Media criticise lack of courage over aid plan

Schneider-Ammann and his cabinet colleagues have come under fire over the package Keystone

Swiss newspapers have for the most part criticised government plans to slash the sum set aside to prop up the export and tourism industries.

Some commentators said the decision to give SFr870 million ($1.1 billion) – instead of the mooted SFr2 billion to combat the effects of the strong franc – was too timid and would not help solve all the economy’s problems.

The revised bailout allocates SFr500 million to protecting jobs across all industry sectors, with most cash used to extend the existing shortened working hours scheme with the state subsidising lost wages. The SFr2 billion plan, criticised by some for distorting competition, had been announced earlier in August.

Some SFr100 million will go to a fund that can extend emergency loans to the hotel industry. Public transport projects and specific agricultural exports will get a boost, as will a state technology and innovation programme and the two Federal Institutes of Technology.

The measures – still to be approved by parliament – did not go down too well with the tabloid Blick.

“The government has rolled over. It’s afraid of its own courage. The courageous plan… has become a timid whisper,” said its editorial writer.

The paper found the government’s reason for not giving the whole SFr2 billion package – that it was almost impossible to decide who should get direct aid – “an embarrassing excuse”.  

It also pointed the finger at the centre-left Social Democratic Party whose two government ministers – Switzerland’s magic formula sees a multiparty government – had not lobbied enough for direct aid.

“Perfume of amateurism”

La Liberté, from the French-speaking part of Switzerland, found the whole affair “tainted by a perfume of amateurism”.

“How was it possible the economics minister was not able to anticipate the definition problems that a programme of direct aid to companies would raise,” it asked.

Parliament might not have passed all the original measures but nevertheless, “the cabinet gives the impression of a government which is not on top of things and does not know how to spend its billions”.

  

For its part, Le Temps, based in Geneva, said that direct aid would have gone against the Swiss economic doctrine, which “refuses all direct state financial aid to companies and sectors in trouble”. The bail-out of big bank UBS remained an exception, it noted.

The government’s “self-service” reflex would, however, lead to some enterprises profiting and others, like small and medium-sized businesses, failing to gain from the move.

“The mountain laboured and brought forth a mouse” was the Italian-language Corriere del Ticino’s verdict, adding that it thought that the cabinet had maintained an eye on the upcoming elections when announcing the original package.

Its view was that structural reforms allowing the economy to react better to globalised markets would be better than promising “stars from the sky”.

Floodgates and watering cans

The Zurich-based Neue Zürcher Zeitung argued that Economics Minister Johann Schneider-Ammann and Finance Minister Eveline Widmer-Schlumpf had acted ”imprudently” by not being specific when they first announced the original package two weeks ago. This had “opened the floodgates for speculation”.

“The interested parties queued up before parliament as at a bus stop in the city of London,” said its editorial writer.

Pressure from the business world and some political parties had resulted in the watered down package, he observed.

He warned that the government alone could not solve all the problems linked to the strong franc. However, he did praise the cabinet for its approach, for example over supporting jobs, and that it had pulled together over the aid issue.

The Tages-Anzeiger also praised the measures for employment but found that the companies profiting from the move over shortened working hours could be a bit more grateful.

“But where is the firms’ solidarity with society?” it asked. They could offer bonuses or compensation time when the economy recovers. In addition, the economy lobby wants to lower the already low Swiss tax on earnings which means giving back less to the state that is supporting companies. “Outrageous”, was the writer’s verdict.

For the writer in the Berner Zeitung, the measures could have been worse and were better than “sprinkling with a watering can” over the economy. For example, exports were being watered in certain areas directly with “the garden hose”.

Some moves, such as location promotion, the government had wanted to do anyway, he added.

“This can only be interpreted in one way: the strong franc is welcome here to justify getting subsidies and because it gains a political majority.”

Emergency cash plan

SFr500 million of the SFr870 million ($1.1 billion) goes to protecting jobs in all industry sectors, with most cash being used to extend the existing shortened working hours scheme with the state subsidising lost wages. SFr100 million goes to a fund that can extend emergency loans to the hotel industry.
 
Also benefitting: a state technology and innovation programme that helps translate ideas into successful business plans, the two Federal Institutes of Technology, some public transport projects and specific agricultural exports.
  
Parliament will vote on the package in September.

The bailout plan is aimed at countering the negative effects of the rapidly strengthening franc. The original SFr2 billion plan of mid-August was criticised over fears it could be used to distort competition by bailing out specific sectors.

The strong franc

The Swiss franc is a so-called “safe haven” currency, which means that investors and speculators buy it when other currencies, including the euro and the dollar, are under pressure.

The franc has gained about 25 per cent in value against the euro and the dollar over the past four years.

The Swiss National Bank has emphasised that it does not pursue an exchange rate target, but consistently bases its monetary policy on its legal mandate: to ensure price stability, while taking due account of economic developments.

Starting in March 2009 the SNB intervened in currency markets. But after pumping in 15 per cent of GDP in May 2010 to little effect, it dropped them in June 2010. These forays led it to a loss of SFr21 billion last year, its biggest ever.