Swiss Economy Research Articles

The workplace of the future: the COVID-19 pandemic and working from home in Swiss small businesses

PurposeMicro and small enterprises (MSE) play a critical role in the Swiss economy but had no meaningfully adopted working from home (WFH) policy before the COVID-19 crisis. The timing of the study’s data collection allowed a unique assessment of Swiss MSEs’ adoption of WFH enabled by the adoption of digital technologies due to the first government-mandated COVID-19 lockdown. The study also set out to assess the permanence of any changes in the adoption of WFH by MSEs after initial government COVID-19 restrictions ended.Design/methodology/approachThe study uses a threefold theoretical framework combining social, technical and spatial dimensions. Data were collected via telephone interviews. The utilised sampling frame included 153,000 small businesses with 4–49 employees, and the realised sample for the study was 503 interviews with MSE owners and managing directors (MDs).FindingsThe Swiss government’s COVID-19 crisis lockdown policies accelerated the digital transformation of work by employees in Swiss MSEs by increasing the number of employees WFH. However, the number of MSEs with WFH employees decreased after the first lockdown ended. Small business leadership is an important influence on the persistence of any increases in WFH.Originality/valueThe data collection uniquely captures the effects of externally driven digital transformation of work in small businesses by the adoption of WFH. The findings show that small businesses can rapidly learn new ways of working and support the claim that Swiss MSE MDs play a critical role in the adoption of WFH. They also confirm the importance of digital leadership and culture for realising the potential of WFH in small businesses.

Switzerland in international trade in goods and services

The Swiss economy is highly integrated into the international economy and the country benefits from an open trade regime for manufactured goods. The priority directions of Switzerland’s foreign economic policy are assistance with the entry of Swiss companies into international markets and the subsequent development of economic ties with the EU. In the article, the author examines Switzerland as a participant in international trade.

A monthly leading indicator of Swiss GDP growth based on Okun’s law

We propose a unique method of nowcasting and forecasting GDP growth based on a forward-looking measure of unemployment (FLUR) and Okun’s law that offers a number of advantages over current leading indicators of the Swiss business cycle. The following investigation, covering the period from 1991/1 to 2021/4, demonstrates that our approach outperforms an AR(1) model of GDP growth equally well as the popular Business Cycle Index of the Swiss National Bank and the KOF Barometer with respect to year-to-year growth, but less so in regard to quarter-to-quarter changes. Our findings suggest that our approach offers a reliable and useful indicator to policymakers seeking easily compiled information on the current and future course of the Swiss economy at monthly time intervals.

Forecasting changes in the macroeconomic situation in Switzerland: the smart economy of the future

The global economy creates unequal conditions for the development of different countries in terms of their endowment with resources, the ability to use technologies, the availability of financing, etc. However, today a pool of countries with the most powerful and stable economies has been formed. Among these countries is Switzerland considered by most economists to be perhaps the most stable and predictable country in Europe. The prerequisites for this status are the implementation of a balanced financial, budgetary and foreign economic policy for a long time, and as a result, today Switzerland is an attractive investment destination and a fairly influential country in the international arena. A retrospective analysis of statistical data on the country's development with further forecasting of basic indicators makes it possible to form a general idea of the prospects for the development of the Swiss economy and determine how its development will take place in the context of implementing modern approaches to the formation of the smart economy of the future. The study used general scientific and special scientific research methods, adhered to the principles of objectivity, scientificity, specificity, and systematicity. To conduct the study, 26 of the most relevant scientific sources on the chosen topic were processed. Given the relevance of the study, its purpose was to specify the directions of further development of the Swiss economy based on a forecast of macroeconomic indicators, as well as to determine the factors of success of the state in the context of the modern smart economy and the general processes of digitalisation of economic life. As a result of the study, the following results were obtained: the main macroeconomic indicators which can be considered as a reflection of the economic situation in the State as a whole were identified, and accordingly, their forecast will allow forming a comprehensive picture of the state of the Swiss economy and financial sector; the selected macroeconomic indicators were forecasted; the prospects for the development of the macroeconomic situation in Switzerland in the context of modern economic life digitalisation and development of the smart economy were determined. The conclusions indicate that the obtained results will make it possible to identify the key factors of the success of the Swiss economy and to formulate directions for its further development in the context of the modern smart economy and digital technologies.

