Government Affairs in Switzerland
Local Formal Name:
|Status:||UN Member Country|
|Capital City:||Berne (Bern)|
|Main Cities:||Zürich, Geneva, Basel, Lausanne|
|Currency:||1 Swiss franc = 100 centimes|
|Languages:||French, German, Italian, Romansch|
|Religions:||Roman Catholic, Protestant|
Switzerland offers one of the most favourable business environment in the world. The natural environment poses virtually no risk to business and the quality of the infrastructure is high. The rule of law is strong and there is very little corruption, the authorities generally work efficiently, the tax and regulatory burdens on the economy are low, while industrial relations are very peaceful and the labour market is highly efficient. Accordingly, Switzerland regularly performs strongly in cross-country comparisons of competitiveness. For example, the World’s Economic Forum’s Global Competitiveness Report has ranked Switzerland the most competitive country, out of more than 130 included in the survey, in recent years.
Weaknesses in the business environment include: inefficient government bureaucracy; complex tax regulation; high labour costs and prices; a lack of competition in certain sectors; regulatory differences vis-à-vis neighbouring countries (Switzerland is not a member of the EU); and relatively weak disclosure requirements for companies, reflecting an attachment to secrecy in financial matters.
The legal and regulatory environments is generally very positive and business-friendly. The World Bank’s Doing Business 2011 survey ranks Switzerland 27 out of 183 countries in the overall ease of doing business
Small and medium-sized enterprises form the backbone of the economy and dominate sectors such as manufacturing and retail trade. The country also hosts an impressive roster of multinational corporations with origins in the U.S., Europe and Asia, as well as two of Europe’s top pharmaceutical companies, Roche and Novartis, the bio-technology giant Serono, and the world’s largest food company, Nestlé, while UBS is among the world’s largest banks.
In 2009, Arthur D. Little Headquarters Study reported:
124 headquarters of U.S. companies in Switzerland
EMEA headquarters: 23 %
Global Headquarters: 31%
European Headquarters: 46%
67 European companies with 30% of all headquarters coming from Germany
EMEA headquarters: 7%
Global headquarters: 63%
European headquarters: 30%
28 Asian companies with 50% of all headquarters from Japan
EMEA headquarters: 4%
Global headquarters: 21%
European headquarters: 75%
The Arthur D. Little’s headquarters database is non-exhaustive, since some of the cantonal data regarding foreign companies in Switzerland is strictly confidential.
The key to Swiss success lies in its political institutions, which ensure that ordinary citizens are involved in political decision-making, and that no one interest group is able to benefit unduly at the expense of another.
The federal constitution defines Switzerland as a federal state composed of 26 cantons with far reaching autonomy.
Switzerland’s government, parliament and courts are organized on three levels:
- cantonal (based on 26 cantonal constitutions)
- communal (in a few small cantons and in some 2500 small villages reunions of all citizens are held instead of cantonal and communal parliaments; local courts are usually common to several communities)
The federal constitution in principle reserves the areas of foreign relations, the army, customs examinations and tariffs, value added taxes and the legislation on currency, measure and weight, railways and communications to the confederation. On the other hand only the cantons (and some major cities) do have armed police forces, run hospitals and universities (with the exception of two federal institutes of technology). Legislation on public schools is made by the cantons, resulting in 26 different education systems, but the public schools are actually run by the communes, much like many other public services (like water supply and garbage collection). The confederation, the cantons and the communes do collect income taxes to finances their affairs.
When it comes to the details, everything is just a little bit more complex in Switzerland’s political system, however, because in almost any field of state activity federal legislation does try to establish a minimal amount of national standard on one side while leaving a respectable amount of self-determination to cantons and communes on the other side. A majority of the electorate does reaffirm this basic principle of Swiss politics over and over again – by rejecting centralistic laws and accepting federalistic laws in referendums.
- The National Council is Switzerland’s “house of representatives”. The 200 members are elected every four years according to a refined proportional election system, but since every canton forms a constituency and cantons have extremely different numbers of inhabitants, a few smaller cantons may only send one member to the national council, which results in majority elections for these.
- The Council of States represents the cantons . Full cantons send two members, half cantons one, giving a total of 46 members. The rules how to elect the members are made under cantonal legislation, so they may differ from canton to canton. A majority of cantons does elect their members of the Council of States every four years on the same day as the members of the National Council, however.
- Both chambers discuss new laws separately. Sometimes they have to repeat a discussion if the other chamber has passed a different version of a law.
- Being member of parliament is not a full-time job in Switzerland (at least they are not paid accordingly …). Formally, parliament meets four times a year for several weeks. In between, each member has to read proposals for new laws individually and to attend one-day conferences of commissions.
- Both chambers of parliament form several commissions – some to control the work of the administration, some to debate new laws in depth. Specialists in fields like health, military and many more are elected to represent their party in these commissions. All parties of minimal size (5 members of parliament) are represented at least in a few commissions and smaller parties may join to form a fraction giving them the right to work in commissions.
