Reforms needed to protect Swiss wealth

Postal services is one sector ripe for further reforms according to the OECD Keystone

A report has warned that Switzerland will not remain among the world's richest countries if it doesn't carry out more reforms and open its markets to competition.

Experts from the Organisation for Economic Co-operation and Development (OECD) said Swiss economic growth has been well below average since 1980.

The new report from the OECD, “Switzerland: Seizing the opportunities for growth”, points out that the country’s stable politics and flexible labour market have helped make it wealthy.

But it adds that, despite reforms to increase domestic competition and enhance Switzerland’s integration into the world economy, growth is more than a full point below the OECD average.

This is apparently because the pace of reforms has not been fast enough and results tend to be fragmented. The experts also say that the product market is over-regulated compared with neighbouring countries.

The OECD reckons the Swiss government should push more ambitious reforms and get public backing for these changes by promoting their benefits.

The report recommends strengthening competition policy; cutting regulatory and technical barriers to promote international trade and investment; speeding up reform of key infrastructure sectors, such as telecommunications and electricity; increasing public sector efficiency by improving federal and cantonal regulations.

Direct democracy

Responding to the report, Walter Stoffel, the head of Switzerland’s competition watchdog, said 11 recommendations made by the OECD experts were necessary to reinforce domestic market competition.

The transport, communications, energy and environment ministry faces the biggest challenge if the report’s findings are taken into account by the Swiss authorities.

The experts said that while railway reform was keeping pace with the rest of Europe, postal and electricity services were behind.

Hans Werder, the ministry’s secretary-general, said that if Switzerland was behind in some sectors, it was a direct consequence of the country’s unique political system. Direct democracy means Swiss citizens often have the last say on major projects.

Three years ago the Swiss rejected a liberalisation of the electricity market; in 2004 they narrowly turned down a proposal defining the postal service’s role and its network that would have maintained a post office in almost every town and village.

Better information

The report recommends that Switzerland consider regulatory policies and reforms at the national level rather than at the cantonal and local levels, where most decisions are taken now.

Such an approach would help create a proper framework for reform, making it simpler to explain the proposed changes to the population and their potential benefits.

The head of the State Secretariat for Economic Affairs (Seco), Jean-Daniel Gerber, said that the economics ministry would be putting more efforts into informing the population about change.

Seco also plans to organise a congress later this year to discuss economic reforms, in particular those already undertaken abroad.

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In brief

Switzerland, along with 19 other countries, signed the convention founding the Organisation for Economic Co-Operation and Development on December 14, 1960.

Like all 30 member countries, the Swiss government maintains a permanent delegation to the OECD, composed of an ambassador and diplomats.

Through its country surveys and comparable statistical and economic data, the OECD provides its member countries with tools to analyse and monitor their economic, social and environmental policies.

Countries can draw on the OECD’s expertise, including peer reviews, and they can access all of the research and analysis conducted by the organisation’s secretariat.