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Economy chief urges sweeping reform

Jean-Daniel Gerber is preoccupied with the problems in Switzerland's social sector Keystone

The state secretary for economic affairs has called for wide-ranging reform to inject dynamism into the Swiss economy.

This content was published on January 7, 2005 - 16:11

In an interview with swissinfo, Jean-Daniel Gerber said one of the main problems in the domestic economy was the lack of competition.

Earlier on Friday, Gerber told a news conference that reform was most urgently needed in the social sector, where the aging population and the weakness of economic growth were threatening the financing of social insurance.

He added that Switzerland needed a growth rate of at least two per cent annually in the long term.

His comments came after the government announced that unemployment had risen slightly in December to four per cent (158,416 people).

swissinfo: You’ve said the problems in the economy are home grown. What do you mean by that?

Jean-Daniel Gerber: You can see that our export sector is extremely competitive internationally and works very well.

In the domestic market, there has not been enough reform in the past 20 years and there is not enough competition. In the social sector, the health system and pension schemes are extremely expensive and they cost more and more.

An increasingly large part of our income is used to finance this social network, and there we also have to make the necessary reforms. We should change the system and incentives in such a way that we can have the same or even a better level of performance but at a lower cost.

swissinfo: Who or what is blocking the economy in Switzerland?

J-D.G.: Practically everyone who benefits from the present system.

As soon as you call for reforms, you have an avalanche of persons and enterprises that do not want them because they are benefiting
from the high prices. It’s quite difficult to convince them that they have to accept more reform and more competition.

swissinfo: But of course reforms hurt people. They are afraid of them.

J-D.G.: Reforms hurt people but I would argue that there are more people who benefit than suffer.

The second point is that people normally suffer for a short time until they are hired by another enterprise. If you don’t carry out reforms, people will suffer even more because there will be a crisis and we will have no more money to soften the negative impact that an adjustment process always brings.

swissinfo: How concerned are you at the labour situation in Switzerland, with unemployment now at four per cent?

J-D.G.: I am concerned of course for the individual who is affected, the man or woman who has no work. This is very often a tragedy.

But at the same time, as long as the growth rate in Switzerland stays as it is now at a positive 1.8 per cent, presumably the economy at a certain stage will hire more people.

swissinfo: There are those in Switzerland who believe that extending the free movement of people to the new European Union members would worsen the labour market here. What are your thoughts?

J-D.G: They may be right in the very short term. But they are certainly wrong in the medium term. Swiss enterprises have to be competitive. That means they need foreign labour. About one in four workers is of foreign nationality.

The labour market in the new EU members is excellent with very qualified people, and if these people cannot come to Switzerland but go [instead] to Germany, Italy, France, Austria, to our competitors, this will have a detrimental effect on the Swiss economy.

If we do not open the labour market progressively to these countries, they will not open their markets to Swiss products. The Swiss entrepreneur will relocate, stop producing in Switzerland and go where the market is. This would have quite a negative impact on unemployment rates in Switzerland.

swissinfo: Why should Switzerland support the second set of bilateral accords with the EU?

J-D.G.: The danger is that if we do not effectively support it, the EU may cancel the agreement we negotiated in the so-called Bilaterals I: the freedom of movement of people from the “old” EU members.

We would then lose the important labour market of the EU. We would not have the possibility to send our people to the EU, for example students. This would have an extremely detrimental effect.

swissinfo: If there’s one message for the Swiss about the urgency of reform, what would that be?

J-D.G.: What happens on the global market is a chance for Switzerland and not a risk, so let’s take that chance.

swissinfo-interview: Robert Brookes

Key facts

The State Secretariat for Economic Affairs (Seco) believes that its forecast of 1.8% for economic growth in Switzerland for 2004 will be achieved.
But it says that the 2% growth forecast for 2005 will probably be revised downwards.
Factors influencing a revision downward include a slowdown in Germany, Switzerland’s main trading partner.

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In brief

Jean-Daniel Gerber says Switzerland needs economic growth of at least 2% a year in the long term.

He’s calling for urgent reform in the social sector.

Gerber told swissinfo that people should see change as an opportunity, not a risk.

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