In terms of regulation, Switzerland is not doing particularly well. Small and medium businesses, in particular, are suffering.
Switzerland as a business location regularly occupies top positions in international rankings. Examples are property rights, the number of patents per capita, or – so far – general tax requirements. In terms of business friendliness in terms of organization, the country has lost ground, at least according to the World Bank’s ease of doing business index.
Between 2066 and 2020, Switzerland fell from seventeenth to thirty-sixth place. However, the indicator has lost its relevance. The index was discontinued after criticism that some countries such as China were doing better. However: Complaints of bureaucratic excesses on the part of the economy, especially on the part of small and medium-sized businesses, are increasing. The states councilor, Hansgeorg Knecht, a businessman, put it this way this week: “We now have to fill in the forms Jojo-style.”
Different estimates are circulated about the level of regulatory costs in Switzerland. Systematic survey not found. In 2015, a “conservative” estimate by the Federal Council was 2% of GDP. The trade union, which mainly represents small businesses, talks about 10%, or 70 billion francs.
“The freedom of action of companies is being restricted by a stricter regulatory corset.”
Political initiatives aimed at stemming the flow of regulations have been launched many times, but the wheels of politics are slowing down particularly on this issue. Two proposals were discussed in the House of States this week. As in the advisory, the majority of the UEG was undisputed. Among other things, it provides regulatory cost estimates and a centralized federal digital platform.
However, it is questionable to what extent this new regulation will significantly reduce the regulatory burden. There is a danger of more bureaucracy rather than less bureaucracy. Nonpartisan entrepreneur Thomas Minder said UEG wouldn’t even win a beauty prize.
Specific regulation brakes may be more stable and powerful. However, for political reasons, it seems she has no chance. The Council of States decided not to enter. He would take it into his own hands to eliminate the alleged “privilege” of corporations over other interest groups by extending the scope to individuals – as he had done shortly before in the UEG.
With a tighter regulatory corset, companies’ freedom of action is restricted. With the expected introduction of the OECD minimum tax, one of the advantages of locations in Switzerland will be reduced. It will be even more important if politicians do not lose sight of the regulatory jungle.
One approach might be the one-in-one requirement, which applies in Great Britain, Canada and, since 2015, in Germany (otherwise it would not be a typical country of few and efficient bureaucracy). For every new law, an existing law must be repealed. Or a sunset rule with an expiration date, as is practiced in the USA.
Arno Schmocker He has been commenting on economic policy issues at the Federal Palace in Bern since September 2021. He has also been writing about companies in various industries for many years, currently medical technology.More information