At the end of the Second
World War, when other industrialized nations
were trying to rebuild their shattered
economies, Switzerland's manpower and means of
production were intact and, therefore, in a
favourable position for rapid development.
Since then, her production
and workforce have continued to expand. Thanks
to advanced technological development and an
emphasis on vocational training, many Swiss
companies are among the world leaders in their
field.
As the economic machine was
running at full speed, it soon provoked a cry
for help: the country's native labour force -
even with many women working - was
insufficient. From the end of the 1950s,
foreigners, mostly Italian and Spanish,
arrived in increasing numbers to contribute to
the development of the Swiss economy; without
them, the standard of living enjoyed in
Switzerland today would never have been
reached.
When the economy began to
slow down in the middle of the 1970s, the
foreign workers were among the first to feel
its effect. The years 1977 to 1982 were a
period of recovery, although there were some
intermediate recessions in the industrial
sector which were mainly due to repeated rises
in the exchange rate. At the same time
structural improvements were made in certain
sectors, which led at first to closures or
mergers. Since 1983, there has been a new
positive trend, encouraged by improved
worldwide economic conditions and the added
thrust of technological development. Since the
influx of foreign labour is restricted by law
it was only possible, despite a high level of
investment, to achieve what by international
comparison is considered a below average rate
of growth.
The very successful
financial year in 1990 represented the end of
the longest period of growth since the last
war. Meanwhile a stubborn inflationary trend
developed, which had to be countered with a
rigorous monetary policy. At the end of 1990 a
mild but unusually long period of recession
started, accompanied by a far-reaching crisis
in the property market which had repercussions
in the banking sector. The effects of this
economic crisis were especially felt in the
construction industry. Although in comparison
with the gross national product this slump was
less marked than during previous recessions,
its effect on employment has been drastic.
At the end of 1992 over
120'000 people were unemployed, a proportion
which had not been seen in Switzerland since
the 1930's.
The economy should recover
slowly over the next two years, although the
employment situation will take longer to get
back to normal.
State and economy in partnership
The Swiss economy is based
on the principle of free enterprise.
Accordingly, freedom of commerce and industry
are guaranteed by a Constitutional Article of
1874.
Since that time,
Constitutional Articles concerning the economy
dating from 1947 and later Articles, have
slightly tempered these freedoms. State
intervention is permitted if it can be
justified in the interests of the country as a
whole.
On several occasions, the
Federal Council has had to take direct urgent
action in terms of controlling prices and
salaries, or limiting public construction,
etc. State intervention is, however, always
kept to a minimum.
Through its influence, the
State also plays an active part in commercial
and economic relationships. According to the
Constitution, the Confederation has the sole
right and responsibility to conclude customs
and trading agreements with foreign countries.
The State always supports a policy of reduced
customs duties, with no import restrictions,
remaining opposed to all forms of
protectionism.
An economic area comprising
some 300 million people is being created as
part of the European Community. Within the
framework of the EEA, EFTA countries have
access to the European market. In the
referendum held on 6 December 1992 the
electorate and the cantons rejected
Switzerland's joining the EEA. This means that
Switzerland will have to tread its own path.
In order to reduce the negative effects of
this decision Switzerland will have to adopt a
revitalisation programme to improve the
flexibility and competitiveness of its economy
and to introduce the necessary reforms on its
own.
No need for strong-arm strike tactics
The living conditions of
workers obliged the State to take an early
interest in social security matters. This
resulted in a whole range of legislation: the
1877 Federal Factories Act curbed, in
particular, the employment of children; the
Sickness and Accident Insurance Law first came
into force in 1890; the Federal Employment Law
in 1964; the law concerning old-age and
surviving dependents' insurance (AHV/AVS) was
adopted in 1948.
In 1972, the so-called
'Triple Pillar' system was embodies in the
Swiss Constitution: the first is a compulsory
national pension scheme whose payments are
intended to reasonably cover basic needs;
these pensions are adjusted periodically to
take account of cost-of-living increases. The
second 'pillar' consists of employers' staff
pension schemes which have been compulsory
since 1985 and which, together with the
Federal pension scheme, are intended to
maintain a constant standard of living in
later life; the 'third pillar', which is not
heavily taxed, is based on voluntary savings
(bank accounts, life insurance). It is useful
to mention here a Constitutional Article which
came into force in June 1981 concerning
another employment issue; men and women
engaged in the same occupation must receive
equal pay.
