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Home , Concordance system, Swiss Alps

1. – facts and figures.

Nestled between the and the Jura , Swit- the two largest of which are shared with its neighbors: for example zerland is a communications and transport center between (Lac Leman) in the South-West with , while northern and southern Europe where European cultures and in the North-East is shared with Germany and languages meet. No other country offers such great variety in . so small an area. The Swiss economy’s high degree of devel- opment exists thanks to its liberal economic system, its po- litical stability and its close integration with the economies of An overview of Switzerland other countries. The state creates the necessary framework and only intervenes when this serves the interests of society www.swissworld.org at large. Its high quality education system and outstanding Languages: German, English, French, Italian, Spanish, Russian, infrastructure form the basis for the competitiveness of the Chinese, Japanese Swiss economy.

1.1 Geography. Fig. 2: Map showing the location of Switzerland The total area of Switzerland is 41,285 km2. Characterized by and hill ranges, rivers and lakes, Switzerland offers a wide variety of in a small area – 220 km from North to South, and 348 km from West to East. The Swiss Alps, the hilly Mittelland region, which stretches from Lake Constance to Lake Geneva, and the Swiss Jura, a long range of fold mountains, form the three main geographical areas of the country. Due to its central location, Switzerland is a place where different cultures intersect and, at the same time, a communications and transportation hub between northern and southern Europe.

Six percent of Europe’s fresh water supply is stored in the Swiss Alps, which is why Switzerland is also known as the «reservoir of Europe». Switzerland has numerous rivers and over 1,500 lakes,

Handbook for Investors 2012 9 1.2 Climate. The proximity of politics to the business community and citizens is achieved through the federal structure, in which many public Switzerland’s climate is strongly affected by the nearby Atlantic functions are executed at cantonal or municipal level. These in Ocean. The prevailing winds from the West bring damp, mild sea turn have a certain amount of autonomy and can thus implement air over to Switzerland. Cooling in the summer and warming in solutions which are designed to meet local requirements. the winter, they also bring sufficient precipitation all year round 1.3.2 Separation of powers at federal level in most areas. The Alps act as a clear climatic divider between northern and southern Switzerland; as its weather comes prima- Online information of the federation, cantons and munici- rily from the direction of the Mediterranean, the South enjoys palities much milder winters than the North. Temperatures in Switzer- land depend primarily on height above sea level. In the northern www.ch.ch lowlands, the average temperature in January is around 1 °C, and Languages: German, English, French, Italian in July around 17 °C, whereas on the southern plateau the cor- responding average temperatures are 2 °C – 3 °C higher. In accordance with the federal constitution, the are the «sovereigns» of the country – in other words, the highest The weather and climate in Switzerland political body, responsible for electing parliament. Every citizen with voting rights also has the right to participate in the shaping www.meteoschweiz.ch of the constitution and the legal system by means of Languages: German, English, French, Italian or initiative.

The Federal Assembly or parliament consists of two chambers: the National Council, representing the people with 200 members, 1.3 Political system. and the Council of States, representing the 26 cantons with a total of 46 members. The National Council is elected directly by 1.3.1 Federal structure the people every four years; each canton forms one constituency. Switzerland is a nation created by its own will and formed from Cantonal representation is based on population, although each several ethnic groups with different languages and religions. canton is entitled to at least one representative. The modern Swiss state was founded in 1848. Before this time, Switzerland consisted of a loose association of independent can- The federal government is known as the Federal Council, and it tons. The abbreviation CH for Switzerland, as found in Internet operates as a collegial body. Each of its seven members, who addresses, for example, dates back to the official Latin name are elected by the Federal Assembly comprising the members of «Confoederatio Helvetica». both chambers, heads one of the seven departments (ministries). The presidency of the government rotates between the Federal The state has a federal structure and is divided into three political Councilors on an annual basis. levels: municipal, cantonal and federal. The federal government is responsible for everything assigned to it under the constitu- The highest jurisdiction in Switzerland is enforced by the Federal tion, such as foreign and security policy, customs and excise, Supreme Court in , the Federal Insurance Court in Lu- the monetary system, national legislation and defense. By global cerne, the Federal Criminal Court in and the Federal Ad- comparison, the 26 cantons have a high degree of control. ministrative Court in Berne (from the middle of 2012 in St. Gallen). Healthcare, education and culture are among the political areas in which they have a great deal of influence. As small and flexible political entities, the cantons also compete with each other in various areas.

