Title page
Contents
Foreword 4
Executive Summary 10
1. Key Policy Insights 15
Introduction 16
Policy support should target hardest-hit firms and vulnerable groups 20
The COVID-19 pandemic continues to raise uncertainty 20
Unprecedented policy support helped sustain incomes and employment through the pandemic 21
The economic recovery will continue, but the protracted pandemic increases uncertainty 23
Monetary policy remains accommodative 25
Fiscal policy should avoid premature tightening 28
Supporting hardest-hit firms and facilitating job reallocation 32
Boosting competition to raise productivity and growth 34
Improving regulatory settings 37
Maintaining international openness to harness competitive pressures 40
Ensuring effective use of resources to raise living standards of all and make growth more sustainable 42
Environmental performance is good but consumption patterns and resource use still result in environmental pressures 42
Boosting green investment and eco-innovation 45
Addressing challenges from population ageing 46
Making the tax mix more growth friendly 50
Fighting corruption and money laundering 53
References 59
2. Fostering a strong labour market to support the recovery and sustain growth 66
Introduction 67
High resilience and substantial government support shielded the labour market during the crisis 68
Adequate policies effectively supported the labour market during the crisis 68
The impact of the crisis varied considerably across groups of workers and sectors 71
The legacy of the crisis could weigh on the labour market 76
Exiting the crisis and facilitating job reallocation 80
Balancing adequate support and incentives for workers' reallocation 80
Seizing the opportunity to reconsider the social protection of the self-employed 85
Boosting active labour market policies 87
Fostering geographical mobility 89
Making the labour market more inclusive 89
Addressing the gender income gap 89
Supporting the employment of older workers 93
Raising skills and lowering inequities in education 94
References 102
Table 1. The economy has recovered to pre-crisis levels 11
Table 1.1. Macroeconomic indicators and projections 24
Table 1.2. Low-probability events that could lead to major changes in the outlook 25
Table 1.3. The fiscal position is strong 31
Table 1.4. Potential impact of structural reforms on per capita GDP 32
Table 1.5. Illustrative direct fiscal impact of selected recommended reforms 32
Table 1.6. Past recommendations on lowering barriers to competition 42
Table 1.7. Past recommendations on ensuring sustainable and inclusive growth 56
Figure 1. The Swiss economy has been relatively resilient 11
Figure 2. The fiscal position remains strong despite the fiscal expansion during the crisis 12
Figure 3. Productivity growth has slowed 12
Figure 4. Environmental pressures remain despite decoupling of domestic emissions and material use from growth 13
Figure 1.1. Risks and challenges from the ongoing pandemic persist 16
Figure 1.2. The Swiss economy has shown its resilience in the face of a global crisis 17
Figure 1.3. The overall resilience masks high heterogeneity across sectors and groups 17
Figure 1.4. The Swiss enjoy a high standard of living and relatively low income inequality 18
Figure 1.5. The crisis has hit low-income households harder 18
Figure 1.6. Productivity growth has slowed 19
Figure 1.7. The COVID-19 pandemic has yet to be overcome 21
Figure 1.8. Economic developments 23
Figure 1.9. Monetary policy remains accommodative 27
Figure 1.10. The build-up of imbalances in the residential real estate market has continued 28
Figure 1.11. Emergency fiscal measures pushed public balance into a deficit 29
Figure 1.12. The crisis had differing impacts across sectors 33
Figure 1.13. Switzerland is a top performer in terms of labour productivity and GDP per capita 35
Figure 1.14. Productivity is very high in a number of sectors 35
Figure 1.15. The globally competitive and high value-added economy is sustained by a highly skilled workforce 36
Figure 1.16. With ageing, productivity growth will be key to sustain living standards 36
Figure 1.17. Productivity growth has slowed 37
Figure 1.18. There is room to improve regulatory settings 38
Figure 1.19. Barriers to trade in services are higher than in most other OECD countries 41
Figure 1.20. Switzerland has benefited from high inward FDI 41
Figure 1.21. Switzerland has decoupled economic growth from domestic greenhouse gas emissions and material use but environmental pressures remain 43
Figure 1.22. Population is ageing rapidly 47
Figure 1.23. Employment rates fall steeply after 65 47
Figure 1.24. Ageing creates fiscal pressures 48
Figure 1.25. The replacement rate from mandatory pension schemes is expected to fall 49
Figure 1.26. Switzerland relies heavily on direct taxation 50
Figure 1.27. The tax system contributes to high indebtedness of Swiss households, while reliance on taxing immovable property is low 51
Figure 1.28. Switzerland's VAT rate and revenues are among the lowest in the OECD 52
Figure 1.29. Switzerland performs well in control of corruption 54
Figure 1.30. Anti-money laundering measures are effective in most aspects 55
Figure 2.1. The labour market has shown resilience, helped by swift policy support 68
Figure 2.2. The number of job vacancies exceeded their pre-crisis level in the second quarter of 2021 69
Figure 2.3. The short-time working scheme significantly cushioned the impact of the pandemic on employment 70
Figure 2.4. The impact of containment measures differed across sectors 72
Figure 2.5. Skilled labour shortages temporarily eased during the pandemic 73
Figure 2.6. Short time work use differed across groups 73
Figure 2.7. Probability that an employee moves to non-employment or short-time work between consecutive quarters 75
Figure 2.8. The Swiss labour market performs well in international comparison 77
Figure 2.9. The sizeable gender wage gap and high incidence of part-time work weigh on women's labour incomes 78
Figure 2.10. Women and foreigners disproportionally work in the most affected sectors 79
Figure 2.11. Employment gaps are sizeable for some groups 80
Figure 2.12. Short-time work was massively used in the sectors most affected by restrictions 81
Figure 2.13. Several countries have recently (re)introduced or increased co-financing by firms in job retention schemes 83
Figure 2.14. Gross replacements rates in job retention schemes tend to be higher than in the unemployment benefit systems 84
Figure 2.15. Self-employment represents a sizable share of employment in Switzerland 85
Figure 2.16. Access to social protection is limited for self-employed workers 86
Figure 2.17. Enrolment in early childhood education and care is low 90
Figure 2.18. The disincentives for second-earners to move to full time employment are very large 91
Figure 2.19. Incidence of long-term unemployment increases with age 93
Figure 2.20. Performance in reading varies widely across socio-economic groups 94
Figure 2.21. The pandemic crisis led to widespread closure of schools 95
Figure 2.22. Participation in adult learning is high but should be broadened 97
Figure 2.23. Participation in life-long learning has declined during the pandemic, especially for older workers who tend to have lower digital skill 98
Figure 2.24. Swiss adults' digital skills are solid but lag the top performers 99
Figure 2.25. Immigrants have heterogeneous educational attainment 100
Boxes
Box 1.1. Monetary policy framework 26
Box 1.2. The debt brake rule 30
Box 1.3. Potential impact of reforms 31
Box 1.4. Planned economic policy to aid the recovery after the crisis 34
Box 2.1. Emergency support measures during the COVID-19 crisis 70
Box 2.2. The Swiss Short Time Work scheme effectively protected jobs in 2020 73
Box 2.3. Implementing the OECD Jobs Strategy during the COVID-19 crisis and beyond 76