Switzerland’s federal government is called Bundesrat (Conseil Fédéral, Consiglio Federale) [Federal Council].
Switzerland’s government is a team consisting of seven members with equal rights. Each member of the government acts as head of a department of the federal administration, but all major government decisions are taken in weekly government conferences either by consensus or by majority voting of all seven members. The members of Switzerland’s federal goverment are usually (re-)elected every four years in December after the parliamentary elections by both chambers of the federal parliament meeting together as the Federal Assembly. There is no legal limit to the total term of office, some federal councillors have been in office for over 20 years.
Several political parties dominate the central government:
Swiss People’s Party (SVP) 26.56% of the votes (2011): The SVP adheres to national conservatism, aiming at the preservation of Switzerland’s political sovereignty and a conservative society. Furthermore, the party promotes the principle of individual responsibility and is skeptical toward any expansion of governmental services. This stance is most evident in the rejection of an accession of Switzerland to the European Union, the rejection of military involvement abroad, and the rejection of increases in government spending on social welfare and education. The emphases of the party’s policies lie in foreign policy, immigration and homeland security policy as well as tax and social welfare policy. Among political opponents, the SVP has gained a reputation as a party that maintains a hard-line stance.
Social Democratic Party (SPS)-18.72% of the votes (2011): It is a political party of the centre-left that supports an extensive government role in the economy. The party’s policies have generally reflected those of the democratic socialist tradition in Europe; for example, it supports giving the federal government the power of direct taxation and sanctions greater government management of the economy. It also became a principal advocate of Swiss membership in international bodies, including the United Nations and the European Union.
Free Democratic Party (FDP). 14.55% of the votes (2011): Since its founding the Radical Democratic Party has supported a strong federal government and a market economy, but at the same time, it has been an advocate for the rights of local government and of minority groups. It promotes de-regulation and low taxes.
Christian Democratic Party (CVP). 12.30% of the votes (2011). The CVP traditionally has been opposed to the centralization of power at the federal level and to federal taxation, favouring instead the raising of revenues by such means as taxes on tobacco and alcohol. The party supports the use of religious institutions and the application of religious values to the solving of social problems and has endorsed policy aimed at strengthening the family unit. The CVP has also encouraged greater participation by Switzerland in international relations, including support for aid to developing countries and entry into the United Nations and the European Union.
Green Party of Switzerland . 8.43% of the votes (2011). The Green Party works for sustainable development, environmentalism, decentralisation, and human rights.
Switzerland does not have a full-time president; the representational functions of a president are taken over by one (or all) of the government members. Every year another member of the government team is elected federal president in turn so that every government member assumes this role once in seven years. The president is primus inter pares [first among equals] with very limited special powers: he/she sets the agenda of the weekly conferences and leads the discussion, addresses the population on 1st of January, 1st of August (National Holiday) and similar occasions and represents Switzerland on some international conferences. Often the government is represented by one or two other members, however, depending on the focus. Official foreign guests are usually welcomed by the government in corpore (all members).
There are frequent referendums on new or changed laws, budgets etc, some of them are mandatory, others are “facultative” (only if 50,000 citizens demand of it)
Ordinary citizens may propose changes to the constitution (“initiative”), if they can find a number of supporters (100,000 out of about 3,500,000 voters). Parliament will discuss it, probably propose an alternative and afterwards all citizens may decide in a referendum whether to accept the initiative, the alternate proposal or stay without change
While the federal system can be found in many other countries like the U.S.A., Germany, Austria etc., and separation of powers (government, parliament, courts) are common to all democracies (or at least should be), referendums are rare in most other countries. In Switzerland’s long tradition of Direct Democracy, frequent referendums do have a stabilizing influence on parliament and government.
- referendums will increase parties’ willingness to compromise (otherwise a defeated party will call for a referendum)
- referendums favour big coalitions (shared power motivates compromise, exclusion from power motivates obstructive referendums)
- referendums increase stability (as extreme laws will be blocked by referendum, parties are less inclined to radical changes in lawmaking and voters are less inclined to call for fundamental changes in elections)
- The two chambers of parliament meet several times annually to sessions of several weeks and between them to preparing meetings of numerous commissions. Being member of parliament is not a full time job in Switzerland, contrary to most other countries today. This means, that Swiss members of parliament are closer to everyday life of their electorate.
The cantons [member states of the Swiss confederations] are free to organize themselves as long as they do respect each other, the federal constitution and laws and the minorities. All cantons do have their own constitutions, their own governments (usually five members elected by the population) and most of them do have (unicameral) cantonal parliaments.
Direct Democracy was invented on cantonal grounds and gives even more participation rights to the population than on federal level. For example federal budgets are not subject to referendums, but communal budgets are even subject to mandatory referendums.