10 Handbook for Investors 2012 Fig. 3: The political system in Switzerland

Legend Voters Instruments Swiss citizens from the age of 18 Elections

Higher Courts Parliament Federal Council Federal Court, Criminal Court and National Council (200 Members) and (Government) Administration Court Council of States (46 Members) 7 Members

Source: Swissworld.org/Präsenz Schweiz

1.3.3 and the concordance system 1.3.4 Political stability and social harmony There is hardly any other country where the electorate has such Studies on personal security and prosperity, social coherence and wide-ranging rights as it does in Switzerland. Citizens can request political stability have shown that Switzerland regularly leads all that a change or addition be made to the constitution by means of international comparisons in this regard. The Swiss attach great an initiative, or they may decide on parliamentary resolutions after importance to their independence. the event by means of a referendum. Switzerland’s long tradition of democracy, its relatively small size and population, high levels Despite the close proximity of different cultures and language of literacy and a wide variety of media are all factors which are key groups, domestic stability is considerable. There is a high degree to the functioning of this special form of government. As a rule, the of tolerance and personal freedom. The relationship between electorate is called upon to vote on federal bills four times a year. employers and employees, or their representatives is generally co- operative. Both sides are committed to resolving issues by means A unique feature of Swiss politics is the concordance system. For of negotiations. Thanks to this social harmony, the general level of decades, the most important political parties have put forward the prosperity in Switzerland has been rising for decades. seven Federal Councillors in a form of coalition. Equally, not only those who win the elections have a seat in parliament; all parties are represented proportionally by number of votes. Resolutions are reached with varying majorities, depending on respective interests. Thus, as many groups as possible have the opportunity to express their opinions on a topic and contribute to achieving a broad- based compromise. This striving for consensus on the basis of the principles of collegiality and concordance contributes significantly to Switzerland’s political stability.

Handbook for Investors 2012 11 Fig. 4: Political stability, 2011 1.4 Public finances. Political orientation stable = 10, unstable = 0 1 Norway 9.49 Switzerland lives up to its reputation as a stable country. The 2 Switzerland 9.49 rate of inflation lies well below that in the EU states and the most 3 Chile 9.48 important industrialized nations. This is also true for unemploy- 4 New Zealand 9.41 ment, with the unemployment rate regularly below four percent. 5 Finland 9.18 Interest rates in Switzerland are also traditionally low, while the 6 Germany 9.11 savings rate is high (national saving as a percentage of GDP in 10 Denmark 8.94 2009: 30.8 %). 11 Luxemburg 8.92 14 Singapore 8.50 The public spending ratio measures expenditure by public admin- 15 USA 8.47 istrations as a percentage of the gross domestic product (GDP). It 16 Netherlands 8.33 includes spending by public authorities and the mandatory social 17 Great Britain 8.25 insurances. In Switzerland, this ratio is at 34.6 % (2009). Most 18 Brazil 8.17 European countries have a ratio of well above 50 %. 19 France 8.09 20 Hong Kong SAR 7.57 The country is in a healthy financial situation. This applies to the 22 China 7.15 financial budget of the central state, the federal government as 29 India 6.71 well as the cantons and local authorities. The surplus ratio in 35 Ireland 6.33 2010 was 0.5 % at state level. 48 Russia 4.90 51 4.58 National debt is also below that of most countries in Europe. Total 54 Belgium 4.03 public sector debt amounts to 39 % of GDP (2010). Compared to 55 Japan 3.89 the average national debt ratio of EU countries (78.9 %), Swit- Source: IMD World Competitiveness Online 2011 zerland’s ratio is relatively low. Most European countries have much higher levels (2009: Italy 115.9 %, France 77.7 %, Germany 73.2 %). Swiss Federal Authorities

www.admin.ch Swiss Federal Finance Administration Languages: German, English, French, Italian www.efv.admin.ch Languages: German, French, Italian

