Bureaucracy jeopardizes investment in Switzerland

The first nationwide bureaucracy monitor, conducted by gfs.bern on behalf of economiesuisse, highlights just how urgent the need for action is. The survey included 1,527 companies from all language regions and of all sizes. The representative survey paints a clear picture:

• The regulatory burden is heavy: 67 percent of companies rate the administrative burden as high.
• Bureaucracy has increased: 64 percent of the companies surveyed note that bureaucracy has continued to increase over the past five years. Companies report cumbersome procedures, duplicate data requests, and differing requirements from various authorities. Bureaucracy ties up time and human resources that are then lacking for the actual core business.
• Investments are being scaled back: Three out of ten companies (30 percent) state that they have postponed, reduced, or completely abandoned business projects and investments due to administrative requirements. This primarily affects the development of new products and services, investments, and the training of apprentices. As a result, the very momentum that ensures Switzerland’s prosperity and competitiveness is being slowed.

The fact that companies are holding back on and reducing investments in Switzerland must serve as a wake-up call for the country. “The growing regulatory burden and the associated bureaucracy are home-grown problems. We urgently need to take countermeasures here. Companies need more entrepreneurial leeway again. This is the only way to secure prosperity and jobs in our country,” says Silvan Wildhaber, President of economiesuisse, during a joint business press conference. Other countries are showing how it’s done: Scandinavian countries, in particular, are making their administrative processes significantly more efficient and digital. “We must measure ourselves against the best—and finally make progress in reducing unnecessary bureaucracy,” says Wildhaber.

The need for action is evident in many industries. “The export-oriented chemical and pharmaceutical industry needs risk-based, internationally compatible guidelines as well as efficient authorization and approval procedures. Bureaucracy is patient; innovation requires speed. When good ideas encounter lengthy and cumbersome procedures, Switzerland loses its valuable competitive edge,” says Annette Luther, President of scienceindustries and Vice President of economiesuisse.

The tech industry, too, is struggling with rising costs and more difficult access to key markets. “Companies in the tech industry are under pressure from two sides: margins are shrinking, and bureaucratic costs are rising. The funds absorbed by bureaucracy are not available for investments in the future. This is an unhealthy development,” says Martin Hirzel, President of Swissmem and Vice President of economiesuisse.

As a highly regulated sector, the insurance industry is particularly affected by complex regulatory requirements and administrative burdens. “A strong insurance industry needs a reliable regulatory framework. Consumer protection, stability, and competitiveness go hand in hand. That is why the competitiveness of the financial center should be enshrined as an equally important regulatory objective and consistently taken into account when new regulations are introduced. This will strengthen Switzerland’s position as an insurance and reinsurance hub in the long term,” says Stefan Mäder, President of the Swiss Insurance Association (SVV) and Vice President of economiesuisse.

The warning signs from Swiss companies must be taken seriously. Decisive action is needed in business location policy. From the business community’s perspective, the following economic policy priorities are key to systematically reducing bureaucracy:

• Fully and comprehensively digitize government processes: Digital processes must be simplified. A complete digitization of the interfaces between the business sector and the public administration is needed to eliminate unnecessary hurdles and disconnects. Access to reporting agencies must be fast, transparent, and digital for companies. In addition, standardized forms and interfaces are needed at all three levels of government. Switzerland, as a digital hub, has what it takes: expertise and leading digital companies.
• Create investment-friendly conditions: It is unacceptable for companies to forgo investing in Switzerland due to lengthy approval processes and onerous administrative requirements. Clear improvements are needed at all three levels of government—for example, in the area of building permits or in the standardization of procedures and processes for obtaining additional permits.
• Consistently simplifying existing legal requirements: There are now over 36,000 business obligations at the federal level alone. This makes it all the more urgent to simplify existing requirements. The guiding principle here should be that any given matter need only be regulated, reviewed, or reported once, if at all possible. The Business Relief Act provides an initial framework for this. The measures in the Federal Council’s “Competitiveness Package” must be consistently implemented. In addition, further innovative and practical measures (such as “one-stop shops”) are needed.
• Remove technical barriers to trade: The highly export-oriented economy needs access to sales markets that is as free of barriers as possible. Free trade agreements and the update of the Mutual Recognition Agreement (MRA) under the Bilateral Agreements III are concrete examples of how unnecessary bureaucracy can be avoided and existing barriers removed.
• The courage to do nothing (yet): All too often, the reflex is to regulate immediately when challenges arise. The regulatory burden is increasing sharply, particularly at the regulatory level. Regulation must once again be designed to be more risk-oriented, principle-based, and proportionate, rather than prescribing every detail. A “mindset change” is needed in politics and administration, coupled with structural measures that promote restraint in and oversight of regulation. In addition, regulatory impact assessments should be rethought—too often, they fail to accurately reflect the actual costs incurred in practice.