After a somewhat lengthy, multi-step appraisal process at my company, the outcome was finally revealed: an annual salary increase of drum roll 0%! As you know, this effectively amounts to a pay cut when accounting for inflation.
To add to my confusion, there were no remarks about my performance. While I may not be the company’s superstar, I consistently meet or exceed expectations—and no, this is not my first year at the company.
So, what was I expecting? Well, to begin with, an increase that at least matches the annual inflation as a baseline. Then comes the performance-related part. If you’re doing a somewhat decent job, your knowledge and the value you bring to the company should grow over time, and so should your salary. Unless you’re doing terribly, I’d expect at least a few percent on top of the inflation adjustment. Is this expectation unrealistic?
Is this kind of outcome typical in Switzerland? Where I’m from, a zero percent increase (which I’ve never experienced) would usually signal one of two things:
a) The company believes you’re underperforming and might consider letting you go.
b) The company is in serious financial trouble.
Neither of these scenarios seems to apply in my case, so I’m left puzzled. I’m contemplating having a serious conversation with HR about this, but before I do, I wanted to ask: is this the norm in Switzerland?
Yes, it is in the private sector. In some companies, the employee council or even industry union might agree on a annual pay raise of 1-2%. Often this is used to give pay raises to a few people. The way to address this would be to give your boss enough reasons to put you on next year’s recipient list.
In public administration jobs, inflation adjustments are often (mostly?) included.
Yes, more or less normal.
Even when you get that promotion, it’s not too typical to get more than 5% increase.
The only way to seriously bump up your base salary is to switch companies.
I worked and still work in the public sector, but at a higher level. When I worked in Berne, I was entitled to salary increases based on my performance and the inflation adjustment, which corresponded to salary increases of around 3-4%.
However, the fact that I was awarded new degrees (bar exam and successful in-house training plus two CAS) had strictly no influence on my salary. So I decided that, given my market value, I’d look elsewhere. Bingo, I’m still working for the State, but I’ve got 3 more classes, recognition of my diplomas and future recognition for the hypothetical new training courses I might take.
Moral of the story: to increase your salary, you often have to change employer in Switzerland… As far as I’m concerned, it’s a salary increase of around 15-20%.
Well it happens. I would say more often if you are above 40 than if you are younger.
I would not say that they are considering letting you go or in financial trouble.
I think that they think that for the job you are doing, you are not more valuable than your current salary. Now it is your decision to decide if you are ok with your current salary with this company, or if you want to look around for other opportunities.
Eh, does it though other than on paper? I understand it’s a paycut in absolute terms of buying power vs inflation, but CH has very low inflation. Would you feel better if you saw a 1.1% raise? I’d frankly think it’s a joke, Edit: and actually my own job always did inflation-adjusted salaries even in years they paid no bonuses, and it did feel like a joke, even if it was 2-3%.
It is also what I have experienced since 2011. If they need you to work in a specific project or team or relocate to another country you can negotiate with HR in big corp.
Otherwise the best option is to get another contract at another company and get a counter proposition from your current employer.
HR knows about it and it will be useless to meet them as they are OK with turnover and replace you. Your manager has to cope with it and can only negotiate payrise for his team if he can prove the turnover is abnormally high.
FWIW it’s a job market, unless you have a special contract (e.g. public sector with indexed wages) you’re paid based on negotiated cost of labour, not based on cost of living.
If you think you’re worth a lot more, I think you can benchmark yourself with a job offer and go back to your manager/HR (but also make sure to take into account everything, a higher paying job can also have downsides).
Indeed, considering the low inflation rate in Switzerland, it might not seem significant at first glance. However, I want to stress that the inflation rate serves primarily as the baseline for what I’m accustomed to. Beyond that, the focus shifts to performance.
Yet, the very fact that inflation is so low raises an even bigger question: why don’t employers simply adjust salaries accordingly? It’s fundamentally a matter of principle—the work you accomplished last year remains just as valuable, and ideally, even more so, this year.
I actually discussed this topic with some co-workers recently, sharing my concerns. Their overall response was somewhat indifferent, which surprised me. Coming from a Scandinavian country, I suppose I’m approaching the issue from a more socialist perspective. There, such a situation would likely lead to strikes—haha.
