SWITZERLAND

There are no doubts that Switzerland’s formal procedures correspond closely to the democratic ideal. However, some problems have emerged due to the country’s small size, its strong dependence on other countries, the opportunities to free ride in the international and particularly European communities, and the extremely large share of immigrant workers.
With regard to active and passive voting rights, there is the obvious problem that more than a fifth of the total Swiss population and a quarter of the country’s civilian workforce hold foreign citizenship, a much higher share than in other countries. Furthermore, the rules on naturalization are rather strict, making the acquisition of Swiss citizenship costly, time-consuming and frequently even insulting for applicants. For example, citizenship can be claimed only after 12 years of residence, while the administrative process of naturalization takes about one to three years, including interviews and a considerable cost of about €2000 for a family with two small children. Thus, according to some commentators, the strict rules governing naturalization and the sheer size of the foreign population transform the “quantitative” problem of every modern democracy (some adult inhabitants face discrimination on grounds of their nationality) into a qualitative problem: If a quarter of the social product is produced by foreigners, and if more than a fifth of the voting-age population is not entitled to run for public office, the legitimacy of parliament and government and the legitimacy to rule on behalf of the total population (which is hugely more than the citizen base) is arguably called into question. Others argue, however, that while the economy is globalised, democracy functions only on the basis of a national society which identifies itself in terms of citizenship. This includes the (constitutional) right to define who is eligible for citizenship. According to this view, migration certainly creates new problems, in that the “demos” and the resident population do not coincide. Yet, without any restrictions on immigration or the acquisition of citizenship, small democracies would soon disappear from the map.
To date, Switzerland has dealt with these problems somewhat slowly and hesitantly. For example, some notable liberalizing changes were adopted with regard to naturalization (e.g., costs have been substantially reduced) and with regard to passive voting rights in some cantons and local communities. In contrast, driven by strong right-populist movements, the public discourse has shifted to an emphasis on the “us-them” dichotomy.

Candidates and parties may purchase political advertising in the print media. The only restriction to the equal access by candidates and parties to these media outlets concerns the availability of resources. In contrast, political advertising on television or other broadcast mediums is unlawful. In that regard, all candidates and parties are equal in access, in the sense that none has a chance to buy political advertising on broadcast media.
Media organizations give a fair and balanced opportunity to political actors to present their views and programs, insofar as this is not simple advertisement. Right-wing politicians sometimes complain that journalists give center-left politicians better access. But there is little hard evidence that such a bias exists to any substantial extent.

Once again, formal procedures and rules fully correspond to a model democracy. However, there are at least two problems. The first relates to the extremely large share of foreigners who are confronted with the rather strict rules governing naturalization.
Second, given the decentralized and federal structure of Switzerland as a multicultural country, there are minority and electoral rules which give some citizens more electoral influence than others. This applies first and foremost to representation in the Council of States (which is modeled after the U.S. Senate). Each canton is entitled to two representatives. Since the Council of States (Ständerat) has the same power as the House of Representatives (Nationalrat), and the size of cantons varies by a factor of 36 – the canton of Zurich has 36 times more inhabitants than the canton of Uri – a citizen of Uri has considerably more political power than one of Zurich. Historically, these minority rights are traceable to the denominational conflicts of the 19th century. However, one can argue that this denominational definition of minority status no longer holds importance. This would meant that there is no further ground for this unequal distribution of political resources, beyond the legacies of the past and the smaller cantons’ institutional interest in retaining their power. Nonetheless, one has to recognize that federalism and democracy function on different principles (one person-one vote for democracy, one subnational unit-one vote for federalism). Thus, the unequal weighting of the citizens’ votes is a consequence inherent in every democratic federation.

