Short Term Working Extended For Swiss Watchmakers And Suppliers

Switzerland has extended its short-term working support scheme to two years, a measure designed to help companies avoid layoffs during economic downturns. This second extension, announced October 8, directly addresses the anticipated significant downturn in the Swiss watchmaking industry's largest market, the US, following the August 8 implementation of a 39% tariff. The government cited ongoing labor market uncertainty and the impact of these new US tariffs as reasons for the extension, signaling continued challenges for Swiss exporters.

Analysis

Switzerland's federal and canton authorities have extended their short-term working support scheme to two years, marking the second such extension, announced on October 8. This measure, which reimburses 80% of lost wages, aims to prevent layoffs amidst economic downturns. The extension is a direct response to anticipated significant challenges in the Swiss watchmaking industry, particularly concerning its largest market, the United States.

The Swiss watchmaking sector, which saw a recovery in H1 2025 driven by pre-tariff US export spikes, is now bracing for a substantial downturn. This follows the August 8 implementation of a 39% US tariff, which is already translating into higher prices for American consumers. The industry previously utilized this support in 2024 and peaked in Q1 2025 with 110 companies drawing compensation for 300,000 lost hours, highlighting its vulnerability to market shifts.

The government justified this extended support by citing persistently weak labor market forecasts and the considerable uncertainty introduced by the new US tariffs. This intervention underscores a pessimistic outlook for key export-oriented sectors, signaling that the negative impact of trade policy on Swiss industries is expected to persist through the remainder of the year. The strongly negative sentiment score (-0.7) and pessimistic tone further corroborate this challenging economic environment.

Key Decisions for Investors

• Investors should assess their exposure to Swiss luxury goods manufacturers and related supply chain components, given the direct impact of the 39% US tariff on demand.
• Monitor upcoming economic data from the Swiss watchmaking sector and US consumer spending trends for luxury items, as these will indicate the true depth and duration of the downturn.
• Consider the broader implications of escalating trade tensions and tariff policies on other export-dependent industries globally, as this situation may serve as a precedent.