Credit Suisse enters economic reform debate

Alois Bischofberger has urged economic reform Keystone Archive

Swiss workers should delay their retirement, expect fewer wage rises and take individual responsibility for social security, according to Switzerland’s second-biggest bank.

This content was published on January 8, 2004 minutes

Alois Bischofberger, the chief economist of Credit Suisse, on Wednesday said ordinary Swiss need to actively help reform the economy to boost growth.

Bischofberger said the recent federal cabinet elections had provided a fresh opportunity for economic reform.

However, he said encouraging growth in Switzerland was not only the job of the government.

“Everyone needs to get involved,” he said, adding that individuals would need to make sacrifices.

“Automatic salary increases based on age can no longer be justified,” he argued. “The emphasis should be on performance.”

“And it’s also desirable that workers should have an increased willingness to voluntarily work beyond the official pension age.”

Political activism

The comments represent a newfound zeal among Switzerland’s business community to engage in the country’s current economic debate.

Much of that is driven by the December cabinet elections, which saw the government shift to the right.

Business has continued to remind the Swiss of the country’s declining economic fortunes, especially when compared to the rest of Europe.

GDP growth has all but stagnated since the early 1990s, while ordinary workers have seen their traditionally high wages eroded by rising prices and social security costs.

But despite the make up of the new cabinet – which now includes the prominent industrialist, Christoph Blocher, and businessman Hans-Rudolf Merz - a new wave of economic liberalisation is not a foregone conclusion.

The October general elections saw the return of a strong centre-left/green block within the federal parliament, which is likely to oppose any overtly radical and socially divisive economic proposals.

Need for action

Bischofberger – who counts as one of the country’s leading economic commentators – said ordinary voters could no longer ignore Switzerland’s chronic lack of growth.

“Voters have a big responsibility,” he said. “Without action, the need for change will only become more urgent and painful.

“Foresight is needed. And those who never, or rarely vote are particularly in demand.

Credit Suisse – echoing other leading financial institutions – called on the government to reduce spending and tackle social issues such as pensions, health care, support for working mothers and education.

Bischofberger said Switzerland was also in urgent need of greater competition to help reduce the country’s high prices.

“Competition releases energy, frees up rusty structures and promotes innovation,” he said.

He also urged ordinary consumers to become more aggressive about demanding lower prices.

“Compared to other countries, the majority of Swiss are not price sensitive. A critical consumer attitude can do much to help reduce high prices.”

swissinfo, Jacob Greber in Zurich

In brief

Credit Suisse on Wednesday hailed the recent cabinet elections as an opportunity to tackle economic reforms.

The bank also called on voters to make sacrifices to help boost national growth.

The bank’s comments mark a renewed eagerness among big banks to engage in political debate.

With growth all but stagnating, and unemployment rising, Credit Suisse’s chief economist Alois Bischofberger said there was an urgent need for reform.

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