2017 OECD ECONOMIC SURVEY OF SWITZERLAND Boosting productivity and meeting skills needs Bern, 14 November 2017 http://www.oecd.org/eco/surveys/economic-survey-switzerland.htm
@OECDeconomy @OECD
Living standards are high OECD Better Life Index, 2017 Index scale, 0 (lowest) to 10 (best) Switzerland
Income and wealth 10 Subjective well-being
8
Jobs and earnings
OECD
6 Personal security
4
Housing
2 0
Environmental quality
Work and life balance
Social connections
Health status Education and skills
Note: For each dimension indicators are normalised and averaged. Source: OECD, Better Life Index.
2
The economy is growing but only slowly GDP growth % y-o-y 6 4 2
0 -2 -4 2006
2008
2010
2012
2014
2016
Source: SECO. 3
Employment is high Employment-to-population ratio % 85
Switzerland
OECD
80 75 70 65 60 55
50 2010
2011
2012
2013
2014
2015
2016
2017
Source: OECD, Labour Force Statistics database. 4
Productivity has stalled Trend labour productivity growth % 2.0 Switzerland
OECD
1.5
1.0
0.5
0.0
2000
2002
2004
2006
2008
2010
2012
2014
2016
Source: OECD, OECD Economic Outlook 102 database, preliminary version. 5
The demand for skilled workers has been strong Contributions to changes in total employment growth over 2000-16 % pts 50 40
High skill
Middle skill
Low skill
30
20 10 0 -10
-30
GRC FIN SVK NLD LVA CZE DNK HUN ITA EST ESP BEL DEU EU15 SVN IRL POL PRT AUT GBR FRA NOR CHE SWE ISL LUX
-20
Note: Countries are ordered by the contribution of high-skill employment Source: Eurostat.
6
Entrenching the expansion
7
Fiscal policy is sound and public debt low Gross general government debt, % of GDP 120
Switzerland
OECD
100 80 60
40 20 0
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
Note: The shaded area denotes the 25th to 75th percentile range for OECD countries. OECD is an unweighted average of data for available countries. Source: OECD, OECD Economic Outlook 102 database, preliminary version.
8
Unconventional monetary policy has supported growth Interest rates
SNB’s foreign exchange reserves
% 4
% of imports 225 SNB target range
3
3-month, CHF LIBOR
2
175 150 125
1
100
0
75
50
-1 -2
200
CHF/EUR ceiling
25 2006
2008
2010
2012
2014
2016
0
2006
2008
2010
2012
2014
Source: Swiss National Bank; Thomson Reuters Datastream; OECD, OECD Economic Outlook 102 database, preliminary version.
2016
9
Low interest rates increase risks House prices, 2010 = 100 130 120 110
100 Ratio to consumer prices 90 80
Ratio to average household income 2006
2008
2010
2012
2014
2016
Source: OECD, House Price database. 10
Household credit is high Household credit, % of GDP, 2017 Q1 140 120 100 80
60 40
0
MEX TUR HUN CZE POL ISR ITA CHL IRL AUT DEU JPN FRA BEL LUX GRC ESP FIN PRT USA SWE GBR KOR NZL CAN NOR NLD DNK AUS CHE
20
Source: OECD, Vulnerability Indicators database. 11
Age-related public spending will become a fiscal burden 25 20
Long-term projections for age-related spending, % of GDP By type of spending By level of government Long-term care
Health care
Pensions (AHV/IV)
Education
25 20
15
15
10
10
5
5
0
0
2013
2030
2045
Communes Social security
Cantons Confederation 9 10 11 12 13 14 15
2013
2030
Source: Federal Department of Finance (2016), Report on the Long-term Sustainability of Public Finances in Switzerland.
2045
12
The current account surplus is large
CHE
NLD
DEU
DNK
ISL
KOR
HUN
SVN
NOR
LUX
SWE
JPN
ISR
IRL
ITA
ESP
EST
AUT
LVA
PRT
% of GDP 10 9 8 7 6 5 4 3 2 1 0
CZE
Current account balance in OECD countries with a surplus, 2016
Source: OECD, OECD Economic Outlook 102 database, preliminary version. 13
High household saving is contributing to the large current account surplus Net saving and investment balances in selected countries with a current account surplus % of GDP
DEU
NLD
Net investment
Net investment
SWE
Net saving
Corporations
Net saving
Net investment
Net saving
Net investment
Net investment
DNK
General government
Net saving
Households
Net saving
16 14 12 10 8 6 4 2 0 -2
CHE
Source: OECD, Annual National Accounts database; Federal Statistical Office; OECD calculations.