12 Handbook for Investors 2012 1.5 Neutrality. There are four official national languages: German (64 %), French (20 %), Italian (7 %) and Romansh (1 %). In northern, eastern and In terms of foreign policy, Switzerland acts in accordance with the central Switzerland, the prevailing language is German, whereby principle of neutrality. However, this does not in any way mean the (Swiss) dialect is used in everyday conversation. French is that it is an outsider on the world stage: Switzerland has been a spoken in Romandie, in the western part of the country, as well member of the UN since 2002 and also plays an important role in as some parts of the Mittelland; Italian is spoken in the South the UN’s specialized organizations. Furthermore, Switzerland has (), and Romansh in certain parts of the canton of . always played and still plays an active part in important economic organizations, such as the European Free Trade Association 22 % of the population is of foreign nationality. Although in the (EFTA). past migration to Switzerland primarily occurred to preserve those who were less socially able, since the introduction of agree- For more than 500 years, Swiss politics have been dominated ments with the EU/EFTA enabling the free movement of persons, by the words of St Nicholas of Flüe (1417 – 1487): «Don’t get the country has increasingly been attracting foreign nationals involved in other people’s affairs.» Switzerland has been neutral from higher social classes, particularly highly-qualified staff from since 1515, which was also acknowledged by the great European Germany. powers after the Napoleonic Wars in 1815. No other country in Europe can look back on such a long tradition of neutrality. Since the end of the Cold War, Switzerland has relaxed its definition of Swiss Federal Statistical Office neutrality. As the role of NATO changed and it started to perform more peacekeeping missions, Switzerland signed up to the NATO www.statistik.admin.ch > Topics > Population Partnership for Peace in 1996. Thanks to its neutrality, Switzer- Languages: German, English, French, Italian land often acts as a mediator. In some cases, Swiss diplomats also represent the interests of countries which have no official contact with each other. Switzerland offers its neutral territory as a location for meetings and conferences of particular political 1.7 Cosmopolitan and international delicacy. outlook.

1.7.1 Languages and cultural heritage Federal Department of Foreign Affairs Most Swiss nationals speak at least one foreign language, which they learn in elementary school. English is also increasingly www.eda.admin.ch included in the curriculum at an early stage. Due to the coun- Languages: German, English, French, Italian try’s openness – including in terms of immigration – the range of languages actually spoken and used for communication is wide. In international business, English is very much in evidence alongside the respective national languages, and is used by many managers. 1.6 Population. The co-existence of various language groups and different reli- The permanent resident population of Switzerland is around gions, and the large proportion of foreign residents result in a high 8 million. The proportion of those aged between 20 and 39 is degree of openness and tolerance. This makes it easier for foreign 26.6 %, with 16.8 % aged 65 and over, and 21.0 % aged under companies to conduct business from Switzerland. 20. Life expectancy is one of the highest in the world: 79.4 years for men and 84.4 years for women. Residential areas remain rela- Although Europe is Switzerland’s most important business partner, tively decentralized and therefore not overly crowded: more than it also has very close relationships with other markets, particularly two-thirds of the population lives in the five largest cities (Zurich, the US and Asia. The financial centers of Zurich and Geneva in Geneva, Basel, Berne, Lausanne) and their greater metropolitan particular are melting pots of diverse cultures. In terms of culture, areas. too, Switzerland has a tradition of tolerance and openness. Its neu-

Handbook for Investors 2012 13 trality means it has access to all countries, and it also welcomes 1.7.2 Direct investments and Swiss corporations abroad reciprocal contact. This diversity has made it easy for both global Switzerland’s exposure to global markets is among the strongest companies and numerous international organizations to settle in of any country. In 2009, direct investments abroad totalled Switzerland. CHF 866 billion, or 164 % of GDP. In comparison, in the Nether- lands, direct investments abroad in the same year amounted to 107 % and in Ireland 85 %. Swiss companies with direct invest- ments abroad employ around 4.2 million staff in their foreign subsidiaries and operating units, and they are also important employers in Switzerland.

Fig. 5: The most cosmopolitan economies Individual rankings Degree of infor- Degree of inter- Economic integration Overall ranking mation/access to national political of the economy information cooperation Belgium 1 6 4 3 Austria 2 n.a. 2 4 Netherlands 3 4 5 7 Switzerland 4 22 1 8 Sweden 5 n.a. n.a 5 Denmark 6 12 6 13 Ireland 11 2 23 30 France 13 34 10 1 Luxemburg 14 3 18 54 Singapore 17 n.a. 21 77 Germany 18 41 8 12 Italy 22 24 2 Great Britain 24 32 7 85 USA 27 57 25 14 Russia 42 92 39 42 Japan 45 102 46 29 China 63 97 82 38 Brazil 75 91 124 19 India 111 122 247 20

Source: KOF ETH Zurich: The Globalization Index 2010

14 Handbook for Investors 2012 1.7.3 International organizations as a platform for many organizations, including the UN with its Because of its political independence and conscious commit- headquarters in Geneva. Around 250 NGOs, who advise the UN ment, even for international understanding, Switzerland serves also have their headquarters in Switzerland.

