As trust declines globally, can Switzerland remain an exception?

Research shows that trust tends to be higher where there is greater political participation, as here during town-square voting (Landsgemeinde) in canton Glarus. Keystone

Switzerland is one of the most trusted countries despite being home to some of the largest companies in the most distrusted sectorsExternal link. There are, however, signs that trust is waning in the wake of the Panama Papers and corporate scandals that hit close to home. 

We are living in an era of distrust according to global surveys. Edelman’s Trust BarometerExternal link in 2018 showed that globally, trust in general has plummeted in the last few years with little sign of recovering. Twenty of 28 markets surveyed lie in distrusted territory, up one from the previous year, and the United States experienced the steepest decline in trust ever recorded. 

The Barometer attributed a big part of the drop in trust to persistent references to “fake news” and the failure of key institutions such as government to respond to events like the refugee crisis, major data breaches, and corruption scandals. 

Switzerland is one of the rare exceptions among peers when it comes to public trust of key institutions including government, business, and the media. The Organization for Economic Cooperation and Development (OECD)’s 2017 Government at a GlanceExternal link reported that nearly 80% of Swiss citizens have confidence in the federal government, almost double the OECD average of 42%, and 17% points higher than in 2007. The 2018 Edelman Trust Barometer found companies headquartered in Switzerland are the second most trusted after Canada. 

Two faces of Switzerland 

Switzerland is no stranger to corporate scandals and shady business deals. The UBS affair in 2008 cast a dark shadow over the country’s banking sector and recent allegations that SwissPost manipulated accounts to claim more government subsidies showed that even Swiss companies can fall prey to illegal activities. 

Despite this, Mark Pieth, criminal law professor and founder of the Basel Institute on GovernanceExternal link explained in a phone interview with swissinfo.ch, “the stamp of Switzerland still carries some weight in cleaning up companies. Choosing to have your headquarters in the country is still a safe bet.” 

How do we reconcile the different images of Switzerland? Pieth says there are two contrasting views of Switzerland. “On the one hand, the country is a paradise of ultra-liberalism. On the other, it is a pirates’ harbor. The country runs incredible risks with sectors like commodity trading, sports associations, and arms trading into conflict zones.” 

Reinventing themselves 

The country maintains high levels of public trust in part because it has an “incredible ability to help companies reinvent themselves when hope seems lost,” argues Pieth. “The Swiss are opportunistic. When trends are headed in a certain direction or the country foresees big financial losses, the government sets in motion mechanisms for change. No one thought the country would get rid of bank secrecy and tax manipulation, but it did when it saw the writing on the wall.” 

Isabel Ebert at the Institute for Business EthicsExternal link at the University of St. Gallen, who is currently researching the impact of big data on trust in the workplace, argues that “high levels of trust stem from Swiss citizens’ faith in the liberal market economy and a certain belief that everyone has access to the same opportunities.” Pieth expressed similar views, arguing that this faith in business is strongly rooted in protestant values. “The business model in Switzerland is Calvinist to the extreme. People believe that companies are ultimately good.” 

In people we trust 

There are other reasons for high public trust in key institutions. Research shows that trust tends to be higher where there is greater political participation. Ebert explains, “Switzerland’s direct democracy gives people a sense that they have a voice and influence in politics. There is a strong belief here that the government, backed by the people, will hold companies to account for any proven misconduct.” 

She also attributes some of the public trust to the balanced media landscape. “There is no big money in media such as in the UK and US, where economic interests influence the way of reporting. It also isn’t heavily politicised.” According to Credit SuisseExternal link there has been a slight drop in the trust in media in Switzerland over the last year but it is still higher than many other countries. 

Pieth believes that some of this trust is misplaced. “Most of the corporate scandals in Switzerland don’t actually affect people in Switzerland. You look at Zug and see picture perfect Switzerland with trains that run on time and geraniums along the lake. It is also home to Glencore, the largest commodity trader in the world [and currently under investigation by the U.S. Department of Justice for money laundering], but the negative repercussions of the company’s actions are not felt locally. Swiss people almost seem surprised when they are confronted by NGOs.” 

Trust issues 

However, there are signs that public trust is slowly eroding. Credit Suisse reports that Swiss institutions remain well-liked, but they are losing trust – with the exception of the Federal Supreme Court and banks. Of the 20 top-ranked institutions, 18 saw trust decline in the last year – after a long period of increase. 

Strong public support for initiatives also reveals fractures in the foundation of trust between citizens and key institutions. In an interview with swissinfo.ch, Alex Biscaro of Transparency International’s Swiss Chapter cited, as an example, the 2014 nationwide vote in favor of the mass immigration  initiative that called for a re-introduction of limits and quotas on European workers in Switzerland. The public defied warnings by the government, the Parliament, and the business community that such a move would damage the Swiss economy. Ultimately, Biscaro says, “many voted in favor of limiting freedom of movement because they didn’t trust that large companies would keep their promises not to lay off Swiss workers in favor of cheaper labour from elsewhere in Europe.” 

The grassroots movement for the Responsible Business Initiative is another example. Biscaro explains, “I can’t imagine 10 or 15 years ago an initiative like this, that is pushing for such tough legal measures targeting big multinationals in the country, would secure the 100,000 signatures needed for a binding referendum.” This reflects a lack of confidence that certain Swiss-based companies when doing business abroad, especially in sectors like commodities, will act in accordance to basic environmental, social and anti-corruption standards unless explicitly mandated by law. 

Panama Papers

One of the major jolts to trust was the Panama Papers revelations that Swiss lawyers played a major role in setting up offshore firms that could be used to launder money or evade taxes. Biscaro explains that “although these activities by Swiss intermediaries were not necessarily illegal under Swiss law, people were astounded by the extent of opaqueness and secrecy in such business dealings.” This also came after the FIFA bribery scandal raised questions about the lax Swiss regulation of international sporting associations headquartered in the country. 

Concerns about transparency and the lack thereof when it comes to corporate influence in politics, including the financing of national committees, is also growing. A recently published evaluationExternal link of the Swiss interdepartmental anti-corruption working group set up 10 years ago was highly critical of the group’s effectiveness, calling into questions its independence and availability of resources to fulfill its mission. 

Despite ranking third on the latest Transparency International Corruption Perceptions IndexExternal link, this is only a measure of perception limited to the public sector. Biscaro says, “the reality is that we only hear about a small percentage, around 5-10%, of cases of corruption or corporate misconduct. This is only the tip of the iceberg.”