A liberal economy, stable political conditions, developed infrastructure, rule of law, independent judiciary and press – all this, and more, makes Switzerland one of the most attractive global economic centers. As SwissInfo notes, the confederation is a small country, but if you look closely and approach it, it turns out that on a small patch of 41.3 thousand square kilometers, regions with very different business potential coexist.
For now, the most attractive industrial and business center of the country remains the famous canton of Zug. This follows from annual analytical reviews published by Credit Suisse and UBS banks. Among the factors allowing this small lakeside region to maintain such prestigious leadership, the banks name the financial framework conditions, the availability of highly educated and motivated labor, the convenient transport location of the canton, and the stability of the political system.
"When foreign companies choose certain regions of the world to 'reside' in, these four points are always at the top of their priority list. And if any of these factors in Switzerland as a whole begins to deteriorate, the canton of Zug will feel it very soon. We already see some things, for example, a clear reduction in the number of new firms moving to the Confederation from abroad," says Beat Bachmann, director of the cantonal Office for the Promotion of Small and Medium-Sized Enterprises (Zuger Wirtschaftsförderung).
"The reason is obvious – the results of some referendums held in Switzerland in recent years have made foreign top managers think, and very seriously. Switzerland has definitely begun to lose popularity and attractiveness in their eyes, and the most important negative factor in this regard now is the problem of skilled personnel. Finding good employees has become more difficult now than before, and it will probably become even more difficult," says B. Bachmann.
At the same time, he unambiguously hints at the referendum held in February 2014, where the Swiss decided to limit the influx of labor from EU countries. The official reminds that this referendum is not the only measure. As is known, restrictive measures have long been in effect in Switzerland regarding workers from countries outside the EU/EEA. These measures were already strict, but now the authorities have not only further tightened the conditions for obtaining the right to work for persons from 'third countries' but also significantly reduced the number of quotas allocated for such workers.
According to B. Bachmann, such measures "send a completely wrong signal to foreign investors and make them suddenly stop and think, for example, about whether I, as a business owner, can find suitable local personnel in sufficient numbers if a decision is made to move production to Switzerland. Of course, when setting up new production abroad, any company must rely primarily on its own potential and know-how, but local personnel are also indispensable."
In the canton of Zurich, which ranks second in the ranking of business-attractive regions of Switzerland after Zug, the tasks of developing small and medium-sized businesses are handled by the Office of Economy and Employment (Amt für Wirtschaft und Arbeit), which is part of the cantonal Ministry of Economy. This office is engaged not only in creating favorable conditions for business but also in personnel selection.
"In our work, we try to take into account the interests of both the economy and society as a whole, which means we are closely involved with people looking for work," says ministry spokeswoman Irene Tschopp. "If, for example, we start receiving a series of requests from a company to bring in, say, IT specialists from so-called third countries to work in Switzerland, we initially get in touch with the authors of these requests and offer to look for relevant unemployed specialists from Switzerland itself."
She fully understands why foreign businesses fear a shortage of local personnel and therefore do not come to Switzerland as actively as one might wish. Indeed, the confederation itself produces too few specialists each year, and the shortage is especially felt in innovative sectors such as IT. But at the same time, "innovative companies like Google or Zimmer Biomet are not only not planning to reduce their presence in Zurich but are actively increasing it, despite the alleged shortage of personnel in Switzerland."
It is interesting from this perspective to visit another Swiss regional 'cluster' of high-tech production, namely the canton of Basel-Landschaft. There, the issues of developing small and medium-sized businesses are handled by Thomas de Courten, who is also a member of the National Council (the large chamber of the federal parliament) from the conservative Swiss People's Party and one of the authors of the notorious 'anti-immigration legislative initiative' approved by the people in February 2014.
According to him, the results of this referendum have not yet had any negative impact on the canton in terms of its attractiveness to foreign business. When asked how the regime of free movement of people and capital affects the process of attracting foreign companies to Switzerland and whether the introduction of restrictive migration measures will hinder this process, Thomas de Courten replies: no, it will not. He points to the existence of such restrictions for persons from 'third countries,' which "function perfectly in our region and do not pose a risk factor."