Peace in Labour Relations
Switzerland is one of the
countries where the people spend the most time
at work: between 2'000 and 2'300 hours a year.
And yet, labour disputes are rare - due in
part to the important legislation designed to
protect worker's rights. A long-standing
agreement between employers and trade unions,
peace in labour relations was first introduced
in 1937 and has been regularly renewed. It
aims to settle any dispute peacefully, without
strike action or lock-outs and to go to
arbitration if the matter cannot be settled
internally. In 1941 it became obligatory to
have collective agreements to regulate labour
relations between employers and workers.
Agriculture
The economic importance of agriculture in
Switzerland
As a part of the national
economy, agriculture in a highly developed
country with a strictly defined division of
labour is closely linked with all the other
branches of the economy and with other
countries. Apart from the market-orientated
interweaving of basic prerequisites and
product markets with the production and
processing sectors, links also exist with
other businesses and institutions. This is the
case, for example, in the fields of basic
training and further education, basic and
applies research, consultancy and
communications.
Agriculture is diminishing
in importance in all modern economies. The
proportion represented by the agricultural
sector in the gross national product (GNP) is
decreasing and is only 3.2% in Switzerland
today. The number of people employed in
agriculture is also falling: a mere 5% of
those gainfully employed. This does not
properly reflect, however, the importance of
agriculture. With its large-scale land
coverage agriculture uses and cares for around
half of the surface of Switzerland. In this
way it helps to maintain fertile land, to
preserve a basic aspect of life and is an
important factor in shaping the landscape of
Switzerland. Agriculture is thus a vital
prerequisite for the tourist industry.
The structure and development of
agriculture
An analysis of the structure
of agriculture in Switzerland reveals the
number of farms, their relative sizes, how
many people they employ, the distribution of
animals, the machinery used, etc. A series of
such analyses over a certain period shows the
development in the structure of agriculture.
The typical Swiss farm is a
family business, and as such is the central
factor of agricultural policy.
Production and degree of self-sufficiency
Thanks to rapid progress in
technology, biology and organisation
productivity per hectare and per animal, as
well as per employee, has risen enormously in
Switzerland over the past 40 years.
Agricultural production has in fact doubled
over this period. The final gross yield from
agriculture (value of total produce,
calculated at production cost, leaving the
farm) was estimated at SFr. 8.8 billion in
1992. The high percentage represented by
cattle-farming (approx. 75% of gross yield) is
due to natural production conditions (climate,
soils, topography and altitude). Around
three-quarters of the whole of Switzerland's
productive surface can only be used for
growing fodder for cattle (especially dairy
cattle). Mountain farming involves almost only
diary farming.
The fact that productivity
has increased, on the one hand, and that the
increase in demand has been slowing down, on
the other, has led to an improvement in the
degree of self-sufficiency over the past few
decades. Measured in calories home-produced
food now covers 65% of demand (gross). The
degree of net self-sufficiency shows to what
extent Switzerland can cover its nutritional
needs. In order to obtain this the gross
product must be reduced by the amount of
fodder imported. Thus average net
self-sufficiency for the years 1988 - 1990 was
62%. With an average daily consumption of
around 3.200 calories per head 2'000 calories
can be supplied by the home-market.
Agricultural policy
Agricultural policy must
create the necessary conditions for Swiss
agriculture to fulfill the following tasks in
the best way possible: help to ensure the
provision of high-quality food, exploit and
maintain a basic prerequisite of life,
preserve and look after productive land, help
to maintain an even population distribution
pattern. The basis for agricultural policy in
Switzerland includes the federal constitution
(article 31b), the law on agriculture of 1951
and additional decrees. The instruments of
agricultural policy are very complex and
far-reaching. Roughly speaking the system can
be divided into three types of measures: basic
improvement; ensuring prices, sales and food
supply; and direct subsidies. Federal
expenditure on agriculture and food production
amounts to SFr. 3.1 billion per year or 8.7%
of the total annual budget (1991).
Present changes in
agricultural policy, due to internal and
external factors, include a basic change in
measures to be taken: prices and income policy
will be more clearly separated than has been
the case so far. In the future market prices
will be used to steer production, additional
direct subsidies will, on the one hand, help
to ensure a certain level of income and, on
the other hand, be used to reward especially
ecological efforts in agriculture.