Switzerland does not finance parties with public money on the federal level. In return there are no constraints applied. It is a case of “une legislation absente” (Gunziger 2008: 2-4). There is some financing of parties on the cantonal level in Geneva and Fribourg (Gunzinger 2008: 40). A considerable part of the political parties’ revenues come from the subsidies to party factions in the national parliament or reimbursement of parties for services, amounting in some cases to 30% of total party income (Brändle 2002: 123). Another important source of income is the attendance fee granted to members of parliament, which can be considered as a form of party financing. In general, parties won constitutional status only through the constitutional revision of 1999, and there is deep-seated aversion to any public financing of political parties.
In return, there is little to no public scrutiny of party activities, since no public money is at stake (see also Z’graggen 2009 and Z’graggen/Linder 2004).

Public and private media corporations are free from government influence. This is enshrined in the Swiss constitution. Although the federal government chooses the chairperson and some board members of the quasi-public nonprofit radio and television organization, it is not able to exercise any influence over the organization’s daily reporting or journalistic work (Marcinkowski 2007).

The most important electronic media organizations in Switzerland – in terms of coverage and intensity of use by citizens – are publicly owned. Private television stations play only a small role in the country’s media landscape. These are largely regional stations, such as Tele Bärn (mainly for the cantons of Bern, Solothurn and Fribourg) and Tele Züri (for the canton of Zurich). A number of foreign radio and television stations can be received in Switzerland, contributing to the country’s media plurality. The country has a high number of private newspapers, with a highly decentralized system of regional concentration. However, a strong tendency toward centralization has weakened the regional newspaper market. This has been amplified by the strong growth of free papers for commuters such as 20 Minuten in the morning and Blick am Abend in the evening (similar publications exist in the French-speaking part of Switzerland). These have tended to crowd out readership of classic newspapers, which have suffered from a decline in readership of 14% between 1998 and 2009. In addition, a trend toward concentration has affected formerly independent newspapers such as Bund and Berner Zeitung. As with other small nations, Switzerland enjoys a relatively diversified ownership structure, but over time there has been a very strong process of centralization and concentration (Meier & Perrin 2006; Trappel & Perrin 2006).

Swiss authorities pursue very open strategies of information release. For example, the website of the federal administration (www.admin.ch) offers access to major sources of political information.
Article 16 of the constitution, on the issue of freedom of opinion and information, states that: “(1) The freedom of opinion and information is guaranteed; (2) Every person has the right to form, express and disseminate opinions freely; (3) Every person has the right to receive information freely, to gather it from generally accessible sources and to disseminate it.”
The Federal Law on the Principle of Administrative Transparency (Loi sur la Transparence, LTrans) was approved in December 2004 and took force in July 2006. The law gives any person the right to consult official documents and obtain information from authorities. The authorities must respond within 20 days. If a request is refused, a citizen can seek redress from the Federal Delegate for Data Protection. However, this law’s applicability is partially limited. The law applies to federal public bodies, other organizations and persons who make decisions under the Administrative Procedures Act, and Parliamentary Services. The Suisse National Bank and the Federal Commission on Banks are exempted. The law also does not apply to official documents concerning civil or criminal law processes, documents relating to foreign policy, or political party dossiers relating to administrative disputes.
Given these qualifications, it is noteworthy that this law has gained some influence, since the Federal Supreme Court interprets it in a liberal way (see Decision 1C_522/2009, of May 19, 2010).

