Switzerland 2017 OECD Economic Survey boosting productivity and meeting skills needs

1. http://www.oecd.org/eco/surveys/economic-survey-switzerland.htm
2017 OECD ECONOMIC
SURVEY OF SWITZERLAND
Boosting productivity and meeting skills needs
Bern, 14 November 2017
@OECD
@OECDeconomy

2. 2
Living standards are high
OECD Better Life Index, 2017
Index scale, 0 (lowest) to 10 (best)
Note: For each dimension indicators are normalised and averaged.
Source: OECD, Better Life Index.
0
2
4
6
8
10
Income and wealth
Jobs and earnings
Housing
Work and life balance
Health status
Education and skills
Social connections
Environmental quality
Personal security
Subjective well-being
Switzerland
OECD

3. 3
The economy is growing but only slowly
GDP growth
Source: SECO.
-4
-2
0
2
4
6
2006 2008 2010 2012 2014 2016
% y-o-y

4. 4
Employment is high
Source: OECD, Labour Force Statistics database.
Employment-to-population ratio
50
55
60
65
70
75
80
85
2010 2011 2012 2013 2014 2015 2016 2017
Switzerland OECD%

5. 5
Productivity has stalled
Source: OECD, OECD Economic Outlook 102 database, preliminary version.
Trend labour productivity growth
2000 2002 2004 2006 2008 2010 2012 2014 2016
0.0
0.5
1.0
1.5
2.0
Switzerland OECD
%

6. -30
-20
-10
0
10
20
30
40
50
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
High skill Middle skill Low skill
% pts
6
The demand for skilled workers has been
strong
Contributions to changes in total employment growth over 2000-16
Note: Countries are ordered by the contribution of high-skill employment
Source: Eurostat.

7. Entrenching the expansion
7

8. 8
Fiscal policy is sound and public debt low
Gross general government debt, % of GDP
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.
0
20
40
60
80
100
120
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Switzerland OECD

9. 9
Unconventional monetary policy has
supported growth
Source: Swiss National Bank; Thomson Reuters Datastream; OECD, OECD
Economic Outlook 102 database, preliminary version.
Interest rates SNB’s foreign exchange reserves
0
25
50
75
100
125
150
175
200
225
2006 2008 2010 2012 2014 2016
% of imports
CHF/EUR
ceiling
-2
-1
0
1
2
3
4
2006 2008 2010 2012 2014 2016
SNB target range
3-month, CHF LIBOR
%

10. 10
Low interest rates increase risks
Source: OECD, House Price database.
House prices, 2010 = 100
80
90
100
110
120
130
2006 2008 2010 2012 2014 2016
Ratio to consumer prices
Ratio to average household income

11. 11
Household credit is high
Source: OECD, Vulnerability Indicators database.
Household credit, % of GDP, 2017 Q1
0
20
40
60
80
100
120
140
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

12. 12
Age-related public spending will become
a fiscal burden
Long-term projections for age-related spending, % of GDP
Source: Federal Department of Finance (2016), Report on the Long-term
Sustainability of Public Finances in Switzerland.
9
10
11
12
13
14
15
0
5
10
15
20
25
2013 2030 2045
By type of spending
Long-term care Health care
Pensions (AHV/IV) Education
0
5
10
15
20
25
2013 2030 2045
By level of government
Communes Cantons
Social security Confederation

13. 13
The current account surplus is large
Current account balance in OECD countries with a surplus, 2016
Source: OECD, OECD Economic Outlook 102 database, preliminary version.
0
1
2
3
4
5
6
7
8
9
10
PRT
CZE
LVA
AUT
EST
ESP
ITA
IRL
ISR
JPN
SWE
LUX
NOR
SVN
HUN
KOR
ISL
DNK
DEU
NLD
CHE
% of GDP

14. 14
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
Source: OECD, Annual National Accounts database; Federal Statistical Office;
OECD calculations.
-2
0
2
4
6
8
10
12
14
16
Netsaving
Netinvestment
Netsaving
Netinvestment
Netsaving
Netinvestment
Netsaving
Netinvestment
Netsaving
Netinvestment
DNK DEU NLD SWE CHE
Households General government Corporations

15.  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

16.  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
Key fiscal and financial recommendations
(cont.)