Forestry
Forests, the natural habitat
of many species of animal and plant life, are
being increasingly attacked by man. For
centuries our forests have supplies
replaceable supplies of wood as a raw material
and a source of energy. In recent times we
have realised the value of forests as
protection against avalanches, floods, erosion
and landslides. On of the aims of Swiss policy
concerning forests is to maintain and promote
healthy and permanent forests. Thanks to a
general ban on the destruction of woodland and
obligatory re-afforestation to compensate for
wooded areas which are destroyed legally,
forests in Switzerland are by and large
protected from human 'erosion'. Long-term
stability is encouraged through appropriate
management of the forests in as natural a
manner as possible. The federal as well as the
cantonal authorities provide large subsidies
for re-afforestation, management and
protective and structural measures and the
preparation of forest tracks. The central
authorities also subsidize training schemes
for forestry specialists and research, the
latter having become especially important in
the light of the current concern for
environmental damage to forests. The first
Swiss national forest inventory (1982-1990) of
the Swiss Federal Institute for Forest, Snow
and Landscape is to be seen in this
connection. This inventory allowed for the
first time a nation-wide comparison of forest
surfaces and conditions using uniform
guidelines. It will be important to update
this inventory so that the development in the
last few years can be understood, especially
the decline in healthy tree growth. New
forestry legislation aimed at guaranteeing a
stable area of forested land which fulfils its
various functions will come into force in
Switzerland in 1993. Careful forest management
will be encouraged where good quality
commercial wood is produced; every year only
4.5 million m3 is exploited out of about 7
million m3 which is available.
An additional aspect, which
must not be forgotten, is the 90'000 jobs
connected directly or indirectly with forestry
and the processing of wood, especially in
rural areas.
Craft and Industry - Quality First!
The engineering, electrical and metal
industries
The engineering, electrical
and metal industry is the major contributor to
Switzerland's national economy and accounts,
on the longer-term average, for 45% of her
total exports. It is also Switzerland's
largest industrial employer with almost half
the total workforce. The industry produces
everything from laboratory scales capable of
measuring to an accuracy of on ten-millionth
of a gram, to railway engines. Swiss machines
can be found all over the world: weaving,
crushing grain, measuring, regulating,
monitoring, controlling, sizing, rolling,
producing energy, pumping and reaping!
The machine industry
originally grew out of the needs of the
textile industry; the passage from manual
labour to mechanised production in spinning
and weaving workshops dictated that the
machine industry grew up in the areas where
the workshops were. By the end of the 18th
century, the Swiss were vying with the English
for supremacy in the textile industry. The
fact that the English so jealously guarded
their machines and skilled labour made the
challenge all the more worthwhile.
Nowadays, the Swiss have
caught up and, going by their export figures,
their textile machine industry now ranks third
in the world. But other factors had a decisive
impact on the machine sector: e.g. the
introduction of the railways, motorization of
ocean-going vessels, and also new technology
developed at the end of the 19th century to
produce hydro-electric power.
Swiss engineering can claim about 80 'firsts'
in the field of energy production. These
landmarks in the history of technology include
the turbo-generator (1898), the first electric
rack railway at Mont Salève/Geneva (1890),
pump turbine (1930) and the first gas turbine
power station (1978). Switzerland's
engineering, electrical and metal industries
are nowadays characterized by a wide spectrum
of varied products and services into which
electronics have infiltrated on a major scale.
However, the common denominator is still the
concentration on top-quality products tailored
to customer specifications. With this in mind,
Swiss companies also invest large shares of
their turnover in research and development.
The chemical and pharmaceutical industries
The chemical and
pharmaceutical industry has enjoyed a twofold
growth: the dyestuff sector which came into
being out of the demand of the silk and
textile industry, and the pharmaceutical
industry which, centered around the Basle
region, also ranks as one of the major
producers of specialized pharmaceutical
products. The chemical industry, too, has to
face the problem of lack of raw materials. It
has to import raw and secondary products in
order to manufacture the final article.
The chemical industry was
the first to set up subsidiaries abroad and to
'internationalize' its production. Initially
this was to escape protectionist measures
imposed by certain countries after the First
World War, thus producing medical products
within the countries which had import
restrictions.
Other factors have since
encouraged this trend, such as the shortage of
manpower in Switzerland, poor exchange rates
and the fact that many countries where these
industries have been established are insisting
more and more that the companies do not
restrict themselves to production, but also
carry out research that will benefit directly,
or indirectly, other sectors of their economy.
