The contribution of wages to total income in Switzerland has remained constant in the past 30 years. In other developed countries, in contrast, the labour share has fallen, a study supported by the Swiss National Science Foundation (SNSF) reveals. One reason for the stability of the Swiss labour share is the high level of education.
The revenues earned by companies are divided between the employees (in the form of wages) and the shareholders (in the form of profits). In economics, the contribution made by wages to the population’s total income is referred to as the labour share. It is a key indicator of how income is distributed within a country.
This is because the distribution of wage income in society is far more even than that of capital income, which is focused on a small group. A reduction in the labour share tends to lead, therefore, to greater levels of inequality in the national economy, and could weaken social cohesion.
Michael Siegenthaler, Tobias Stucki and Michael Graff of KOF Swiss Economic Institute at the ETH Zurich have investigated the development of the labour share in the countries of the Organisation for Economic Co-operation and Development (OECD) in recent decades. Switzerland apparently has an exceptional role: from 1980 to 2012, the labour share here has remained stable, whilst in most other OECD countries it has fallen.
In Switzerland, the share of wages in total income has been constantly between 65 and 70 per cent. In countries such as France, Italy, Japan, the USA and Sweden, in contrast, the labour share has fallen during the past 30 years from between 65 and 70 per cent to between 55 and 60 per cent.
High labour share due to high level of education
Using data from companies, the researchers investigated the factors that explain changes in the labour share. Alongside weaker trade unions, above all the increased use of computers and the Internet have been responsible for the decrease in the labour share of most OECD countries. “Routine tasks are being done more and more by computers, rather than by people,” says Michael Siegenthaler. This reduces the labour share of total income as in particular less well qualified employees are no longer needed.
In comparison with countries like Sweden or the USA, Switzerland slept through this technological revolution from 1980 to the mid 1990s. After this point, Switzerland was able to dampen the effects of the digital revolution on the labour share, in part owing to its high standards of education, with a relatively high number of qualified employees using computers to perform complex tasks.
Switzerland to lose its special position
Another key reason for Switzerland’s special position in respect of the labour share according to the researchers is the change in the industrial landscape. In the last 30 years, the Swiss industrial scene has moved less significantly towards sectors with low labour shares than has been the case in other countries. “Switzerland has specialised in knowledge-intensive sectors of industry and services that have above-average labour shares,” says Siegenthaler. This has counteracted the decrease in the labour share.
The researchers also investigated the possible future development of the labour share in Switzerland. Their assumption is that computerisation of the workplace will further increase and the power of the unions continue to fall. Therefore, Switzerland will probably have to cede its special position to a certain extent, as the labour share is likely to fall here too by 2020.
M. Siegenthaler, T. Stucki: Dividing the pie: the determinants of labor’s share of income on the firm level. KOF Working Paper No. 352, February 2014.
Media - Abteilung Kommunikation | idw - Informationsdienst Wissenschaft
Diagnoses: When Are Several Opinions Better Than One?
19.07.2016 | Max-Planck-Institut für Bildungsforschung
High in calories and low in nutrients when adolescents share pictures of food online
07.04.2016 | University of Gothenburg
Researchers from the Institute for Quantum Computing (IQC) at the University of Waterloo led the development of a new extensible wiring technique capable of controlling superconducting quantum bits, representing a significant step towards to the realization of a scalable quantum computer.
"The quantum socket is a wiring method that uses three-dimensional wires based on spring-loaded pins to address individual qubits," said Jeremy Béjanin, a PhD...
In a paper in Scientific Reports, a research team at Worcester Polytechnic Institute describes a novel light-activated phenomenon that could become the basis for applications as diverse as microscopic robotic grippers and more efficient solar cells.
A research team at Worcester Polytechnic Institute (WPI) has developed a revolutionary, light-activated semiconductor nanocomposite material that can be used...
By forcefully embedding two silicon atoms in a diamond matrix, Sandia researchers have demonstrated for the first time on a single chip all the components needed to create a quantum bridge to link quantum computers together.
"People have already built small quantum computers," says Sandia researcher Ryan Camacho. "Maybe the first useful one won't be a single giant quantum computer...
COMPAMED has become the leading international marketplace for suppliers of medical manufacturing. The trade fair, which takes place every November and is co-located to MEDICA in Dusseldorf, has been steadily growing over the past years and shows that medical technology remains a rapidly growing market.
In 2016, the joint pavilion by the IVAM Microtechnology Network, the Product Market “High-tech for Medical Devices”, will be located in Hall 8a again and will...
'Ferroelectric' materials can switch between different states of electrical polarization in response to an external electric field. This flexibility means they show promise for many applications, for example in electronic devices and computer memory. Current ferroelectric materials are highly valued for their thermal and chemical stability and rapid electro-mechanical responses, but creating a material that is scalable down to the tiny sizes needed for technologies like silicon-based semiconductors (Si-based CMOS) has proven challenging.
Now, Hiroshi Funakubo and co-workers at the Tokyo Institute of Technology, in collaboration with researchers across Japan, have conducted experiments to...
14.10.2016 | Event News
14.10.2016 | Event News
12.10.2016 | Event News
21.10.2016 | Health and Medicine
21.10.2016 | Information Technology
21.10.2016 | Materials Sciences