Economic Policy Reforms 2023

Switzerland

See more data for Switzerland on the related dashboard.

Product and labour markets functioning

Performance gaps

• Competition in certain domestic markets is hampered across cantonal borders. The administrative burden on start-ups is higher than in OECD top performers and resolving commercial disputes takes longer and is costlier than on average in the OECD.

• The merger control framework remains too permissive. Civil action against cartels is rare due to high complexity and short prescriptive periods. State involvement in the economy, notably in the network sectors, and the advantageous position of numerous state-owned enterprises reduces competition.

Recommendations

• Fully implement the Internal Market Act to ensure equal access to markets in all cantons.

• Reduce the administrative burden on start-ups. Introduce “silence is consent” licensing rules.

Digital transition

Performance gaps

• The share of Swiss adults with advanced IT-related skills is high. Raising digital skills further will be essential to foster stronger productivity growth and alleviate skills shortages.

• Participation in life-long learning is high overall, but significantly lower for low-skilled workers or those out of work. E-government services are improving but further digitalisation could reduce administrative burden.

Recommendations

• Better target skills training to low-income workers, thereby allowing them to benefit from the digital transformation.

• Subsidise employer-provided adult skills training, including IT.

• Expand the use of digital tools to enhance services and simplify procedures at all levels of government.

Inclusiveness, social protection, and ageing

Performance gaps

• The population is ageing rapidly. Pension replacement rates from the mandatory pension system are set to drop significantly.

• The gender income gap is high, in part due to high incidence of part-time employment among women. The tax and benefit systems combined with a high cost of childcare result in lower working hours and lower labour incomes for women.

Recommendations

• Link the retirement age to life expectancy.

• Expand the supply of childcare and provide targeted means-tested fee reductions, childcare benefits, or tax credits to improve affordability.

• Reduce disincentives to work for second earners, by moving from family based to individual-based taxation or through tax adjustments and slower withdrawal of benefits.

Climate transition

Performance gaps

• Switzerland prices its CO2-emissions at high rates, but various exemptions distort the link between market signals and the costs of environmental damage across sectors.

• The Swiss financial sector has a global outreach but is still heavily invested in oil and coal extraction and much less in renewable energy or CO2-neutral mobility, despite significant progress in recent years.

Recommendations

• Continue efforts to broaden the base of the carbon tax by reassessing exemptions and align pricing of CO2 emissions with international climate cost benchmarks.

• Continue increasing transparency in relation to climate footprint of financial portfolios.

Overall performance