For all these reasons, the movement towards
decentralization and 'internationalization'
has intensified. However, major
decision-making remains in Switzerland. The
main reasons why the Swiss chemical and
pharmaceutical industry can compete
successfully against the foreign competition
are, on the one hand, the considerable amounts
of money being invested constantly in research
on effective substances, and, on the other
hand, the development of new products. A high
proportion of all employees in the chemical
industry work in research, and the
pharmaceutical industry's budget for research
amounts to 12-20% of its turnover.
This high figure is easily
explained when one considers that to produce a
new drug - and this sector represents
approximately half the chemical industry's
total production - necessitates testing
between 8'000 and 10'000 chemical substances,
and once the drug is finalized, trial lasting
10 - 12 years have to be carried out before
the product can be marketed.
The Swiss dyestuff industry
also ranks among the first in the world. It
produces very high quality dyes with a huge
range of applications: in dyeing and printing
of textiles, leather, paper; in paints and
varnishes; in graphic arts and in building.
As for perfume essences and
food flavourings, the Geneva companies share
the position of world market leader. These two
companies do business in practically every
perfume market in the world. Here again, their
strength lies in the quality of research and
originality of ideas.
Lastly, we should mention
agricultural chemistry, a field in which
Switzerland has come to play an important
international role by ensuring food for people
throughout the world, especially in the plant
protection sector.
The watch industry
In the conquest of space or
major sporting events - where time has to be
measured to a millisecond - it is Swiss
watches and chronometers that are relied upon.
This reputation did not come about by chance,
but by the combination of Swiss inventiveness
and the accuracy of their work.
It was the Huguenot refugees
at the end of the 16th century, whose
technical expertise started the development of
Swiss watch-making. Geneva was the home of the
first guild of watch-makers at the beginning
of the 17th century and the industry finally
extended right along the Jura chain from
Geneva to Schaffhausen.
1845 saw the arrival of the
first machines capable of producing completely
identical parts, thus creating the concept of
mass-production and turning craftmanship into
industry in one fell swoop. In the process of
mechanization, Switzerland left all her
competitors standing and she has dominated the
world market for more than a century.
The industry progressed
rapidly and the export of Swiss watches has
become an important tradition. Almost all of
the over 130 million watches and movements
manufactured every year go for export.
The success of the Swiss watch industry is due
to three factors: the quality of the products;
the constant improvements that are made; and
finally, good after-sales service.
All the major developments
in watch-making have come from this little
country, which has become the symbol for
chronology. Individual manufacturers
recognized the importance of pooling their
talents in research, and this was formalized
by the creation in 1921 of the Swiss
Laboratory of Horological Research and more
recently (1962), by the Electronic Watchmaking
Centre, both in Neuchâtel.
The latter organization
dedicated itself to researching into the
potential of microelectronics and in 1967, it
produced the world's first quartz watch.
Since then, the Swiss
watch-making industry has originated all
developments in the quartz watch field, such
as digital watches with liquid crystal or
electrochromic display, high-frequency quartz,
combined analog/digital display, watches with
optic sensors, dichromic displays which
transform the whole face into an electronic
screen while retaining the appearance of an
elegant watch with hands. This necessarily
incomplete list concludes with the world's
slimmest watch with a total thickness of 0.98
mm and with the first prototype of a watch
which responds to the human voice.
Excellent after-sales
service was always one of the strong points of
the Swiss watch industry and is undoubtedly a
prerequisite of an industry manufacturing
first-class products based on top technology.
Swiss watchmakers always
took pains to organize technical training in
other countries and to provide it with
adequate back-up. In this way, customer
service centres were set up in several
countries, and watchmakers from all over the
world come to Switzerland to refresh and
supplement their professional know-how.
The recession in the
mid-1970'2 coupled with the advent of quartz
watches (which now account for 90% of the
number of watches exported) have resulted in
major restructuring and in a considerable
reduction in staff numbers. Quartz watches
have a lot fewer parts than mechanical ones
and their assembly is often automated. Efforts
to rationalize and standardize the Swiss
watch-making industry have been successful and
since 1984, the export of watches and watch
parts in the lower price categories has risen
considerably, thanks to the plastics industry.
On the other hand, more expensive Swiss
watches (often with mechanical movements) have
been virtually unaffected by the fluctuating
economic situation and account for almost the
whole of the world market in these categories.