14
Key fiscal and financial recommendations To support growth: Avoid persistent budget underspending through better co-ordinating procedures at federal and sub-national levels. Reduce agricultural subsidies and pursue efficiency gains in public spending to free up funds for measures that enhance growth and inclusiveness.
To reduce risks: Eliminate remaining explicit cantonal government guarantees to their public banks. Establish a formal framework for setting mortgage lending limits that takes affordability into account and is enforced on a comply-or-explain basis. 15
Key fiscal and financial recommendations (cont.) To address ageing-related challenges: Fix the retirement age at 65 for both sexes, and thereafter link it to life expectancy. Increase financial incentives to work longer before retirement. Promote programmes to lengthen healthy working lives, including preventative health programmes. Promote lifelong training, career planning and tailored job-search assistance to enhance workers’ resilience to change.
16
Boosting productivity for long-term growth
17
Productivity is high, but sluggish Average annual rate of trend labour productivity growth over 2006-16 % 3.5 3.0 2.5
2.0 1.5 1.0
0.5
3 4 5 6 7 8 9 10 11 12 13 14 15
0.0
-1.0
GRC ITA LUX FIN AUT CHE MEX DEU GBR JPN BEL NLD NZL DNK FRA ESP CAN ISR PRT ISL NOR SWE HUN AUS USA SVN CZE EST IRL KOR SVK TUR POL CHL
-0.5
Source: OECD, OECD Economic Outlook 102 database, preliminary version.
18
Switzerland is a leader in R&D and innovation Innovation performance indicator EU average level in 2010 = 100 180 160
Moderate innovators
Strong innovators
Innovation leaders
140 120 100 80 60
40 0
POL LVA TUR HUN GRC SVK ITA ESP EST PRT CZE SVN EU28 FRA ISR IRL NOR BEL LUX AUT ISL DEU GBR NLD FIN DNK SWE CHE
20
Source: European Commission (2017), European Innovation Scoreboard 2017. 19
The productivity of frontier firms has diverged from the rest Labour productivity, 2002 = 100 250 Most productive 1% of firms
Other firms
200 150
100 50 0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Note: Markers denote survey years. Labour productivity is calculated as value added per employee. Source: OECD calculations based on KOF, Swiss Innovation Survey.
20
The administrative burden is heavy Share of firms that discontinued their business citing bureaucracy as the main cause, % 60 50 40
30 20 10 0
KOR NLD AUS NOR DEU PRT ESP GBR ISR BEL FIN USA CAN SWE ITA CHE
Source: Global Entrepreneurship Monitor 2015/2016, Report on Switzerland. 21
Regulatory barriers to competition are high Product market regulation indicator 3.5 3.0
Least restrictive countries¹
Euro area
Switzerland
Restrictiveness
2.5
2.0 1.5 1.0 0.5 0.0
Professional services
Retail distribution
Transport
Network sectors Communication overall²
Energy
1. ”Least restrictive countries” is the average of the three countries with the lowest score in each sector. Scores range from 0 to 6 and increase with restrictiveness. 2. Network sectors overall is the unweighted average of transport, communication and energy.
Source: OECD, Product Market Regulation database.
22
Barriers to trade inhibit competition and productivity Services Trade Restrictiveness Index, for sectors with largest gaps 0.50 Switzerland
OECD
0.30 0.20
Courier
Broadcasting
Computer
Construction
Commercial banking
Motion pictures
Engineering
Logistics freight forwarding
0.00
Sound recording
0.10
Logistics storage and warehouse
Restrictiveness
0.40
Source: OECD, Services Trade Restrictiveness Index database. 23
Most women work part-time Part-time employment as a share of total % 80
70 60
Men
Women
50 40 30 20 0
HUN SVK CZE POL LVA GRC PRT SVN EST TUR FIN ESP USA CAN CHL FRA SWE ISR ITA MEX ISL NZL IRL LUX DNK JPN NOR BEL GBR AUS DEU AUT CHE NLD
10
Source: OECD, Labour Force Statistics database. 24
Key recommendations to boost productivity To improve framework conditions: Increase private ownership and remove barriers to entry in energy, telecommunications and transport. Remove representatives of economic associations from the competition authority’s board. Lower restrictions on trade in both goods and services, notably in agricultural products. Complete the negotiations for free-trade agreements that are underway. Finalise the virtual one-stop shop for administrative matters. Establish cantonal physical contact points to improve delivery of advisory services and public financing programmes. 25
Key recommendations to boost productivity (cont.) To better use skills of women and immigrants: Increase childcare affordability. Shift income taxation to individual rather than household incomes, or implement equivalent measures. Facilitate high-skilled immigration from non-EU countries to meet labour market needs.
