Swiss struggling to keep up with competition

Pascal Couchepin says Switzerland's economic growth leaves much to be desired Keystone Archive

Economic growth in Switzerland has been lagging behind other industrialised countries for 25 years, according to a new study.

“It’s a bad position, which makes us ashamed,” said the economics minister, Pascal Couchepin, as he presented the report from the State Secretariat for Economic Affairs (Seco) last week.

The study showed that throughout the 1990s, economic growth in Switzerland was the lowest of all countries belonging to the Organisation for Economic Cooperation and Development (OECD).

The aim of the report is to prepare the way for concrete measures to be introduced to increase competitiveness, strengthen economic growth and create highly skilled jobs.

“If we do not reach a high level of growth we will have difficulties in solving social problems, particularly the problem of the ageing population,” Couchepin told swissinfo.

A key concern is productivity. The study found that although the Swiss work hard many other countries are far more efficient at organising the production of goods and services.

Lack of competition

“Productivity growth is a very complex issue and there are many determinants of it but I think one which is particularly important for Switzerland is the lack of competition in internal markets,” Aymo Brunetti, head of economic analysis at Seco told swissinfo.

“We still have a very high price level in Switzerland which is an indication of very low competitive pressure,” he added.

The report said Switzerland would do well to look at the example of Luxembourg, which has a higher standard of living than Switzerland, but far lower prices.

Brunetti said that although the report does not go into political details, some measures to improve growth and productivity are already in the pipeline, one example being the issue of sanctions against cartels.

“It is extremely important that if a cartel is detected, you can give fines directly and not first give a warning. This is a concrete measure that could introduce more competition and that is very important,” he said.

He added that other regulated areas could also benefit the Swiss economy with reforms towards liberalisation.

“We could still introduce more competition with reform of the electricity market, reform of the ‘last mile’ in telecommunications and liberalisation in the whole area of postal services,” he commented.

The report is to be examined by an interdepartmental working group called “Growth” which will come up with proposals by spring next year.

“We hope that it will provoke a public discussion,” Couchepin told swissinfo. “It will give… an overview of the situation in Switzerland and we shall start studies now in the administration to develop practical solutions to reach the general goal of better growth in the future.”

by Robert Brookes