Public services in voter spotlight

In 2015 Swiss Post employed around 62,000 people and generated a profit of CHF645 million Keystone

Public services like the Swiss Federal Railways and Swiss Post are the subject of a nationwide vote on June 5. The consumer magazines behind the initiative are concerned at rising costs compared with the services they provide.

Four Swiss consumer magazines launched the people’s initiative, “In support of public sector services”External link, citing complaints by their readers. But so far, the initiative has won few supporters.

The initiative calls for three changes. “Firstly, that the government not set profit-making goals for basic services; secondly, that the profits from public companies are not used to fund the government’s overall budget; and, third, that the company directors not earn more than the corresponding government minister,” explains Zeynep Ersan Berdoz, chief editor of “Bon à Savoir” magazine and a member of the initiative committee.

The proposal has been overwhelmingly rejected by both houses of parliament. Not only are the political right and business groups against it, but also the left and trade unions, which are usually keen to protect consumers and public services.

Ersan Berdoz counters: “We have witnessed the deterioration of public services over the years. There has been a marked increase in the number of complaints from consumers who are unhappy about the drop in services and increased prices. Following these complaints, our magazines examined the strategic objectives set by the government for public service companies.”

She argues there has been a  shift away from what was initially customer satisfaction to a focus on profitability and profits.

“This is reflected in practice in the closing of 1,800 post offices over the past 15 years, that is more than half of all branches. There has also been a 150% rise in the cost of sending a parcel weighing under 1.5kg in 20 years, whereas inflation was only 13% over the same period. Meanwhile, the price of a second class return train ticket from Geneva to Lausanne has gone up by 75% since 1990. At the same time, the quality of the service provided has deteriorated: ticket offices are closed, commuters and intercity travellers have to travel standing, there are fewer railway employees.”

Public sector services

The text of the initiative states that it applies “to companies that perform legal duties on behalf of the government in the field of basic services or that the government controls directly or indirectly through a majority stake”.

Three major companies are primarily concerned: Swiss Post is an autonomous public sector service provider that is wholly owned by the Swiss government. According to government figures, in 2015 it employed around 62,000 people, had a turnover of CHF8.2 billion and generated a profit of CHF645 million. The Swiss Federal Railways is the country’s largest public transport company. It is also entirely owned by the government. In 2015 it employed 33,000 people, had a turnover of CHF8.7 billion and generated a profit of CHF245 million. Swisscom is a telecommunications company that operates according to private sector principles, but with a majority stake (51.22%) by the government. In 2015 it employed around 22,000 people, had a turnover of CHF11.7 billion and generated a profit of CHF1.4 billion.

These arguments do not convince Roger Nordmann, speaker of the Social Democratic parliamentary group. “The number of people complaining is not a reliable indicator of the quality or defects of public services. Some things work well, others less well. But we cannot jump to conclusions just because people complain in a magazine, especially given that those who are happy do not write in.”

Different interpretation

The main difference between supporters and opponents of the initiative concerns the interpretation of the first paragraph of the textExternal link. This states that “in the field of basic services, the government shall not seek to generate a profit, cross-subsidise other areas of the administration, or pursue fiscal objectives”.

Opponents argue that public service companies should not be stopped from making a profit.

“Without profits they cannot reinvest in order to improve services. Moreover, it is normal that tied-up capital should produce a yield. If public utility companies consistently lost money, the government might be tempted to sell off its shares to reduce the debt,” argues Nordmann.

“Our initiative does not preclude making a profit,” says Ersan Berdoz. “We just ask that profit-making not take precedence over user satisfaction. But all the better if there are profits.” 

Nordmann believes that stopping cross-subsidisation is also problematic. “This is fundamental to public services. For instance, it is clear that the profits generated on the Geneva-Zurich railway line are used to cover losses made on the less-frequented Broye stretch.”

But Ersan Berdoz says: “Nowhere is it written in the initiative that cross-subsidies are forbidden within the same company. We just don’t want these profits to go into the general fund where the government can do with them whatever it likes wherever it likes. That amounts to a hidden tax, which is wrong.”

Salaries

One point in the initiative could however win consensus, at least within the political left. Paragraph Two states that “the government shall ensure that the salaries and fees paid to the employees of these companies are not higher than those paid to employees of the federal administration”.

This measure clearly targets senior managers of public sector companies. “It is not right that the bosses of these big companies earn three or four times more than the corresponding government minister. We’re talking about a public service and priorities must be set. A reasonable salary is also one of those priorities,” says Ersan Berdoz.

“This is the only positive point in the initiative,” deems Nordmann.

“I also think that the big bosses are overpaid – although less so than in banks or insurance companies – and that their salaries should not exceed those of government ministers. But this is a marginal problem, and quantitatively not very important.”

Defining public services

Opponents believe that the initiative actually goes against its stated aim. “This initiative does not get to grips with the real problems affecting public services, and nor does it solve those that it claims to have identified. The whole undertaking doesn’t make sense,” criticises Nordmann.

But Ersan Berdoz argues: “This initiative is the result of a significant increase in complaints from consumers which we are relaying, because we see that the public sector is going downhill and that its future is in danger. It is therefore important to enshrine in the constitution a definition of a universal public service, precisely in order to avoid such distortions.”

The initiative in a nutshell

The initiative “In support of public-sector services” was launched by the news and consumer rights magazines “Bon à Savoir,” “K-Tipp,” “Saldo” and “Spendere Meglio,” which have a total readership of 2.5 million in Switzerland. It was filed with the Federal Chancellery in May 2013 with 104,197 valid signatures. The initiative was turned down by both houses of parliament. The government recommends rejecting it.

Translated from French by Julia Bassam