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 $40,900, 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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