The Swiss government said it will compensate employees forced to work fewer hours at companies hit by the sharp appreciation of the Swiss franc, marking the first domestic political action aimed at cushioning the impact of recent currency moves.

The Swiss Department of Economic Affairs announced a policy Tuesday that will allow Swiss companies hit by the strengthening franc to claim compensation from Switzerland’s unemployment insurance authority for staff with reduced working hours. The move is intended to give businesses more flexibility to adjust to weakened demand for their goods, and to help them avoid laying off workers.

The new program will “ease the pressure on some companies,” Swiss Trades Union Confederation chief economist Daniel Lampart said. But Mr. Lampart said the Swiss National Bank should now “take concrete steps to weaken the franc.”

Earlier this month, the SNB abruptly removed a cap on the value of the franc, allowing it to gain value relative to the euro and the dollar. That in turn may make Swiss goods more expensive in the eurozone and U.S., and crimp the profit of export-reliant Swiss firms. The franc has gained about 17% against the euro and roughly 13% against the dollar, since the SNB’s policy change.

Swiss Finance Minister Eveline Widmer-Schlumpf has said that the Swiss economy should be able to withstand the scrapping of the currency cap. But some politicians, trade unions and industry groups have called on the government to help firms that may be hurtby the stronger franc.

Hans Hess, the head of the machinery and electrical industry association Swissmem, has warned that a fifth of the association’s member companies could now go out of business. On Wednesday, Mr. Hess welcomed the government’s employee compensation plan.

“It will hopefully encourage firms to opt for cutting work hours, rather than jobs,” he said.

In 2011, the Swiss government stepped in to help firms hit by a strengthened franc, with an 870 million franc ($961 billion) stimulus package to support unemployment insurance and the tourism industry.

Source: wsj – Swiss to Compensate Workers Hurt by Franc

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