Zurich continues to be of paramount importance as a regional financial center and the country as a whole. In terms of value added per capita, the financial sector is top. Nevertheless, a decline in banking jobs is expected.
Zurich is and remains the country's most important financial center. It is not only the pillar of the region's economic strength but one of the largest employers, but differences between banks, insurance companies, and other financial service providers are likely to increase.
A study published Friday by the Swiss economic research institute BAK Economics for the Office of Economic and Labor Affairs of the Canton of Zurich looks at developments over previous years and makes predictions for future developments.
Largest Financial Center
The Zurich financial center comprises cantons of Zurich, Zug, and Schwyz and contributed an added value of 29.9 billion Swiss francs ($32.1 billion) in 2021, about 16 percent of the region's economic output. Compared to the last study of this kind, also in 2021, it marks a decrease of 1.3 billion francs. With over 97,000 full-time jobs, it is by far the largest financial center in Switzerland.
Zurich's financial center accounts for 45 percent of Switzerland's financial sector in value-added terms and 42 percent of jobs. Compared with this, the corresponding figures for the next largest financial centers, Geneva including Vaud, Basel, and Ticino, are significantly lower.
The sector is also a heavyweight in the city of Zurich itself, accounting for around 27 percent of economic output in 2021. Banks are even more concentrated in the city than insurance companies.
More Dynamic Than the Economy
The real gross value added of the financial industry developed more dynamically overall than the economy between 2011 and 2021, the report continues. In the pandemic years of 2020 and 2021, it grew partly due to the increase in volume in the banks' lending business and the stock market boom in 2021, helping to support Zurich's economy.
In the case of banks, the interest rate and commission business performed differently in 2022. While interest rate increases had a positive impact on the interest business, assets under management declined due to the stock market slump. Big signs of recovery are evident and overall, the added value of the industry is expected to increase slightly in 2022 (+0.3 percent) and 2023 (+0.7 percent).
With inflation boosting the cost of insurance claims, insurance value added is expected to increase, albeit moderately, by +1.5 percent in both 2022 and this year.
Employment Growth Slows
Differences are evident in employment trends. While jobs are disappearing at banks due to cost-cutting programs and the further thinning out of the branch network, IT jobs are in a growth phase. Insurers are likely to create more jobs in the areas of digitization, regulation, and sustainability, whereas other financial services are expected to see a slowdown in momentum.
The Zurich region's financial sector has above-average productivity at 307,000 Swiss francs in 2021, which is the highest of the industry aggregates analyzed. Insurers have the highest at 515,000 francs, followed by banks with 323,000 francs and 168,000 for other financial service providers. That compares to the economy as a whole at 183,000 francs.