Governmental Measures in Switzerland Against Mass Bankruptcies During the Covid-19 Pandemic

This article examines the impact of the Covid-19 pandemic on debt enforcement and insolvency law in Switzerland. Despite the absence of strict lockdown measures, many sectors of the Swiss economy suffered significant losses. The government responded by introducing generous public support schemes to keep businesses afloat. The article focuses on the modifications made to Swiss law during the pandemic to avoid mass bankruptcies and facilitate restructurings. The government first introduced a general stay of proceedings, preventing debt collection but not affecting the underlying obligation to pay, and later the Covid-19 Ordinance on Insolvency Law, which provided relief to companies, especially SMEs, to implement the necessary restructuring measures. Some unsuccessful initiatives, such as a special moratorium introduced for SMEs, are also discussed. Finally, the article considers the limited take-up of some of the insolvency measures and discusses the possible consequences of the obligation to repay Covid-19 loans in the future. Overall, it provides a comprehensive overview of the impact of the pandemic on debt enforcement and insolvency law in Switzerland and the measures taken to mitigate its effects.

The Historical and Political Peculiarities of the Swiss Economic Development until the early 2000s

The study of the historical characteristics of the Swiss economy and its development up to the twenty-first century has not been thoroughly examined by either Soviet or Russian scholars and is highly topical due to the fact that the transformation of Switzerland from a backward economy to one of the most advanced and competitive countries is of considerable interest to the academic community. The goal is to examine and analyse the characteristics of the evolution of a multi-ethnic and multi-confessional union into a federal state, which have directly influenced the development of capitalist relations, the industrialisation of Switzerland, its particular niche specialisation and competitiveness. The author also draws the attention to the political and economic equilibration of the 'neutral' Confederation between the Сеntral Powers led by Germany and Entente countries and Allies and the Axis during the two world wars, which allowed its economy to be safeguarded and successfully grown. A number of factors determining the country's main economic development trends are identified in the article. The conclusion is drawn that there is a linkage between Switzerland's national and regional historical development and its economic success. The Swiss peculiar approach to pragmatic exploitation of weaknesses and disadvantages, its particular identity and the mentality that has developed over a long historical period, have played a crucial role in the creation of the Swiss economic model.

The limits of internal devaluation: Switzerland during the great depression

During the Great Depression, countries endowed with abundant gold reserves were not able to leave the gold standard and devalue their currencies until the mid-1930s. Instead, they were forced to go down the road of internal devaluation. We analyze the policies of the Swiss authorities by estimating a New Keynesian small open economy model. Our results show that the long adherence to the gold standard and the failure of internal devaluation imposed considerable costs on the Swiss economy. Moreover, counterfactual exercises suggest that a timely devaluation would have led to an early recovery from the Great Depression.

160 Years of aggregate supply and demand in Switzerland

This paper studies the causes of movements in inflation and output in Switzerland over 160 years between 1855 and 2015. Aggregate supply and demand shocks are identified in a structural VAR, and their evolution and effect on prices and output are discussed. Shocks to the Swiss economy have generally, although not uniformly, declined in magnitude over the sample period. The World Wars, the deflation of the 1920s and the Great Depression represented much larger shocks than either of 1970s break-up of Bretton Woods and move to floating exchange rates or the Global Financial Crisis.

