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Swiss employers to reinstate working from home in winter in event of gas shortages

Just a few months after the Covid working-from-home requirement was scrapped, some Swiss companies have said they will reintroduce it to save money on heating.

This winter, Swiss workers may be working from home again. Photo by Andrew Neel on Unsplash
This winter, Swiss workers may be working from home again. Photo by Andrew Neel on Unsplash

Russia’s invasion of Ukraine is having far reaching consequences, including a likely gas shortage this winter. 

The Association of Swiss Energy Companies states that the risk of a power shortage is “real and large”.

As a result, the Swiss government and Swiss companies are looking at ways they may be able to save money. 

Swiss companies to cut heat and ask employees to work from home

One option, as reported in the Swiss media, is to reduce heating costs in offices by asking employees to work from home. 

Swiss news outlet 20 Minutes reached out to several companies to ask for their plans in the instance of a gas shortage. 

Insurance giant Axa said the first step would be to lower temperatures in offices, before rearranging office space so that only certain areas were heated. 

The next step would be to ask employees to work from home. 

Swiss Post confirmed that asking employees to work from home would be the first step, should a gas shortage push heating costs up. 

‘It could hit us hard’: Switzerland prepares for impending gas shortage

If gas shortages persist, cantons could put in place gas rationing systems, whereby industry groups would have to adhere to gas quotas. 

Private individuals and other institutions such as hospitals and schools would not be impacted by this rationing as they are given protected status. 

Industry associations have spoken out against the situation, saying they are experiencing unfair treatment. 

Zurich government councillor Patrick Neukom countered, saying that while he understood the frustrations of industry groups, they should take this time to push forward an energy transition away from Russian gas and towards renewables. 

Zurich residents asked to keep homes cooler in winter

While working from home might save companies money, it is likely to push the onus on workers – many of whom will be working in colder homes anyway. 

Gas crisis: Zurich residents urged to keep homes colder this winter

In order save electricity, the city’s government will call on households to lower the temperature from the usual 23 degrees to 20. 

“If all households were to implement this, it would make a difference overall,” said Martin Neukom, head of Zurich’s construction sector.

Other cantons are getting ready for the impending gas crisis as well, not ruling out countrywide restrictions on electricity consumption.

Lidl is developing emergency plan for blackouts, other retailers also ‘well prepared’

Due to the expected  gas shortage, Lidl Switzerland is setting up a worst-case-scenario contingency plans to be implemented in case of blackouts.

“We are observing developments in the energy sector very closely and are in the process of working out the necessary emergency plans”, the company spokesperson said, without disclosing further details.

Other large retail chains are devising plans  as well in case they are plunged into darkness.

“Basically, we feel well prepared. There is no reason to panic; even meticulous preparations for extreme scenarios do not mean that they will have to be implemented”, Migros spokesperson said.

Coop and Manor also have various contingency plans in place, they said, while at Aldi, “we are always following the current situation closely and evaluating it as part of our crisis management in order to adapt our existing emergency concepts if necessary”.

READ MORE: How is Switzerland preparing for power outages this winter?

How reliant is Switzerland on Russian gas?

While the reliance on Russian oil is comparatively minimal, Switzerland has a heavier reliance on Russian gas. 

Natural gas provides around an eighth of Switzerland’s total energy supply.

Problematically, Switzerland does not have any capacity to store gas in order to prevent insecurity of supply. This is despite a federally mandated store of a variety of other things, including foodstuffs and medication. 

Ukraine invasion: How reliant is Switzerland on Russia for energy?

Switzerland buys most of its gas through various European distribution centres, although an estimated 47 percent of this is of Russian origin. 

 

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COST OF LIVING

EXPLAINED: What the steep rise in Swiss interest rates could mean for you

The Swiss National Bank (SNB) raised the key interest rate by 0.75 percentage points, putting it back in positive territory at 0.5 percent.

EXPLAINED: What the steep rise in Swiss interest rates could mean for you

As announced by Switzerland’s central bank on Thursday, the rate change applies from Friday, September 23rd.

“The bank’s aim is to counter the renewed rise in inflationary pressure and the spread of inflation to goods and services that have so far been less affected”, according to SNB.

The SNB has not said how long the current rate will be in place, but noted that “it cannot be ruled out that further increases in the SNB policy rate will be necessary to ensure price stability over the medium term”.

READ MORE: Swiss central bank announces big rate hike in inflation fight

Inflation rate in Switzerland currently stands at 3.5 percent. While it is much lower than in the eurozone, where it exceeds 9.1 percent, it is still higher than its usual rate of below 1 percent.

Why has the SNB raised the interest rate for the first time since 2015?

For the same reason that other central banks have done so, including the European Central Bank and the Federal Reserve in the US: price stability

In general, central banks see increasing interest rates as a response to rising inflation: higher rates help reduce the overall level of demand and, subsequently, also the upward pressure on prices.

Whether this strategy will work is another matter.

The SNB rate hikes will “have a fundamentally dampening effect on inflation”, Felix Oeschger, analyst at Moneyland price comparison platform, told The Local.

“However, it is far from clear whether these alone will be enough to curb inflation”, he added.

One for the reasons for this uncertainty, Oeschger said, is that “the energy crisis and the high prices of some agricultural commodities, such as wheat, are a result of the Ukraine war. These prices are more difficult to influence with key interest rate increases”.

In its inflation forecast, the SNB predicted the inflation will drop to 2.4 percent in 2023.

But “considering that the SNB has continuously revised its inflation forecasts upward since December 2021, it is quite conceivable that inflation in Switzerland will continue to rise or at least remain high”, Oeschger pointed out.

READ MORE: EXPLAINED: The groups most affected by inflation in Switzerland

Will the Swiss consumers benefit (or not) from the higher interest rates?

It depends on what you are looking to buy.

If you are planning to buy big-ticket items that are usually purchased with credit — like homes — then you may have to dig deeper into your pockets.

If you already have a fixed-rate mortgage, then you are safe from rate increases for the term of your mortgage.

But for new buyers or those with variable-rate mortagages, things may be more problematic.

“It is not excluded that mortgage interest rates will reach 3 to 4 percent next year”, from the current 2.6 to 3.1 percent, according to Donato Scognamiglio, director of real estate platform Iazi.

What about rents?

Tenants may not be better off than homeowners.

Many have already received notices of higher rents to compensate for increased costs of energy.

Now another charge could be added as well, though probably not immediately.

“Rents will go up, but only when the reference interest rate itself is raised”, Scognamiglio said.

The benchmark interest rate is the average of all mortgage interest rates. If the reference rate increases by 0.25%, tenants will have to pay 3 percent more rent. “I expect this to happen next year”, he said.

But it is not all bad news; higher interest rates will yield some benefits as well.

For instance, if you have certain types of investments, you may see more money coming in.

“I expect yields on fixed-income financial products such as bonds to continue to rise”,  Oeschger said.

“In the case of medium-term notes issued by Swiss banks, we have already seen significant increases since the beginning of the year”, he added.

As for savings accounts, however, “the banks have so far been very hesitant to raise interest rates, but if monetary policy tightens further, we can expect interest rates to rise slightly here as well”.

Generally speaking, what will become cheaper and more expensive for consumers?

The bad news here is that everything that has to do with energy, even indirectly, will become more expensive.

This includes “heating, transport costs, electricity and also food”, another Moneyland expert, Ralf Beyeler told The Local.

READ MORE: Pasta up by 13 percent: How food and energy prices in Switzerland are rising

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