Parliament pushes for domestic-market reform

It's easier to extract a tooth than set up as a dentist in a different canton Keystone

Parliamentarians will seek this week to quicken the pace of reform on the domestic market during a key debate in the House of Representatives.

The move comes amid mounting criticism that politicians have spent the past decade dragging their feet on the issue of opening the market to competition.

There is broad agreement across the political spectrum that Switzerland suffers from a divide between its export sector, which has to compete on world markets, and the domestic economy, much of which still enjoys considerable protection from competition.

Economics Minister Joseph Deiss has not hidden his frustration at the apparent lack of political will to tear down barriers to doing business in and between Switzerland’s 26 cantons.

At last month’s Swiss Economic Forum (SEF) in Thun, he said the desire to reach political consensus in Switzerland was hindering badly needed reform.

SEF organiser Stefan Linder also used the occasion to call on politicians to make the opening up of the domestic market a priority over the next 12 months.

The origins of the new domestic market law, due to be debated in parliament on Tuesday, date back over a decade.

But according to Linder, “not much has happened since then, and Switzerland still does not have a properly functioning domestic market”.

Simple aim

The main aim of the revised law is simple: to breathe new life into a sluggish domestic economy by making it easier for people offering professional services to compete across cantonal – and in some cases municipal – borders.

Switzerland’s federal structure, which devolves much of the power to decide and implement regional economic policy to the cantons, does little to encourage competition.

Some local and regional authorities have been accused of protectionism and of hindering the free movement of skilled workers between cantons.

Teachers, hairdressers, dentists, engineers and hoteliers, for example, can only work in the canton in which they have been granted a permit to work.

A barber who is qualified to cut hair in canton Zurich may be unable to set up a salon elsewhere in the country because his or her qualification is not recognised in all cantons.

False dawn

When the current domestic-market law was introduced with great fanfare in October 1995, the government hailed the legislation as an important step towards eliminating restrictions and barriers put in place by the cantons.

But creating a law was one thing: putting it into practice across the country and instigating genuine reform turned out to be quite another.

In a statement to parliament ahead of the debate, the government said it was time to face up to the fact that “there is a gap between the aims of the [1995] domestic-market law and its achievements to date”.

“In fact, until now this law has not led to any notable opening of the market.”

Observers say part of the blame for the slow pace of reform lies with the Federal Court, which has tended to err on the side of supporting the principles of federalism and regional autonomy when ruling on cases involving alleged infringements of domestic-market legislation.

They add that relatively few appeals are made against such rulings, mainly because of the costs and time involved in waiting for cases to be heard.

Changes ahead

If it is accepted by parliament, the new law would stop cantons and local authorities from blocking free access to the labour market for non-locals.

It would also give the Competition Commission more power to appeal against any decisions which it suspects are being taken in contravention of the spirit and letter of the legislation.

The debate in parliament comes just over three months after a leading think tank called for reform of the federal system and the creation of six “super regions” around Switzerland’s main cities to help act as motors for growth.

Avenir Suisse said the current federal system of 26 cantons and more than 3,000 local authorities “led to protectionism” and hampered economic growth.

swissinfo

Key facts

A law designed to open up the domestic market was approved by parliament in 1995.
Around 250,000 people – 7% of the working population – could benefit from the amended legislation.
Those who are likely to benefit most are teachers, health workers, engineers and architects, hoteliers and restaurant owners and doctors.

In brief

The new law has three goals:

To break down local barriers to domestic-market entry.

To remove geographical restrictions on individuals practising their trade that could also prevent Swiss citizens facing disadvantages in Switzerland compared with EU nationals.

To give the Federal Competition Commission binding powers at cantonal and communal level.