the next three months is sliding into negative territory, which means that there are more firms that want to reduce their headcount in the next three months than those that are planning to increase it.
Bleak employment prospects in the manufacturing sector
The employment outlook in the wholesale, manufacturing and banking sectors is the most negative of all. On balance, a clear majority of the firms surveyed in manufacturing expect to see a reduction in employment. The KOF Employment Indicator for this industry stands at minus 13.2 points. Compared with the last quarter, the indicator for this sector has fallen again and has now been in negative territory since mid-2023.
On balance, a majority of the firms surveyed in the retail and hospitality sectors are also planning to reduce their workforces. In the remaining sectors, however – particularly in insurance, construction and other services – the number of firms that expect to increase their staffing levels continues to exceed those that do not.