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As the pandemic continues and the Swiss watch industry suffers more and more, a new destabilising factor is gaining in importance : protectionism.
The current situation linked to the health crisis, with the closure of shops and now the rise in protectionism, poses a serious threat to Swiss watchmaking. The massive drop in exports is therefore a serious concern for the sector, particularly in terms of employment.
Last September, Switzerland’s third largest export industry recorded 1553 fewer jobs than in the previous year (-2.6%), with a total of 57,750 employees.
However, on 16 December, the Employers’ Convention of the Swiss watch industry considered this in its annual census as “a moderate decline in relation to the strong impact of the global pandemic and on watch exports”.
The decline in employment concerns all categories combined, whether at the administrative, managerial or production level.
“The jobs lost are numerous, but compared to the total, it’s not astronomical,” said Philippe Bauer, the president of the convention, “we feared more massive redundancies in the autumn, but for the moment the situation seems to be under control.
However, the situation is only getting worse as exports continue to fall. Exports fell by 23.5% in the first 11 months of the year, representing a loss of around CHF 5 billion compared to the previous year. The number of sales is 10 years behind. Only the Chinese market escaped the catastrophe and allowed the decline in exports to slow down in November. But at this time, the Chinese are giving preference to local purchases in order to strengthen their country’s economy.
The situation does not seem to be getting better any time soon, given the protectionism practised by more and more states. This customs policy, which aims to ward off foreign competition, is taking off in countries such as Turkey, Saudi Arabia or Algeria.
The latter, which are markets with high potential, “have doubled or tripled their customs duties”, explained the president of the Federation of the Swiss Watch Industry. According to him, free trade agreements will not be sufficient for ever and countries such as India, Brazil and Indonesia must improve trading conditions in the long term. The latter country is in fact discussing agreements with the European Free Trade Association (EFTA).
Another problem this time concerns the European Free Trade Association, of which Switzerland is a member : the free trade agreement between EFTA and Mercosur (Brazil, Argentina, Paraguay and Uruguay) is pending.
“The opening of markets remains a major concern of the FH. Switzerland is an exporting country, and the trend towards closure will have a detrimental boomerang effect,” the FH President continued.
Social factors such as the pandemic, as well as commercial factors such as free trade agreements and protectionism are rising like a sword of Damocles over the head of Swiss watchmaking. Political factors are not without influence : the political instability of Hong Kong, which is the third most important destination, is also hurting exports.
On the other hand, Brexit, which could have appeared as a threat to the Swiss exporting country, spares complications even if some obstacles remain. Berne has already largely settled its trade relations with London.
“The Brexit should not change much for the Swiss watch industry, bearing in mind that the Federal Council has signed an agreement with the United Kingdom to maintain free trade beyond the Brexit, even if it is a tough Brexit,” explains Jean-Daniel Pasche, President of the Federation of the Swiss Watch Industry.
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As the pandemic continues and the Swiss watch industry suffers more and more, a new destabilising factor is gaining in importance : protectionism.
The current situation linked to the health crisis, with the closure of shops and now the rise in protectionism, poses a serious threat to Swiss watchmaking. The massive drop in exports is therefore a serious concern for the sector, particularly in terms of employment.
Last September, Switzerland’s third largest export industry recorded 1553 fewer jobs than in the previous year (-2.6%), with a total of 57,750 employees.
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As the pandemic continues and the Swiss watch industry suffers more and more, a new destabilising factor is gaining in importance : protectionism.
The current situation linked to the health crisis, with the closure of shops and now the rise in protectionism, poses a serious threat to Swiss watchmaking. The massive drop in exports is therefore a serious concern for the sector, particularly in terms of employment.
Last September, Switzerland’s third largest export industry recorded 1553 fewer jobs than in the previous year (-2.6%), with a total of 57,750 employees.
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