In Switzerland, the unemployment rate continues to rise for the second year in a row, creating a contrast with the overall stability in the EU labor market. Such data point to a variable dynamic in a country heavily dependent on exports and global conditions.

Although Switzerland is often associated with a low unemployment rate, it is no longer that far from the neighboring countries’ average indicator. According to ILO methodology, between the third quarter of 2024 and the third quarter of 2025 the unemployment rate rose from 4.7% to 5.1% (an increase of 0.4 percentage points). Such shifts were also observed in Germany (+0.3 percentage points), France (+0.3 points) and Austria (+0.2 points); Italy remained at 5.6%. The average across the 27 EU countries stayed around 5.7%.

“Switzerland is heavily dependent on exports, so the global economic situation may have a stronger impact than in EU countries whose economies are less dependent on trade with the rest of the world”

– Giovanni Ferro-Luzzi, professor of economics at the University of Geneva and the Geneva School of Business Administration

Unemployment Trends and Key Drivers

Switzerland’s reliance on exports makes the industrial sector particularly sensitive to global fluctuations: due to US trade frictions in 2025, supply chains wore down, forcing companies to respond quickly – shrinking headcount or freezing hiring. Because of the open and mobile nature of the Swiss labor market, consequences are quickly reflected in unemployment figures per ILO methodology, notes Stefan Gaini, head of the communications department of the Swiss Employers’ Association.

A strong foreign exchange pressure also affects certain sectors. At the end of January the franc reached its strongest level in years against the US dollar. “A strong Swiss franc creates significant pressure on the metalworking and mechanical engineering sectors, as well as on the watchmaking industry” – notes Daniel Copp, General Secretary of the Swiss Federation of Trade Unions. In these sectors partial unemployment – due to shorter hours with government-supported compensation – helped reduce social costs. In the watchmaking industry last year about 835 jobs were lost, even though exports in this sector had been falling for the second year in a row.

The pharmaceutical industry and the life sciences sector have faced significant cuts. In 2025, this sector became the leader in terms of layoffs – about 30% of the total unemployed people according to the Job Market Barometer released at the end of January 2026 by von Rundstedt Switzerland.

“The reasons are largely cyclical, although long-term structural changes cannot be ruled out if the US administration continues to intensify pressure on this sector in the coming years”

– Ferro-Luzzi

The relocation of pharmaceutical production to the United States keeps the question about corporate strategies and regulatory obligations in focus, as it affects employment in Switzerland. Unemployment is also rising in the financial sector amid the Credit Suisse-UBS merger, affecting the global labor system. Discussions of the implications of restructurings of other banks and insurance companies are underway, and analysts expect a modest rise in unemployment in 2026.

There is a rise in long-term unemployment: in 2023, as the economy recovered from the crisis, the ILO reported about 70,000 long-term unemployed; by 2025 their number exceeded 84,000. The share of people out of work for more than 12 months remains below 10%, but for many this poses a significant challenge to returning to the labor market.

“This is a problem because it is well known that prolonged absence from work makes returning to the labor market harder”

– Ferro-Luzzi

The number of job openings also declined: in 2022 Switzerland faced a labor shortage with almost 130 thousand open positions, and by 2025 this level fell to less than 90 thousand. Experts point to economic uncertainty as the main reason. SECO’s forecast for 2026 calls for modest growth in gross domestic product – about 1.1%.

Along with demographic changes and an aging population, pressure on companies is expected to grow in the coming years. “The greatest shortages are expected in health care, construction and public catering” – notes Gaini.

Regarding the prospects of artificial intelligence in the labor market, experts do not yet share pessimistic forecasts. “AI primarily changes the way we work”, says Françoise Tshants, SECO spokesperson. “In Switzerland, for example, over the last two decades digitization has led to growth of activities not subject to automation, while automated tasks have lost significance. However, these changes happened gradually, and overall employment continued to rise.”

“Although in sectors, especially those related to AI – information technology, banking, administrative activity – there are already signs of rising unemployment, unions believe that this factor will play a “secondary” role in the future labor market.”

– Anonymized comment, dialogue with experts

“We do not think AI will lead to mass unemployment”

– Daniel Copp, General Secretary of the Swiss Federation of Trade Unions