Civil rights are guaranteed by the constitution. However, the country does not have a classic constitutional court able to monitor the conformity of federal law with the constitution. The Federal Supreme Court in Lausanne monitors the constitutional conformity of federal regulations and cantonal laws. In relation to basic civil rights, the European Court of Human Rights serves as a kind of Swiss constitutional court.
In international comparison, the country’s record of guaranteeing human rights is outstanding. However, conflicts between human rights and direct democracy have emerged, particularly recently. One such case is represented by the successful popular initiative for the imprisonment of particularly dangerous criminal offenders without any chance of reexamination (2004). This conflicts with the European Convention for the Protection of Human Rights and Fundamental Freedoms. This convention guarantees periodic reviews in which the necessity for continued imprisonment can be evaluated.
Likewise, there have been conflicts between popular votes on the naturalization of individuals and the call by these individuals for fair and transparent treatment, with the possibility to appeal decisions. It is doubtful whether the naturalization procedure conforms to the standard of human rights set out in the constitution. The Federal Court decided in 2003 that naturalization procedures previously established by popular vote were unconstitutional, since they violated the constitutional norms of nondiscrimination and the right to a lawful legal procedure.
A particularly problematic decision has been the ban on the construction of minarets, accepted in a popular vote in 2009. The basic claim is that minarets signify the power claims and potential aggression of Islam, which need to be suppressed as a strategy for keeping the peace. However, it is evident that the popular initiative was clearly aimed against Islam and the Islamization of Europe (see Hirter/Vatter). Legal scholars tend to argue that the decision violates the freedom of worship and the non-discrimination rule. It is expected that a case against the initiative will be brought to the European Court of Human Rights, and that it will in all likelihood be declared null and void. But the legal process will take several years before the decision can be repealed.
The major underlying problem is the claim of many political actors for the unrestricted right of the people to decide any matter through popular vote, and the way this conflicts with the basic rule of any liberal democracy that there are limitations to the will of the majority, such as human rights standards and protections for minorities. The public debate on the limits to majority rule (through popular vote) shows little cognizance of these traditional limitations to majoritarian rule. This has become very obvious in recent debates about the conflicts between international law and Swiss citizens’ decision rights in popular votes. Although anxiety over the ebbing away of popular sovereignty extends beyond conservatives, this group in particular feels uneasy with the internationalization of law and some recent interpretations of human rights, made by a professional elite with little democratic legitimation and imposed in a top-down manner. In their view, the internationalization of law and international court decisions against the results of Swiss referendums contradict Switzerland’s legislative culture, which is characterized by the principle of subsidiarity and guided by the idea that the people’s decisions have the highest degree of legitimacy.

Switzerland is in many ways a role model for the exercise and protection of political liberties. However, with the adoption of the ban on construction of new minarets represents a severe violation of the right to worship, even if this in practice means little for the free practice of any religion. Before the November 2009 decision, there were only four minarets in Switzerland.

In Switzerland, constitutional law and a consociational political system ensure the autonomy, freedom from discrimination, and rights to political participation of Swiss linguistic, ethnic and religious minorities. Article 8 of the country’s constitution states: “Nobody shall suffer discrimination, particularly on grounds of origin, race, sex, age, language, social position, lifestyle, philosophical or political convictions, or because of a corporal or mental disability… Men and women have equal rights.”
Nonetheless, a number of problems with regard to discrimination exist. As already mentioned (see also Candidacy Procedures), the sheer size of the foreign population and its contribution to the wealth of the nation brings up the question as to whether withholding political rights such as voting can be regarded as an indefensible variety of discrimination. Nonetheless, Switzerland’s conception of non-citizens’ voting rights is similar to that of other Western democracies, and undoubtedly protects the civil and human rights of foreigners without any discrimination. The Swiss People’s Party, the strongest party in the country, and one represented in the government, has repeatedly resorted to openly xenophobic or even racist discourse. Finally, there is still considerable discrimination against women with regard to labor market entry opportunities (lack of adequate family policies), wage equality and equal career opportunities.

Switzerland’s federal government and administration act predictably. This predictability is partially reduced by the very pragmatic administrative culture at the cantonal and local levels. The country’s division into small administrative districts, the tradition of decentralized local government and a partial “militia administration” system provide for a substantial amount of leeway in Switzerland’s public administration activity. The pragmatic administrative culture ensures flexibility and efficiency on the one hand, but reduces legal certainty on the other.

The Swiss judicial system is guided by professional norms without political interference. The judicial system is based on professional training, though a mixture of lay and professionally trained judges serve at the local level in many cantons. Decisions by these judges are subject to review by higher professional courts, however. The Swiss judicial system varies substantially between cantons. This is due to Swiss federalism, which gives cantons great leeway in cantonal lawmaking and hence also in cantonal administration of justice. This also includes variations in the rules and examinations with regard to lawyers’ admission to the bar.

