Layoffs at Credit Suisse: Bankers fall softly

The mood is miserable, bad, abysmal. That’s what Credit Suisse employees say about their employer. Immediately after the bank’s failure, outplacement and career advisors advised employees to reorient themselves as quickly as possible. Anyone who waits too long radiates phlegm and inflexibility. No employer wants that. The situation is particularly dangerous for people over 50 who have been with the bank for a long time and have little direct contact with customers.

«Do nothing for a year»

But is that really the case? One of these supposedly pitiful bankers says he is completely relaxed. He is 50 years old and has not had much to do for months, and his position is being eliminated. But a good door may open at UBS, but he wants to wait and see. He turned down a job offer from the competition. The salary would have been a little lower; he would also have had to make major cuts to his staggered bonus. He did not want that. He also has a notice period of twelve months. “I have worked so hard for the last twenty years, I am not unhappy if I have to do nothing for a year,” he says, laughing somewhat apologetically.

A trader in his 50s says something similar. He is taking things a little easier at the moment, has found joy in wellness and is meeting many old friends again. He is not particularly worried, he says something will work out. There are a few anecdotes like this going around.

A CS employee who worked in a staff position would probably be pretty worried, you would think. Corporate staff positions are always doubled after mergers and takeovers, meaning that there is one surplus worker in every position. But the CS employee has long since found a job at a consulting firm, and his soon-to-be former colleagues are doing just fine. One has a new UBS contract, two have found jobs at other banks, and a fourth is waiting for things to happen. The job market in the greater Zurich area seems to be absorbing a large proportion of CS staff.

Labor market and social plans help

So are the supposedly poor bankers doing well? An industry expert speaks of complaints at a high level. In general, unemployment is low and many bankers are highly qualified. Many who are not happy with the situation have already looked around and found good alternatives. This is also the reason why there has not been a major outcry among staff despite job cuts.

The bank’s social plans, which even the bank’s employees’ association has described as “generous”, also provide peace of mind. For employees under 50, the social plan period with full salary payment is between eight and twelve months, depending on the number of years of service. All employees aged 54 and over or with ten years of service are given twelve months to reorient themselves – with full salary payment. All employees aged 58 and over also receive a severance payment, which is calculated based on the amount of the gross salary and the number of months from the date of leaving the bank to the normal retirement age.

Social plans negotiated in times of need look very different from those at CS/UBS, where the backbone of the company is solid, says Pierre Derivaz, a lawyer at the Swiss Employees Association. Notice periods of just three to six months are common.

So are big bankers getting a softer deal? Mass layoffs have been rare in recent years. In addition, the arrangements are often not announced publicly. For example, the Winterthur-based industrial company Rieter recently announced the elimination of 400 to 600 jobs, most of them abroad. When asked, the company did not want to say what conditions would apply to the affected employees in Switzerland. The media group CH Media also limited itself to a summary reference to the social plan after announcing the elimination of 150 jobs.

Media industry expects tighter budget

The conditions at Tamedia were well known – and tougher than for bank employees – after the group decided in 2018 to stop the print edition of “Le Matin” and to lay off 41 employees. The information is public here. Initially, the company wanted to pay compensation of zero to a maximum of five months’ salary. The employees protested. Because the social partners could not reach an agreement, the case ended up before an arbitration tribunal. It decided on compensation of three to twelve months’ salary.

According to lawyer Pierre Derivaz, he ultimately received half a month’s salary for each full year of service, plus half a month’s salary for each child requiring support. According to the Syndicom union, this was more than twice as much as the media group’s original offer.

Generous cushioning also at Novartis

Similar to UBS, the pharmaceutical company Novartis was able to cushion the impact of the 2,000 job cuts announced in 2019 with high severance payments and early retirements for older employees. The basic formula was monthly salary times years of service times age divided by 100. However, a general overview is difficult due to the many subcategories and the age scale. In the Anglo-Saxon style, the Basel-based company had issued advance notices in which the actual termination was announced four months in advance. Together with a six-month notice period, this resulted in a period of ten months for reorientation.

A social plan usually also includes outplacement services. Their scope also depends on how strained the company’s financial situation is.

According to the bank, all affected employees at the major bank receive individual support. This includes individual coaching sessions, professional assessments, discussions on the possibilities of internal and external job searches, as well as other things such as internships, project assignments or training and further education. In addition, according to UBS, there is an allowance for training and further education of up to 12,000 francs per person, regardless of rank and age.

In other sectors, the cost is less. On average, 6,000 to 9,000 francs are often spent per person to support those affected in their career reorientation, according to lawyer Derivaz.

The acid test will come in 2024

At the moment, many layoffs have not yet been announced, so employees are left hanging. Those who were previously sought-after men or women may hope for the best with a mixture of confidence and comfort, and see the long-term continued payment of wages as a comfortable safety net.

The big bank employees are lucky to be in an industry where there is still a lot of money. Therefore, the big bank can afford to pay the price for social peace and cushion the potential outcry with good money.

The major bank has not said how many employees have resigned of their own accord so far. The top performers in particular do not wait to be fired; they prefer to decide when to leave themselves. The price for this is the loss of continued salary and possibly little work at the major bank.

The anecdotes of golden parachutes and bankers who spend a financially relaxed and relaxing time on “gardening leave” can certainly trigger feelings of envy in others. But the real test for the “sedentary” will only come when the job search becomes serious in 2024 towards the end of continued salary payments.