THE IMPACT OF HIGHLY SKILLED LABOUR MIGRATION ON HOST COUNTRIES (SWISS EXPERIENCE)

Purpose. The aim of the article is systematization of theoretical approaches to the essence of international migration processes of highly qualified labour, as well as clarification of the impact of migration of highly qualified labour on host countries using the example of the Swiss economy. Methodology of research. In the course of writing the article, the methods generally accepted in economic science were applied: theoretical and comparative analysis – to reveal the essence and meaning of migration processes; analysis and synthesis, grouping method – to determine the number of people, causes and consequences of emigration of the country’s population; abstract and logical ‒ for theoretical generalization and formulation of conclusions. Findings. The consequences of immigration processes for the Swiss economy are studied. To understand the phenomenon of migration of highly qualified specialists, approaches to its definition are considered, including the theory of “brain drain”, which explains the negative consequences of the migration of highly qualified specialists in sending countries, the theory of “brain recruitment”, which describes the positive effects of this migration on receiving countries. Originality. An assessment of the main causes and consequences of migration processes for the social and economic development of the country was carried out, a systematization of theoretical approaches to the essence of international migration processes of highly qualified labour force was carried out, and the impact of migration of highly qualified labour force on host countries was clarified using the example of the Swiss economy. Practical value. The results of the conducted research can be used in the process of further implementation of deep social and economic reforms and radical institutional transformations in Ukraine, aimed at the formation of competitive advantages of the labour market and its effective functioning. The use of international experience to improve the efficiency of the domestic labour market will have positive consequences for the national economy in the future. Key words: highly qualified specialists, migration, integration, labour migration, migration processes, immigration, potential, workforce.

Weekly economic activity: Measurement and informational content

We construct a composite index to measure the real activity of the Swiss economy on a weekly frequency. The index is based on a novel high-frequency data set capturing economic activity across distinct dimensions over a long time horizon. We propose a six-step procedure for extracting precise business cycle signals from the raw data. By means of a real-time evaluation, we highlight the importance of our proposed adjustment procedure: (i) our weekly index significantly outperforms a comparable index without adjusted input variables; and (ii) the weekly index outperforms established monthly indicators in nowcasting GDP growth. These insights should help improve other recently developed high-frequency indicators.

Small and medium businesses in Switzerland and multinational companies

The article gives a comparative study of the main elements of Swiss system of business — transnational corporations and small and medium companies (SMEs). Using the methods of statistical analysis, systematic and comparative approaches the author analyzes their role in country economy, modification of activities and changes of their positions in innovative spheres. The author examines the factors of attractiveness and preferences which have influenced the location of TNC headquarters in Switzerland and its new trends. Multinationals are a driving force for Switzerland`s economy development. Swiss multinationals are also leaders in foreign direct investments. The study shows special significance of small and medium enterprises for Swiss economy and exports, their contribution to innovations and R&D. Foreign trade provides the greatest impetus for SMEs growth. The author analyzes the process of internationalization of small and medium companies in specific conditions of small country and their support by different instruments in the framework of three-tier system of interaction (federal center — cantons — municipalities) including financial support and preferential taxation. The federal government supports SMEs in obtaining bank loans by funding loan guarantee cooperatives. As a result it was envisaged that transnational companies and SMEs cooperated in creating a competitive and innovative economy and cluster model in Switzerland. The author notes the negative influence of pandemia on Swiss economy and MNC and SME, but at the same time there are some signs of its recovery.

The Influence of Consumer Behavior on Climate Change: The Case of Switzerland

Reducing material flows and their associated environmental impacts substantially contributes to moving toward a more sustainable society. Both individual consumption behavior and governmental regulations play a crucial role in reaching sustainability goals. In this article, we present a Material Flow Analysis combined with a simplified Life Cycle Assessment of the Swiss economy. Results were linked to an analysis of consumption patterns. This allowed us to evaluate the direct influence of consumer behavior on national greenhouse gas emissions using a consumption-based approach and the quantification of the range of these emissions from different lifestyles. We conclude that the consumer has a direct influence on slightly more than 50% of the greenhouse gas emissions generated by the Domestic Material Consumption. If everybody were to behave like the 20% of the population with the most climate-friendly behavior, emissions would decrease by merely 16%. Cooperation between stakeholders at all levels of society is therefore needed. This study provides a contribution to decreasing material and energy consumption and defining possible future pathways with the final aim to bring anthropogenic greenhouse gas emissions down to zero in Switzerland.

