According to the Credit Suisse study, employment grew by 7.4% in the French-speaking region between 2014 and 2019, compared to 5.3% nationally, with peaks in the cantons of Geneva and Vaud.
French-speaking Switzerland has been very dynamic over the last decade. As a whole, despite its geographic and economic diversity, this region has seen GDP, employment and population growth above the Swiss average. According to the latest indicators, companies in Romandie have weathered the COVID-19 crisis very well. Vacancies have never been more numerous than at the beginning of 2022. Although recruitment difficulties are felt, French-speaking Switzerland appears to be less affected by labor shortages than other regions of the country. The job market at Romandie benefits in particular from the relatively young age structure of its population. Many regions of French-speaking Switzerland are also very attractive from a financial point of view as a place of residence, especially for families.
In their new study, economists from Credit Suisse analyze the cantons of Fribourg, Geneva, Jura, Neuchâtel, Valais and Vaud and discuss different aspects of the regional economy, such as the evolution of economic sectors, business and employment, factors of residential attractiveness, population growth or the real estate market.
Employment and productivity on the rise in the last decade
Between 2014 and 2019, employment increased by 7.4% in French-speaking Switzerland, compared with 5.3% nationally. Growth was particularly strong in the cantons of Geneva (+8.7%) and Vaud (+8.6%), as well as in Valais (+6.8%). However, the differences between regions are significant: while the increase reached 12% in Gruyère, employment fell in some bastions of the watchmaking industry, such as the Vallée de Joux or the region of La Chaux-de-Fonds. Productivity, i.e. gross value added per job, increased in all francophone cantons except Geneva between 2011 and 2019, reflecting the region’s strong capacity for innovation. After Zug, Vaud is, for example, the canton with the highest density of start-ups, with Geneva, Neuchâtel, Freiburg and Valais also in the top 10.
French-speaking companies seem to have weathered the COVID-19 crisis well
The pandemic has had a strong impact on the French-speaking economy, particularly in terms of foreign trade. With the exception of Valais, which managed to do well thanks to the chemical-pharmaceutical industry, all French-speaking cantons recorded a significant drop in their exports in 2020. The tourism sector also suffered: last year, the number of overnight stays in hotels and para-hotelers in French-speaking Switzerland was still 24% below the 2019 level. However, Jura managed to register more overnight stays in 2021 than before the crisis. Thanks in particular to significant help from the Confederation and the cantons, the impact of COVID-19 on companies in French-speaking Switzerland was not as negative as feared at the beginning of the crisis. Bankruptcy rates in 2020 and 2021 were lower (often significantly) than those for the years 2018-2019 in all French-speaking cantons. While at the Swiss level, the latest data indicates a slight recovery in bankruptcies, no clear trend reversal is currently visible at the Romandie level. Contrary to the national average, there was no more business creation than before in French-speaking Switzerland during the COVID-19 crisis.
French-speaking Switzerland less affected than other regions by labor shortages
Unemployment has returned to pre-crisis levels in most French-speaking cantons. At the same time, vacancies have never been more numerous in French-speaking Switzerland than at the beginning of 2022 (+38% in February 2022 compared to February 2020 and up to +54% in Valais, according to the Jobradar of the company x28). More and more companies in French-speaking Switzerland are reporting recruitment difficulties. However, these seem to be less pronounced than in other regions of the country. During the Credit Suisse SME Survey 2021/2022, over 62% of SMEs in French-speaking Switzerland that recruited or attempted to recruit in the last three years indicated that the search for candidates proved to be quite (38%) or even very difficult (25%). compared to 66% on average in Switzerland and more than 75% in eastern and northwestern Switzerland. Around 36% of SMEs in French-speaking Switzerland think that the search for staff will become more complicated in the coming years, compared to more than one in two across the country. One of the explanations for these regional disparities in terms of labor shortages is demographic: while on a Swiss scale, baby boomers’ pensions are expected to soon outpace the number of young people entering working life, this phenomenon should not be observed in Switzerland. francophone, although the balance between entry and exit from the labor market will decrease significantly in the coming years.
More dynamic demographics and a lower degree of aging than the Swiss average
The job market at Romandie benefits from the relatively young age structure of the population. Vaud, Geneva and Freiburg are even the cantons with the lowest proportions of elderly people (65 years and over) in Switzerland, with less than 17%. Between 2000 and 2020, the population increased by an average of 1.2% per year in French-speaking Switzerland, compared with 0.9% nationally. This growth is explained by the positive contribution of international immigration, a mirror of economic dynamism, which attracts migrants with an average level of education above that of residents in all cantons of French-speaking Switzerland. Several regions are also benefiting from a positive internal migration balance. Among the most dynamic are those who manage to take advantage of its attractiveness as a place of residence close to the great centers of Lausanne, Geneva and Bern. This is the case, for example, of Gruyère, Broye, Glâne/Veveyse, Gros-de-Vaud, the regions of Nyon, Morges/Rolle and Morat or those of Monthey/St-Maurice, Aigle or Martigny. The telecommuting boom following the COVID-19 pandemic has accelerated these out-of-town movements, allowing families looking for housing to expand their search radius.
Residential financial attractiveness above the Swiss average, especially for families
Based on freely available income, i.e. the amount available to households for consumption or savings after deduction of mandatory deductions (taxes, social charges, health insurance), fixed expenses related to housing and any mobility and childcare, several francophone regions present themselves as advantageous places of residence. The cantons of Jura, Valais and Friborg even have a residential financial attractiveness above the Swiss average. The canton of Neuchâtel is in the middle. French-speaking Switzerland is particularly advantageous for families with children, especially Valais, which is positioned at the top of the national ranking. Childcare for pre-school children in daycare centers is less expensive than the Swiss average in all French-speaking cantons, and tax deductions for childcare costs as well as relatively generous family allowances complete this favorable picture.
Real estate market: rising prices, falling vacancy rates
The COVID-19 pandemic spurred the desire to have a home of their own. Faced with the weakness of residential construction activity, the boom in demand has triggered a further rise in property prices in all cantons of French-speaking Switzerland. Even for a family with an average income of SFr134,000, fewer and fewer goods are accessible. In the Lake Geneva region, the share of real estate still accessible to such a family is now below the 10% threshold. On the Jura, the Rhône Valley and parts of the cantons of Neuchâtel and Fribourg, on the other hand, home ownership is still much more affordable. Growing emphasis on housing and strong immigration also supported demand in the rental market, especially for larger apartments. This evolution, combined with a decrease in construction activity, caused a reversal of the trend in the level of the rental vacancy rate in 2021, after years of growth in excess supply. In French-speaking Switzerland, the decline was minimal and limited to the cantons of Friborg and Valais. Cantonal differences also remain significant. While the unoccupied housing rate is very low in the canton of Geneva (0.63%), it is 5.58% in Valais. The trend of applications for building permits, which is clearly down, points, however, to a well-founded reversal in the trend also in French-speaking Switzerland.
The study “La Suisse romande – Regional economic perspectives” is available in French and German at the following address: credit-suisse.com/regionalstudies