17. Boosting productivity for
long-term growth
17

18. 3
4
5
6
7
8
9
10
11
12
13
14
15
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
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
%
18
Productivity is high, but sluggish
Average annual rate of trend labour productivity growth over 2006-16
Source: OECD, OECD Economic Outlook 102 database, preliminary version.

19. 19
Switzerland is a leader in R&D and
innovation
Innovation performance indicator
EU average level in 2010 = 100
Source: European Commission (2017), European Innovation Scoreboard 2017.
0
20
40
60
80
100
120
140
160
180
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
Moderate innovators Strong innovators Innovation leaders

20. 20
The productivity of frontier firms has
diverged from the rest
Labour productivity, 2002 = 100
Note: Markers denote survey years. Labour productivity is calculated as value added per employee.
Source: OECD calculations based on KOF, Swiss Innovation Survey.
0
50
100
150
200
250
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Most productive 1% of firms Other firms

21. 21
The administrative burden is heavy
Share of firms that discontinued their business citing bureaucracy as the
main cause, %
Source: Global Entrepreneurship Monitor 2015/2016, Report on Switzerland.
0
10
20
30
40
50
60
KOR NLD AUS NOR DEU PRT ESP GBR ISR BEL FIN USA CAN SWE ITA CHE

22. 22
Regulatory barriers to competition are
high
Product market regulation indicator
Restrictiveness
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.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Professional
services
Retail
distribution
Transport Network sectors
overall²
Communication Energy
Least restrictive countries¹ Euro area Switzerland

23. 23
Barriers to trade inhibit competition and
productivity
Services Trade Restrictiveness Index, for sectors with largest gaps
Restrictiveness
Source: OECD, Services Trade Restrictiveness Index database.
0.00
0.10
0.20
0.30
0.40
0.50
Logisticsstorageand
warehouse
Soundrecording
Logisticsfreight
forwarding
Engineering
Motionpictures
Commercialbanking
Construction
Computer
Broadcasting
Courier
Switzerland OECD

24. 24
Most women work part-time
Part-time employment as a share of total
Source: OECD, Labour Force Statistics database.
0
10
20
30
40
50
60
70
80
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
Men Women
%

25.  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

26.  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
Key recommendations to boost
productivity (cont.)

27. Ensuring a dynamic skills
training and life-long
learning system
27

28. 28
The education and training system is
successful
Youth not in employment, education or training
% of 18-24 year-olds
Source: OECD (2017), Education at a Glance 2017.
0
5
10
15
20
25
30
35
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

29. 29
Immigration has helped to meet the rising
demand for skilled workers
Contribution to working-age population growth by education and nationality, % points
Source: Federal Statistical Office.
-4
-2
0
2
4
6
8
10
12
Lower
secondary
Upper
secondary
Tertiary Lower
secondary
Upper
secondary
Tertiary
1997-2007 2007-2017
Swiss citizens Other nationalities

30. 30
High-skill vacancy rates are rising
Sectors with above-average vacancy rates, %
1. IT and Other Information Services is a subsector of IT and Communications.
Source: Federal Statistical Office.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Totaleconomy
Accommodation&food
services
Manufactureofmetal
products
Tradeandrepairof
motorvehicles
Realestate&scientific
services
Manufacturingof
computers&watches
Manufactureofother
specialisedmachinery
Finance&insurance
IT&communications
IT&otherinformation
services¹
Average since 2009 Year to 2017Q2

31. 31
Tertiary education should further expand
Entry rates for bachelor’s degree or equivalent¹
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.
0
10
20
30
40
50
60
70
80
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
%

32. 32
Participation in life-long learning is high
25-64 year-olds participating in education and training in the preceding four weeks, 2016
Source: Eurostat, Labour Force Survey 2016.
0
5
10
15
20
25
30
35
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
%

33. 33
Participation in life-long learning is not
broad-based
Difference in participation rates of those with high and low levels of education, 20161
1. 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.
0
5
10
15
20
25
30
35
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
% pts

34.  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
Key recommendations for a dynamic skills
training and life-long learning system

35. For more information
Disclaimers:
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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.
35
http://www.oecd.org/eco/surveys/economic-survey-switzerland.htm
@OECDeconomy
@OECD