Switzerland - Overview:
Switzerland is an incredibly international country with a population of approximately 7 million, nearly a fifth of which are foreign nationals. The country has four official languages comprising German, French, Italian and Romansh. German and French are the most prevalent of these, spoken by around 64 per cent and 20 percent of the population respectively. English is also widely spoken and is a common language in the business community. The country is blessed with a wealth of business know-how, a highly trained and multi-lingual workforce, social and political stability and a favourable location in the centre of Europe, which make it an attractive location for pan-European business operations. However, there are no inherent mineral resources so the country relies heavily on imports to support its industries. Numerous major international companies have opted for Switzerland as a location for part of their operations. Amgen, Philip Morris and Compaq Computers, for example, have their European headquarters in Lucerne, Vaud and Zurich respectively. LEGO have production facilities in Zug and IBM has a research laboratory in Zurich.
Economy:
The Swiss economy is characterised by substantial international trading encouraged by the need to compensate for its limited natural resource base and a relatively small domestic market. In fact, as a percentage of GDP Switzerland has one of the highest export rates, in the world. Per capita GDP is significantly above those of the large western European economies, at around $28,600, and the country enjoys a real growth rate of approximately 2-3 per cent. The primary/agricultural sector, is strongly supported by the government, and employs less than 10 per cent of the population. About 40 per cent of the population are employed in the secondary/industrial sector, which includes the machine and metal, watch and textile industries. Much of the output from these industries is destined for export and companies can suffer because of the enduring strength of the Swiss Franc. Over half the population is employed in the tertiary sector/service sector, which includes assurances, tourism and banking, the latter being one of the most important businesses in Switzerland.
In recent years, economic practices have been increasingly harmonised with those of the EU, a region that receives nearly two thirds of Switzerland's exports and is responsible for nearly four fifths of imports. Therefore, while Switzerland is not a signed up member of the European Union, it is fully integrated into the European Market and benefits from its 380 million consumers, economic and business relations and agreements on custom duties. The country's most significant non-EU trading partners are the United States and Japan.
The taxes in Switzerland are levied at three distinct levels, by the state, by the cantons and by the municipalities. As a result tax levels are relatively low due to competition among the different regions to achieve the most favourable tax rates.
Infrastructure:
Major international airports located in Basle, Berne, Geneva and Zurich connect to over 150 cities worldwide. There are also several regional airports operating domestic flights and flights to and from some European cities. An extensive national rail network, that is completely electrified, provides services between major cities that run at least every hour. There are an increasing number of fast rail services to international destinations including Frankfurt, Munich, Paris, Milan and Brussels. Swiss roads are excellent and the extensive motorway network has direct connections to Germany, northern Europe, France, Spain, and Italy.
Switzerland invests more per capita into communications than any other country. As a result it has an extensive mainline telephone network that boasts nearly one line for every member of its population and a well-developed mobile communications network. There is a reliable nation-wide postal service, which includes money transfer services.
Workforce:
The Swiss workforce is highly motivated with a high degree of company loyalty. This is reflected in the fact that strikes are almost non-existent, with fewer than 10 per year since 1975. The standard and breadth of education is excellent and there is a well-established system of vocational training. About a sixth of the population between 25 and 64 years of age are undertaking some form of advanced vocational training programme. A multi-cultural indigenous population, significant foreign national representation and an excellent education system has given rise to a large proportion of the workforce fluent in several languages.
New Technologies:
The international Organisation for Economic Co-operation and Development (OECD) Science, Technology and Industry Scoreboard 2001 ranked Switzerland first among the industrialised nations in acquiring the new skills and technology necessary for the modern industries. These industries included biotechnology, pharmaceuticals, chemicals, medical technology, information and communications technologies, microtechnology, nanotechnology and environmental technologies.
Business Costs:
Salaries are relatively high but overall labour costs are lower than in other European countries. This is due to the fact that working hours are generally longer than in other European countries and strike action is very rare. Social security costs for employers are also moderate since much of the contribution comes from workers. In general, the tax burden is moderate by European standards and varies between the 26 cantons into which the country is divided. Corporate profits are typically taxed at the rate of 20 to 25 per cent. VAT and custom duties are also moderate. There are various tax incentives in place to entice foreign investment and numerous treaties are held with other countries in order to avoid double taxation.
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