Improve access and equity in education. Skills shortages, low enrolment in tertiary education and weak outcomes of pupils from disadvantaged socio-economic backgrounds (especially migrants) limit growth in the long term.
Actions taken: From 2018, pre-apprenticeship integration training is offered to about 1000 migrants per year. Another new programme offers subsidies to companies that provide basic skills training; it aims to improve access to training for low-skilled and older workers.
Recommendations: Use subsidies to encourage participation in continuing education and training for groups with low participation rates. Increase public spending on early childhood education and care, especially for children from disadvantaged socio-economic backgrounds (including migrants). Improve access to tertiary education for students from lower socio-economic and immigrant backgrounds through special financial support (e.g. means-tested grants).
Reduce producer support to agriculture. Producer support to agriculture is high and multiform, with adverse effects on productivity, price levels, trade negotiations, the budget and the environment.
Actions taken: No action taken. In November 2018, the government launched consultations on agricultural policy, which from 2022 would include better linking direct payments to environmental protection.
Recommendations: Reduce agricultural subsidies and make all direct payments conditional on environmental outcomes. Accelerate the pace of agricultural reform, including by moving entirely to direct payments to farmers, and by further integrating the whole food value chain in international trade. Consider introducing a tax on inputs (fertilisers) or outputs (methane from livestock) which are polluting. End farmers’ exemption from the mineral oil tax.
Reform the tax system. The prevalence of direct compared to indirect taxation impedes labour utilisation and reduces allocative efficiency and therefore productivity.
Actions taken: A corporate tax reform was adopted by Parliament in September 2018 and will be effective from 2020. The objective is to align Switzerland’s tax system with its international commitments. The reform will abolish special tax regimes and provide equal treatment of all resident companies, including additional incentives for R&D spending. The CO2 levy increased in 2018 by CHF 12 to CHF 96 per tonne of CO2.
Recommendations: Increase the standard value-added tax rate, remove VAT exemptions and lower personal income taxes, taking into account the federal structure of the tax system. Remove exemptions to the CO2 levy and other green taxes.
1Encourage longer working lives. Increasing public ageing-related spending may crowd out other expenditures. The current situation generates uncertainty for workers about their retirement incomes and working lives.
Recommendations: Set the retirement age at 65 for both genders and thereafter link it to life expectancy. Increase financial incentives to work longer before retirement. Promote healthy working lives, including via preventive health care programmes. Promote lifelong training, career planning and tailored job-search assistance to enhance workers’ resilience to change.
Facilitate full-time labour force participation of women. The cost of childcare, dissuasive second-earner taxation, weak corporate culture of gender diversity and a wage gap contribute to women’s high incidence of part-time work.
Actions taken: In June 2017, Parliament granted an additional CHF 100 million over the next five years for subsidies to reduce childcare costs and to restructure childcare services to meet parents’ needs. In 2018 it extended a federal programme providing additional childcare places. The Parliament will vote on a proposal to increase the federal income tax allowance for child expenses from CHF 10 000 to 25 000 per year. In 2018, Parliament passed legislation introducing targets for the share of female board members of large listed companies, which will be phased in over 5‑10 years and subject to a comply-or-explain requirement.
Recommendations: Further reduce childcare costs to improve access to affordable childcare by amending regulations to increase the range of price-quality choices available and expanding public spending on childcare in a targeted way. Shift income taxation from joint to individual income taxation, or implement equivalent measures. Create paternity leave, and consecutive parental leave to be shared between fathers and mothers.