Yes, but to me, an annual appraisal should do exactly that—it should reassess and renegotiate the cost of your labor. Inflation is directly tied to the cost of living, which naturally drives up the cost of services. As an employee, you’re essentially providing a service to your employer.
In my view, this process is a form of negotiation—just a more structured and streamlined version of it. If employers ensure a fair base salary that shields employees from inflation, along with a performance-based boost, they’re less likely to face a stream of employees knocking on their doors over the following weeks to renegotiate their terms.
Thank you for all the great answers! I still find it hard to accept that this is considered the norm. I don’t think it’s particularly fair to employees, and it certainly seems to make it harder for employers to retain their workforce. I suppose I just have to come to terms with the fact that I’m no longer in a socialist country with strong unions, 480 days paid parental leave etc. haha
But it does make me question why companies bother having an appraisal process at all if the outcome is 0%.
Sorry, maybe I didn’t make myself clear. I left my previous employer (in the public sector) to join another (still in the public sector). I work on behalf of the Swiss government, but each office is “in itself” another employer with its own HR department and internal rules.
The salary and recognition of my qualifications were reasons for leaving. But there were others: boredom at work, no opportunities for advancement, the feeling of becoming stupid, the fading quality of my reasoning and legal writing, the fact of not being stimulated.
Appraisal process is to lower the turnover by co-defining goal and objectives.
It should drive your motivation in your manager objectives.
If you do not achieve them it could be a reason to cut your bonus …
Yes, Switzerland is much more employer friendly than other European countries. You can be laid off anytime with no justification. (And even if you go to court over it and win, the best you’ll get is a few months salary, you won’t get your job back)
On the other hand it also has one of the highest salaries and lowest unemployment rate, so as a worker it’s on you to use the market at your advantage (if indeed you think your current salary is not market rate, which isn’t necessarily the case even if it doesn’t follow inflation, see below)
If you subscribe to market theories, economically it’s a bad idea to index wages on inflation. Wages are already sticky (they don’t go down to adjust to market demands), and inflation is one of the only way to adjust. (You could still be paid above market even if you didn’t get inflation adjustment)
If a job is no longer in demand/doesn’t add as much value as earlier, rather than lower the salary, there will be a slow erosion through inflation, as a worker if that happens over long period of time, you should ask yourself if there’s a need to reskill or switch to a company that can make better use of your current skills.
If everything is inflation linked this adjustment can’t happen naturally, you might instead have companies slowly become less competitive until they are unprofitable and have a more brutal shock later (e.g. mass layoffs) when adjustment become inevitable.
As long as your salary is high enough then a below inflation payrise can still result in more disposable income.
example with easy numbers: you have 60k per year in costs and these are up 20% so now $72k. But you earn $240k per year and get a below-inflation 5% pay rise. You now have $12k more which matches your inflated costs even though you got only 1/4 of the inflationary rise.
Really?
I haven’t really witnessed that (*) - but then again I’ve only been with relatively large multinationals.
Apart from the notice period;
People either get put on “performance plan”, which lasts for a while (1y+);
Or if it’s a greater reorg resulting in larger layoffs, there is a “social plan” (3+ months notice, garden leaves, lump sums etc.).
(*) I would actually be happy (or so I think) if companies were more often like it, since there’s plenty of mostly useless folks I have to work with.
Given cost of hiring/training and potentially employee morale it makes sense to not do it. But afaik most contracts are purely at will, there’s no justification needed.
Fedlex is the main rules, and even if an employer loses in court and this is ruled as an abusive termination, the employee just gets a few months of salary and that’s it.
This is not “literally” true. Swiss employment law is not always very clear on this point, and that’s as it should be. To go into more detail, we need to refer frequently to legal doctrine and case law.
On the face of it, it is indeed possible to terminate an employee’s employment contract without giving any reason. However, you still need a reason! Indeed, an employee may contest his dismissal on the grounds that the employer has given no reason for his dismissal. The employer must prove the contrary, which is why there must always be a reason for termination, otherwise the employer will be obliged to pay damages, but may also be required to take the employee back (rare case but it happens, at least in case law).
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