Story Highlight
– Short-time working reliance in Swiss watch industry declining.
– Reduction linked to permanent adjustments, not recovery evidence.
– Companies cut costs, investment, and workforce significantly.
– Swatch Group maintained workforce, avoiding short-time working scheme.
– Deloitte suggests mixed interpretations of decreased RHT use.
Full Story
The watch industry in Switzerland is seeing a decline in the reliance on the short-time working scheme, known as Réduction de l’horaire de travail (RHT). However, Deloitte warns that this drop should not be seen as a sign that the downturn in manufacturing has ended.
Data indicates that this decrease in the use of RHT is largely the result of watchmakers and their suppliers implementing deeper, more permanent changes to their operational costs. These adjustments have included cuts to investments, production capabilities, and workforce numbers.
The RHT scheme is intended to support businesses during temporary downturns or disruptions, allowing companies to reduce employee hours without resorting to layoffs. During this time, Switzerland’s unemployment insurance compensates employers for 80% of the salaries lost due to reduced hours, while firms continue to pay their workers and manage their social security obligations.
Presenting findings at the Geneva Watch Days, Deloitte’s Managing Partner for Consumer and Fashion & Luxury, Karine Szegedi, alongside watch industry expert Benjamin Morin, noted that the use of RHT surged significantly following the post-pandemic boom. By January 2025, approximately 120 companies were utilising the scheme, but this number plummeted to just over 20 by April 2026.
Although compensated hours have also decreased, they still remained high at about 200,000 by April. Mr. Morin pointed out, “Even though in 2026 we saw a small reduction in the use of RHT, certain companies apply to the RHT scheme but are not using it.”
While these trends seem positive, Deloitte’s analysis highlights that short-time working is increasingly being replaced by more permanent strategies to cope with decreased demand.
For suppliers, the impact of reduced volumes has been decisive, prompting significant cost reductions. In 2025, 74% of suppliers reported cutbacks, but now only 38% continue to do so, indicating that many have already made substantial adjustments.
Deloitte’s survey revealed that 70% of components manufacturers had scaled back on capital investments, while 63% had utilised the RHT scheme. Notably, about half of the surveyed suppliers had still reduced their workforce, whether permanent or temporary, despite the pilot scheme’s aim to protect jobs during downturns.
Mr. Morin explained, “With the reduction in business, many component manufacturers had to reduce their investments,” attributing the cuts to decreased demand and underutilisation of production capacity.
Short-time working represents just one aspect of a broader strategy companies have employed to realign their operations with lower market demand. Mr. Morin described it as a “second lever” in adjusting both capacity and workforce.
This paints a more nuanced picture than the simple decline in RHT implies. If suppliers have already streamlined their workforce and capital expenditures in response to a new, lower order level, there arises less necessity to implement temporary hour reductions.
While many Swiss firms have remained quiet about their cost-cutting measures and use of RHT, the Swatch Group stands out. The company has publicised its commitment to maintaining its workforce in anticipation of future growth.
The Swatch Group has consistently avoided both short-time working and redundancies within its Swiss operations, accepting the impact on profitability from maintaining underutilised facilities. The production segment notably recorded a significant operating loss in 2025, as the company opted to retain capacity and jobs without seeking compensation for reduced hours.
Chief Executive Nick Hayek articulated this strategy last year, emphasising the group’s willingness to forego short-term profits to preserve skilled labour and manufacturing expertise, thereby remaining agile when demand recovers. “We can accept to have less profits,” he stated. With factories operating at suboptimal capacity, employees have been redirected towards training and product development.
Earlier this January, Swatch Group further noted its decision to forgo compensation through the RHT scheme to maintain flexibility in its operations, a choice that appears to be yielding positive results. The company reported an uptick in sales during May and June of 2026, suggesting improved utilisation of its manufacturing facilities thanks to its vertically integrated operations and the ability to retain staff.
In contrast to Swatch Group, suppliers across the industry have largely endured the brunt of declining volumes. Deloitte presents two interpretations of the diminishing use of short-time working: one, that the worst may be over and factories require less governmental support as orders recover; and the other, that much of the Swiss watchmaking supply chain has already adapted to a smaller market by cutting down on investments, reducing capacity, and minimising employee numbers.