Since many fields of modern state activity are left to the cantons by the federal constitution but nevertheless need some standardisation in a time of increased mobility with about one fifth of the population working in one canton and dwelling in another canton, the cantonal governments meet to negotiate multi-cantonal agreements. The resulting system must appear to be rather strange to foreigners, but though it is undoubtedly very complicated it does work astonishingly well and even more perfectly than in many other industrialised countries (Swiss people are known to be perfectionists).
Because so many decisions are made at the local level, the Swiss are closely involved with the laws and closely involved with the laws and regulations which affect their lives- and because each canton is different, they are also able to see for themselves which policies work best. For example, one canton might have high taxes and expensive welfare programs, while another might opt for low taxes and private charity. Each Swiss citizen can then decide which policy suits him best and “vote with his feet” by moving to the canton which he finds the most attractive. The result is that good policies tend to drive out bad.
Public interest groups play an important role at the national level because they are able to launch referenda to block the legislation they oppose. Consequently the cabinet lobbies the interest groups instead of interest groups lobbying the government, as happens in most countries. This is one important way in which the people, and not the politicians control government in Switzerland.
From a government affairs perspective it should be said that Swiss federal and cantonal authorities recognize the importance of having foreign companies invest in Switzerland, which creates an atmosphere of dialogue, collaboration and innovation ready to challenge, if necessary the currently established processes. For example, the Department of Economic Promotion can often assist in cutting through some of the administrative issues that newly established Principal companies and headquarters face.
Finally, and on the cultural level the Swiss have a reputation for getting the best possible deal from opponents without ever appearing aggressive or demanding. Their quiet self-confidence, combined with the exceptional quality and value of their goods and services, allows them to sidestep the ‘hard-sell’ and other high-pressure tactics in the knowledge that they enjoy a strong bargaining position. Nor, since they will refuse to rush a decision, will they succumb to high-pressure tactics themselves.
The Swiss are good at making you believe that ‘you get what you pay for.’ They will make you feel that you have made a questionable proposal if you try to drive too hard a bargain. They remain straightforward in negotiations and make a genuine effort to see matters from the opponent’s perspective. Moreover, they are quick to make helpful suggestions, even when it is not necessarily in their own interests.
Swiss business culture has a rigid, deeply entrenched hierarchy; only the highest individuals in authority make the final decision. Moreover, although everyone involved or affected must be in agreement, the final decision will pass unquestioned once it is reached.
You should be warned that, in Swiss business culture, individuals with seniority, rank, and authority are often very discreet in exercising their power. Frequently, they will assume an air of modesty and kindness.
For the most part, the Swiss are reliable, efficient and can be trusted to follow through. They are also very good at maintaining confidentiality. Even in offices with secretaries, envelopes addressed to individuals will usually be opened only by the addressee. It is recommended that you inform the secretary when you are sending mail that requires an immediate response, so that he or she can alert your correspondent.
David Hampshire, author of the book, “Living and Working in Switzerland” aptly describes the Swiss as,” scrupulously honest, narrow-minded, industrious, pessimistic, boring, hygienic, taciturn, healthy, insular, tidy, frugal, sober, selfish, spotless, educated, insecure, introverted, hard working, perfect, religious, rigid, arrogant, affluent, conservative, isolated, private, strait-laced, neutral, authoritarian, formal, responsible, self-critical, unfriendly, stoical, materialistic, impatient, ambitious, intolerant, unromantic, reliable, conscientious, obstinate, efficient, square, enterprising, humorless, unloved (too rich), obedient, liberal, thrifty, stolid, orderly, staid, placid, insensitive, patriotic, xenophobic, courteous, meticulous, inventive, prejudiced, conventional, intelligent, virtuous, smug, loyal, punctual, egotistical, serious, bourgeois, cautious, dependable, polite, reserved or shy, law-abiding and a good skier”.
He concludes by saying: “You may have noticed that the above list contains a “few” contradictions, which is hardly surprising as there’s no such thing as a typical Swiss!”
Business Development Agencies in Switzerland
Swiss Cantons are very competitive in attracting foreign companies to their administration. 60% of all headquarters relating to Switzerland are based in the cantons here below.
Zug is the preferred canton in attracting new headquarters followed by Vaud, Geneva, Zürich, Fribourg, Bern and Basel
Canton de Vaud
Département de l’économie
Rue Caroline 11
e-mail : firstname.lastname@example.org
Service de la promotion économique de Genève
Rue des Battoirs 7
1211 Genève 4
e-mail : email@example.com
Greater Geneva Berne Area
Economic Development Agency
World Trade Center
Avenue de Gratta-Paille 2
PO Box 252
1000 Lausanne 22
e-mail : firstname.lastname@example.org
Amt für Wirtschaft und Arbeit (AWA)
Standortförderung des Kantons Zürich
Greater Zürich Area
Greater Zurich Area AG
Promotion économique du canton de Fribourg
Avenue de Beauregard 1
e-mail : email@example.com
Wirschaftsförderung Kanton Bern
Basle/Basellland und Baselstadt