State Stimulation of Innovation Activities in Switzerland and Russia

The article explores the system of State Financing of Research and Development (R&D) of small and medium-sized enterprises (SME) in Switzerland. Authors outlined the results of their analysis of key state institutions of financial support. The innovative vector of Swiss economy with a focus on its own financial resources, a developed national scientific and educational environment, as well as mechanisms of tax incentives for scientific and innovative activities of large, small and medium-sized enterprises at the regional level allowed Switzerland to become one of the leaders in the world innovation market. Russia can borrow the experience of Switzerland in the development of multichannel and targeted financial support for innovative activities of SMEs carrying out R&D in areas of scientific and technological development and focus on the production of science-intensive products. A certain exemption from the income tax and a reduction in the rate of insurance tax to SME employees engaged in innovative activities in priority sectors of Russia, the introduction of tax incentives and tax deductions such as patent boxes and super deductions will ensure the increase of the number of SMEs and in their contribution to GDP, will boost a competitiveness of the manufactured high technology products. The Swiss case will help to improve the mechanisms for integrating academic and university science with government and non-government organizations and SMEs in order to accelerate the commercialization of scientific research and the development of international network cooperation. The development of forms of integration cooperation between financial investors and youth small enterprises, start-up leaders and technology start-ups adapted to the Russian realities will allow to increase the level of interaction between the state in the field of higher education and science with large business and SMEs and to solve the priority tasks of training qualified personnel in innovation-oriented sectors of the economy.

HOW TO INCREASE CIRCULARITY IN THE SWISS ECONOMY?

Environmental threats are triggered by the overconsumption of raw materials. It is therefore necessary to move towards a society that both reduces extraction and keeps the majority of the extracted raw materials in the socio-economic system. Circular economy is a key strategy to reach these goals. To implement it effectively, it is necessary to understand and monitor material flows and to define hotspots, i.e. materials that need to be tackled with the highest priority. This paper is aimed at determining how to increase circularity in the Swiss economy by means of a Material Flow Analysis coupled with a simplified Life Cycle Assessment. After having characterized material flows, we analyzed two types of hotspots: i) Raw materials consumed and/or disposed at high level, and ii) Raw materials whose extraction and production generates high environmental impacts. The Material Flow Analysis shows that each year 119 Mt of raw materials enter the Swiss economy. Therefrom, 15 Mt are derived from recycled waste inside the country; 67 Mt leave the system yearly; 27 Mt towards disposal. Out of the disposed materials, 56% are recycled and re-enter the socio-economic system as secondary materials. Looking at hotspots; concrete, asphalt, gravel and sand are among materials that are consumed and disposed at high level. Yet, looking at greenhouse gas emissions generated during extraction and production, metals - including the ones in electrical and electronic equipment - as well as textiles are among the categories that carry the biggest burden on the environment per unit of material.

Economic Growth and Equity in Anticipation of Climate Policy

We study the role of the anticipation of climate policies on equity and economic growth in a numerical model of general equilibrium. The presence of the anticipation period allows the agents to adjust their choices before policy implementation. This period might change the equilibrium dynamics. It might also impact the redistribution of wealth in the economy. We choose the Swiss economy to exemplify and analyze these effects. The supply-side of the economy adjusts by redirecting the investments to cleaner'' sectors with a lower tax burden and higher profitability. On the demand side, welfare impacts by households vary according to their principal source of income. Households that have a high share of their income from capital rents benefit more from the policy’s announcement than others do. We find that, for the most stringent climate policies, the effect of anticipation is strongly positive but also regressive.

Monetary policy through exchange rate pegs: The removal of the Swiss franc‐Euro floor and stock price reactions

AbstractThe Swiss National Bank abolished the exchange rate floor versus the Euro in January 2015. Using a synthetic matching framework, we analyze the impact of this unexpected (and therefore exogenous) policy change on the stock market. The results reveal a significant level shift (decline) in asset prices following the discontinuation of the minimum exchange rate. As a novel finding in the literature, we document that the exchange‐rate elasticity of Swiss asset prices is around −0.75. Differentiating between sectors of the Swiss economy, we find that the industrial, financial and consumer goods sectors are most strongly affected by the abolition of the minimum exchange rate.