26
Ensuring a dynamic skills training and life-long learning system
27
The education and training system is successful Youth not in employment, education or training % of 18-24 year-olds 35 30
25 20 15 10
0
ISL NLD DNK LUX CHE NOR DEU SWE SVN AUS EST AUT LTU BEL NZL CAN GBR USA SVK OECD HUN LVA FIN ISR POL PRT IRL FRA CHL MEX ESP GRC ITA TUR
5
Source: OECD (2017), Education at a Glance 2017. 28
Immigration has helped to meet the rising demand for skilled workers Contribution to working-age population growth by education and nationality, % points 12
Swiss citizens
10
Other nationalities 1997-2007
8
2007-2017
6 4 2 0 -2 -4
Lower secondary
Upper secondary
Tertiary
Lower secondary
Upper secondary
Tertiary
Source: Federal Statistical Office. 29
3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0
1.
Source: Federal Statistical Office. IT & other information servicesยน
IT & communications
Finance & insurance
Average since 2009
Manufacture of other specialised machinery
Manufacturing of computers & watches
Real estate & scientific services
Trade and repair of motor vehicles
Manufacture of metal products
Accommodation & food services
Total economy
High-skill vacancy rates are rising Sectors with above-average vacancy rates, % Year to 2017Q2
IT and Other Information Services is a subsector of IT and Communications.
30
Tertiary education should further expand Entry rates for bachelor’s degree or equivalent¹ %
80 70 60 50 40 30
20 0
LUX HUN AUT MEX ITA SWE PRT ESP DEU ISR FIN SVK CZE GBR TUR CHE NLD NZL EST CHL ISL NOR BEL DNK SVN IRL AUS
10
1. First-time entry rates, excluding international students. First-time entry rates indicate the share of young adults expected to enter that type of tertiary education programme during their lifetime.
Source: OECD (2017), Education at a Glance 2017.
31
Participation in life-long learning is high 25-64 year-olds participating in education and training in the preceding four weeks, 2016 % 35 30 25
20 15 10
0
SVK POL GRC TUR HUN IRL LVA BEL ITA DEU CZE ESP PRT EU28 EA SVN GBR EST AUT LUX NLD FRA NOR ISL FIN DNK SWE CHE
5
Source: Eurostat, Labour Force Survey 2016. 32
Participation in life-long learning is not broad-based Difference in participation rates of those with high and low levels of education, 20161 % pts 35 30
25 20 15 10
0 1.
GRC IRL POL BEL HUN LVA DEU TUR NOR ESP CZE EU28 GBR EA DNK PRT ITA NLD EST LUX SVN ISL SWE FIN AUT FRA CHE
5
25-64 year-olds participating in education and training in the preceding four weeks. Difference in participation rate of those with tertiary education and less than upper secondary school.
Source: Eurostat, Labour Force Survey 2016.
33
Key recommendations for a dynamic skills training and life-long learning system Collect more detailed data on skills to facilitate adjustments to education in response to changing labour market needs. Enhance the effectiveness of pathways between vocational and general streams by increasing the academic component of the vocational curriculum and vice-versa. Encourage small firms to participate more in apprenticeships by promoting sharing of apprenticeship places between firms and training centres that undertake part of the training. Strengthen linkages between the vocational education and training system and employer associations in school-based vocational training. Use subsidies to encourage participation in continuing education and training for groups with low participation rates.
34
For more information Disclaimers: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
http://www.oecd.org/eco/surveys/economic-survey-switzerland.htm
@OECDeconomy @OECD
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