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How Switzerland needs to change to prepare for the future

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How Switzerland needs to change to prepare for the future
Photo: FABRICE COFFRINI / AFP
17:25 CET+01:00
To properly prepare for the future, Switzerland needs to introduce a raft of measures and changes not least to tackle the challenges of its ageing population and a lack of highly skilled workers, a report has found.

In the coming years, countries across Europe are set to face many of the same problems. An ageing population alongside a shortage of tech skills among the populace are set to pose real challenges for wealthy, Western European countries such as Switzerland.  

An OECD report released Monday has found that if the Swiss want to keep their high quality of life and the services to which they have become accustomed, they will need to make a number of changes. 

Here’s what Switzerland needs to do to prepare for the future, according to the OECD. 

Retiring later

In Switzerland, the current retirement age is 64 for women and 65 for men. Under the recommendation, Swiss workers are going to have to wait a little longer to enjoy the sweet taste of retirement - a move which the authors say reflect the impacts of better health practices and longer life expectancy. 

The age should be raised to 65 for both sexes immediately, before being gradually raised to 67. Future increases cannot be ruled out, with the authors saying retirement age in Switzerland should be linked to life expectancy. 

Survey: Swiss reject increases in retirement age

While two extra years for men and three extra for Swiss workers may seem a tough blow, if they were passed the changes would bring Switzerland in line with many of its neighbours. 

In Germany the current age of 65 is to be raised to 67 by 2029, while in France the current age of 62 is increasing to 67 by 2023. Spain and Italy will also raise theirs to 67. 

In the UK, it will be raised to 67 over the next decade - before eventually being raised to the grand old age of 69 by 2046 - bad news for anyone born in 1977. 

Changes in the Swiss retirement age have been recommended. Image: FABRICE COFFRINI / AFP

OK, Boomer: No more age discrimination

If the goal of raising the retirement age is to keep people in the workplace longer, it stands to reason that discrimination against older workers should be curbed. 

While Article 8 of the Swiss Federal Constitution prevents age discrimination, it only applies to government workers - only roughly one in seven Swiss. 

The report recommends that the law be extended, thereby giving more job security to older workers and job seekers in the private sector similar protection - i.e. the remaining 86 percent of the workforce. 

Prepare for a brave new future

Across the world, another threat to economic security and stability is the growing trend of automation and digitalisation. 

With industries as diverse as truck driving and journalism set to be significantly impacted, a future-proofed Switzerland will invest heavily in preparing for the transition. 

If the recommendation is adopted, vulnerable industries will be identified before the impacts of digitalisation and automation are felt. People who work in those industries would receive training to prepare them for the transition. 

Increasing high-skilled immigration from outside the EU

In addition to an ageing population, another major concern for Switzerland in the future is a lack of high-skilled workers - particularly in the tech industries. 

While immigration from EU workers is already encouraged, a higher influx of non-EU workers has been identified as the best solution. Currently it is difficult for businesses to hire from outside the EU, although the recommendations call for this to be changed.

Although immigration has become a politically fraught issue in Switzerland recently, the findings suggest that if barriers aren’t removed, businesses may go elsewhere in pursuit of skilled labour. 

Up-skill job seekers

While Switzerland has one of the lowest unemployment rates in the world - roughly 2.4 percent on latest figures - another way to counter the skills shortage is to up-skill those who are looking for work. 

The report recommends introducing new training programs which focus on the tech industry and are accessible for job seekers.

The report also identifies a need to tailor these training programs to older job-seekers, thereby giving them the technical skills to re-enter the workforce. 

Tax

Then there’s the dreaded T-word. While Switzerland pays one of the lower rates of taxation among wealthy European nations - particularly compared with those to the north - the report suggests that personal income taxes are too high and should be reduced, particularly for people on lower incomes. 

The report called for decreases in personal income taxation. Image: FABRICE COFFRINI / AFP

But it’s not all good news. Under the proposal, the shortfall in government revenue will be made by increasing VAT rates, as well as recurrent taxes on immovable property. 

Taxes should also be imposed for environmental outcomes, i.e. the fuel, heating and flight taxes which have already been flagged by the Swiss government. 

READ: Flight taxes and corporate social responsibility - everything that's set to change after the 2019 Swiss election

One such tax should be on new cars, to encourage the purchase of low emission vehicles. 

 

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