Switzerland’s successful exporters are renowned worldwide. Its companies’ investments abroad are a key factor for economic growth and prosperity. But how does it work the other way around – is Switzerland a magnet for foreign companies?
Comparatively low taxes, social insurance contributions and its central geographic location are immense advantages, says Katarina Lif Burren, a board member of the Swiss-Swedish Chamber of Commerce and a partner and member of the executive committee at Kendris.
“Low taxes are one of several factors, but not the only one,” she says. “Switzerland is not somewhere manufacturers are going to locate production; it is too expensive. We are talking about very high-tech industries. The biggest challenge is to find the right employees. A good life-work balance and a high quality of life are the main things motivating people to settle in Switzerland. You have to have a unique platform to attract the right people.”
Switzerland has plenty to offer expatriate professionals, with its natural beauty, array of leisure activities for winter and summer, excellent infrastructure, political stability and good education system, Lif Burren says. Zurich, Geneva and Basel all featured in the top 10 cities worldwide in Mercer’s 2017 quality of living survey. And Switzerland’s central location is not only an asset for businesses which need access to Europe’s biggest markets, but also for luring employees.
“You are only three hours from Italy and can be in Paris in a couple of hours,” Lif Burren says. “This is something that everyone likes, whether for business reasons or quality of life.”
According to the Swiss National Bank, foreign direct investment in Switzerland currently stands at about 750 billion Swiss francs, corresponding to about 450,000 jobs. This is, not surprisingly, lower than the approximately 1,000 billion Swiss francs that Swiss companies have invested abroad in production, distribution and research facilities. But it is a significant factor in national wealth and economic performance.
Flexible Labour Law
Lif Burren, a Swedish lawyer, advises foreign companies on legal and tax issues in Switzerland. The 26 Swiss cantons compete for investment with favourable tax offers – a situation that allows companies to compare and choose the best option, she says. Companies can also acquire certainty on what taxes they will pay for the first few years after setting up.
In comparison to Sweden, Swiss labour law is also relatively flexible, Lif Burren says. “There is a great deal of freedom in terminating employment,” she says. “For a start-up company which needs flexibility, this is a big advantage.”
There are some drawbacks to Switzerland as a business location, she says. Companies entering the market can face unwelcome surprises because of the diversity of language and culture. “If a company thinks they only need one marketing strategy for the whole country, that will go wrong,” she says. “It is hugely differentiated, which is quite exceptional for a small country.”
Swedish professionals may also find the Swiss business culture more formal than at home – something Lif Burren says is not a disadvantage. “But awareness of it is crucial if you want to have success,” she cautions. “You have to find the golden path between being distant and being over-friendly.”
One major disadvantage for expatriate employees – particularly from the Swedish perspective – is the dearth of paid maternity and paternity leave and shortage of affordable childcare, Lif Burren says. Another is the school timetable, with children expected to go home at lunchtime. Expatriates can get around this by sending children to private schools, but these are expensive. And Canton Zurich has recently introduced laws obliging Swiss parents to send their children to state schools, she says.
“If this is a trend in the cantons, it is a worrying one,” Lif Burren says. “We will not make Switzerland a high-end destination for quality workers like that. It is a big issue, and it doesn’t only affect women. It is about lifestyle, and it is essential to change it if you want to be attractive to the modern generation.”