A daily fever curve for the Swiss economy

Because macroeconomic data is published with a substantial delay, assessing the health of the economy during the rapidly evolving COVID-19 crisis is challenging. We develop a fever curve for the Swiss economy using publicly available daily financial market and news data. The indicator can be computed with a delay of 1 day. Moreover, it is highly correlated with macroeconomic data and survey indicators of Swiss economic activity. Therefore, it provides timely and reliable warning signals if the health of the economy takes a turn for the worse.

Der digitalkapitalistische Geist in der Schweiz. Muster normativer Orientierungen in einem Traditionsunternehmen und einem transnationalen Digitalunternehmen

This article discusses to what extent the legitimation of the economic actions of pioneering actors in the Swiss digital economy is oriented towards solutionism. In a first step, we propose an analytical framing of solutionism that focuses on the actor’s perspective and its negotiations within the context of nation-state. In a second step, we ask about the empirical manifestations of solutionism in Switzerland based on semi-structured expert interviews. Using the example of two large companies in the mobility sector, we argue that a Swiss adaptation of solutionism can be identified, which differs according to whether the company is state-affiliated or an international firm. On the basis of the analysis of their corporate structure, entrepreneurial strategies and normative orientations, we show that the traditional stateaffiliated company represents a solutionism oriented towards the nationstate and that the transnational enterprise, on the other hand, is oriented towards a globally intended solutionism, which, however, relativizes its peculiar anti-regulationism in the context of the Swiss economy.

Real-financial connectedness in the Swiss economy

We study macro-financial linkages and their importance within the Swiss economy from a network perspective. First, we investigate the real-financial connectedness in the Swiss economy, using the KOF economic barometer, obtained from real and financial variables, and, the real activity index (RAI), we distilled from a small set of real variables, as two alternative proxies for the real side. Whereas the KOF-barometer-based analysis shows that both sides transmit sizeable shocks to each other without one dominating the other, the RAI-based analysis shows that in the aggregate, the financial side turns out to be the net shock transmitter to the real sector. In the second part, we focus on the relative importance of financial markets as shock propagators using a network centrality measure. We find that 2008–2009 recession in Switzerland and the Swiss National Bank’s (SNB) exchange rate policy changes in 2011 and 2015 have significantly altered the way the shocks are transmitted across the two sides of the economy. During 2009–2011, stock, bond, and foreign exchange (FX) markets, in descending order, played important roles as shock propagators. Following the SNB’s 2015 policy decision to discontinue the lower bound for the EUR/CHF exchange rate, FX market has become equally important as the stock market but more important than the bond market as a shock propagator.

Швейцария и Евросоюз: особенности торгово-инвестиционных связей

The article studies specifics of trade and investment ties of Switzerland with EU countries. The author researches into the history of relations of Switzerland with EU, specifics of participation of this country in the process of European integration without membership in EU. The author pay attention on policy of neutrality and decentralization of Swiss economy and analyzes the special model of relations of two parties in the shape of bilateral or sectoral agreements as well as the factors determining main trends and periods of its development, profits and risks linked to Switzerland`s joining the EU, and the reasons standing in the way of conclusion of an institutional framework agreement with EU. The core argument is the Swiss reliance on direct democracy and bottom-up approach to governance as well as neutrality policy. The author underlines the factors of attractiveness of Switzerland for European partners first of all tied with competitiveness and diversity of the Swiss economy, it`s original niche character, export orientation, specialization on innovative sectors and development of clusters particular in biomedical technologies. On the basis of analysis and summarizing of statistics the author shows dynamics and specifics of trade and investment ties between Switzerland and the EU countries, merchandise structure of the foreign trade and importance of foreign investment as a key factor for economic growth in Switzerland. The author also assesses the role of multinational companies in Swiss economy as drives of its growth in the context of globalization and the impact on the number of jobs in Switzerland.