Fig. 6: International organizations and important NGOs with their headquarters in Switzerland AITIC Agency for International Trade Information and Cooperation Geneva www.acici.org/ ACWL Advisory Centre on WTO Law Geneva www.acwl.ch International Bureau of Education/United Nation Educational, Scientific and IBE/UNESCO Geneva www.ibe.unesco.org Cultural Organization ITCB International Textiles and Clothing Bureau Geneva BIS Bank for International Settlements Basel www.bis.org CERN European Organization for Nuclear Research Geneva www.cern.ch Cour OSCE Court of Conciliation and Arbitration within the OSCE Geneva www.osce.org/cca EBU European Broadcasting Union Geneva www.ebu.ch EFTA European Free Trade Association Geneva www.efta.int FIFA World Football Association Zurich www.fifa.com FIS International Ski Federation www.fis-ski.com GFATM The Global Fund to Fight AIDS, tuberculosis and malaria Geneva www.theglobalfund.org IFRC International Federation of Red Cross and Red Crescent Societies Geneva www.ifrc.org IIHF International Ice Hockey Federation Zurich www.iihf.com IKRK International Committee of the Red Cross Geneva www.icrc.org ILO International Labour Organization Geneva www.ilo.org IOC International Olympic Committee Lausanne www.olympic.org IOM International Organization for Migration Geneva www.iom.int IPU Inter-Parliamentary Union Geneva www.ipu.org IRU International Road Transport Union Geneva www.iru.org ISO International Organization for Standardization Geneva www.iso.org ISSI International Space Science Institute Berne www.issibern.ch ITU International Telecommunication Union Geneva www.itu.int OTIF Intergovernmental Organization for International Carriage by Rail Berne www.otif.org UCI International Cycling Union www.uci.ch UEFA European Football Association Nyon www.uefa.com UNHCR Office of the United Nations High Commissioner for Refugees Geneva www.unhcr.org UNOG The United Nations Office at Geneva Geneva www.onug.ch UPOV International Union for the Protection of New Varieties of Plants Geneva www.upov.int UPU Universal Postal Union Berne www.upu.int WADA World Anti-Doping Agency Lausanne www.wada-ama.org WHO World Health Organization Geneva www.who.int WIPO World Intellectual Property Organization Geneva www.wipo.int WMO World Meteorological Organization Geneva www.wmo.int WTO World Trade Organization Geneva www.wto.org WWF World Wide Fund for Nature Gland www.wwf.org

Source: Federal Department of Foreign Affairs (FDFA), own research

Handbook for Investors 2012 15 1.8 Switzerland in figures.

Fig. 7: Switzerland in figures General Age expectancy (years) Currency (CHF) Men 79.8 Time zone CET = UTC + 1 Women 84.4 International direct dialling code +41 Religion National day August 1st Roman Catholic 41.8 % Economy1 Evangelical Reformed 35.3 % GDP (nominal) in billion CHF 550.6 Other 22.9 % Per capita income in CHF 58,844 Languages GDP growth 2.7% German 63.7 % Rate of inflation 0.7% French 20.4 % Unemployment rate 3.9% Italian 6.5 %

Imports in billion CHF (goods and services) 232.4 Romansh 0.5 % Exports in billion CHF (goods and services) 294.9 Other 9.0 % Budget surplus/deficit in % of GDP + 0.5 Geography Debt ratio in % of GDP 39.0 Area in km2 41,285 Fiscal quota in % of GDP 29.7 Borders in km 1,881 Direct investment in million CHF Numbers of lakes 1,484 Direct investments abroad 866,517 Highest mountain (in m): , 4,634 Direct investments in Switzerland 512,789 Largest glacier: Aletsch, Valais 117 km2/24 km Capital exports abroad 36,182 Largest lake (in km2): Lake Geneva 582 Capital imports into Switzerland 29,341 Second largest lake (in km2): Lake Constance 539 Population1 Capital city Berne Permanent resident population in tsds. 7,785.8 Largest metropolitan areas, population in thousands Population density per km2 188.6 Zurich 1,170.2 Age groups as a percentage Geneva 521.4 0 – 19 21.0 Basel 498.0 20 – 39 26.6 Berne 350.8 40 – 64 35.5 Lausanne 330.9 65 – 79 12.0 Politics

80 and over 4.8 Form of government Parlamentary federal state since Percentage of foreign nationals 22.0 1848, direct democracy Average number of children per woman 1.5 Cantons 20 full cantons, 6 half cantons Municipalities 2,584

Sources: Swiss Federal Statistical Office; (SNB); Federal Finance Administration; www.myswitzerland.com 1 Figures about the economy and population are taken from 2010 (some from 2009)

16 Handbook for Investors 2012