“Finding great people is key to any business success” or in a free translation “Find the right people and the key to success is in your pocket” – that was the headline of one of the promotional videos released by the Greater Zurich Area AG (GZA) business association, which includes leading business representatives from the cantons of Zurich, Zug, and eight other Swiss regions. The association’s task is to promote Greater Zurich abroad as an attractive business location.
Listing its advantages, GZA also primarily points to the high quality of life in this part of the country, developed infrastructure, and skilled labor. “When we take the initiative and approach certain companies abroad, offering them to relocate their production to us, the first thing they ask about is precisely the availability of hiring the necessary specialists locally,” says GZA Executive Director Sonja Wollkopf Walt. In her opinion, the existence of a free movement regime for personnel, services, and capital between Switzerland and a unified Europe is almost the most important argument with which GZA until recently could convince foreign “captains of industry” of the benefits of relocating their production to the economic heart of Switzerland.
However, then came the referendum on February 9, and in the eyes of foreign investors, distrust became apparent: is everything really so good in Switzerland? This was especially true for companies working in innovative technologies. “Unfortunately, we cannot guarantee today to all these companies that they will be able to freely recruit the specialists they need and obtain the necessary migration permits from the authorities, because today no one knows how the people's vote of February 9 will actually be implemented in practice,” says Sonja Wollkopf Walt. This leads to the emergence of dangerous uncertainty and unpredictability, including in the tax sphere. Foreign companies are still mostly preferring to wait and not take risks, she adds, citing the latest statistical data.
Thus, in the period from 2009 to 2013, efforts by GZA saw 464 companies relocate to the Greater Zurich area, creating 4,165 jobs in Switzerland. This means that on average, 80 companies moved here per month, creating 830 jobs per month during the same period. In 2014, these figures dropped to 65 companies (457 jobs), and for 2015, experts predict these numbers will become even more modest.
Something similar is being experienced by western Swiss structures responsible for promoting Switzerland's economic interests abroad. “Attracting companies from abroad has recently become a much more difficult task,” says Thomas Bohn, Executive Director of the Greater Geneva Berne Area (GGBa) association, which unites five French-speaking cantons and the bilingual French-German canton of Bern. In 2014, the association managed to attract 87 companies to Switzerland, creating about 1,000 jobs here. “It was a good year,” says Thomas Bohn. “But it is also clear to us that the years of cloudless economic conditions have passed and that we will all have to tighten our belts in the near future. We will certainly no longer be able to attract truly 'big fish' with thousands of employees year after year, especially since we have now entered a phase of significant uncertainty.”
As the main factors of this uncertainty, T. Bohn cites the results of the vote on February 9, 2014, and the recently launched reform of business taxation in the country. “But companies from abroad come to Switzerland precisely because of the stability and predictability of the framework conditions that prevail here.” Switzerland still occupies leading positions in the global ranking of business attractiveness, “but it is no longer a paradise on earth that everyone wants to get into.”
Similar conclusions are drawn by Regula Matzek, press secretary of the BaselArea technology park. “Foreign businesses interested in moving to Switzerland are well informed about what is happening here, often expressing very serious concerns. We are increasingly asked critical questions, and it has become much harder to convince foreign investors to relocate here than before.”
On the other hand, Regula Matzek emphasizes that Switzerland still remains a popular business location, characterized by a very high density of biotech companies and firms, as well as the presence of a contingent of talented and skilled labor from 165 countries, including “cross-border commuters” from Germany and France.
When asked how the introduction of migration restrictions could affect Basel's economy, she responds optimistically, citing Severin Schwan, CEO of pharmaceutical giant Roche, who in an interview with Swiss German-language radio SRF recently expressed confidence that Bern and Brussels will certainly find a pragmatic solution to the problem that arose after the referendum of February 9, 2014.