The judges of the Federal Supreme Court are elected for a period of six years in a joint session of both chambers of parliament, requiring a majority of those voting. A parliamentary commission prepares the elections by screening the candidates. Unwritten rules stipulate a nearly proportional representation of the political parties then in parliament. Another unwritten rule demands representation of the various linguistic regions. There is no special majority requirement.

Corruption in Switzerland is rare according to international rankings. Indeed, Switzerland is consistently rated among the most successful countries with respect to corruption prevention. It is governed by the rule of law, offers high wages to public officials and is based on a decentralized democracy with parties that efficiently control and audit public officials.
However, there are opportunities and incentives for political and societal elites to abuse their position for private interests. This is due to the country’s small size, and correspondingly small number of persons interacting in elite positions; to the culture of amicable agreements; and to the very pragmatic problem-solving culture. In addition, holders of elite positions know that they are highly likely to meet again in the future (and probably in different roles). This creates opportunities for the creation of broad informal networks, a reluctance to engage in close mutual surveillance and incentives for the nonobservance of formal rules.

The Swiss economic policy regime combines various elements, including the following.
(1) It is a very liberal and depoliticized regime with regard to regulation of the labor market, in particular to hiring and firing. The rules in this area are very close to those of the United States.
(2) It used to be a very liberal and politicized regime with regard to the in- and outflow of foreign labor.
(3) The economic policy regime is based on the integration of employers and trade unions into the policy-making process, with employers having the largest amount of influence (“liberal corporatism”) and trade unions serving as junior partners. For trade unions, this corporatism has made sense, since it resulted in a regime of full employment (at least for Swiss citizens), high wages and generous private social policy on the firm level. In addition, the public social policy has been expanded in terms of programs and – in particular –expenditure levels.
(4) Switzerland used to maintain a very protectionist policy regime, allowing for cartels and the exclusion of competition. The main beneficiaries were farmers, who were protected from world market competition by high tariffs, as well as small and medium-sized businesses and service providers producing for the domestic market. In addition to high tariffs and strict non-tariff barriers to foreign competitors, business was protected by the acceptance of high tariffs from abroad. Furthermore, collusive pricing was tolerated, and competition between providers/producers limited by the variance in cantonal regulations. This latter aspect made it very difficult for businesses to make competitive offers and win bids outside their home cantons.
(5) It is an economy open to the world market, with domestic rules that facilitate the internationally competitive nature of large enterprises such as chemical producers and banks.
(6) It is an economy policy regime based on low taxes both for labor and capital, and relatively low tax wedges. In return, this liberal state does not intervene massively into the business cycle. Rather, it used to pursue a prudent and basically pro-cyclical fiscal policy. In times of major economic problems – such as in 2008 and 2009 – fiscal packages have been implemented. However, due to institutional and political reasons, these fiscal packages have typically been very limited in size.
(7) The economic policy regime always placed particular emphasis on a prudent fiscal policy (low deficits and debts) and on price stability. Prudent fiscal policy resulted from institutional factors, in particular the fiscal weakness of the federal state compared to the cantons, rules on limitations of excessive deficits and debts (for example, a so-called debt brake or “Schuldenbremse”), and the effects of direct democracy. Citizens were usually reluctant to accept any policy changes which led to increases in taxation. These institutional factors were further reinforced by the distribution of political power, in particular a weak left, and a strong party (the Free Democrats, which are in this respect liberal) supporting a constrained-tax state. Price stability was left to the independent National Bank, which is tasked with a primary goal of price stability, and has the tools of monetary and interest rate policy at its disposal.
This policy regime, which was both liberal and protectionist, has come under pressure due to various changes:
(1) Deindustrialization and a marked shift to a service economy has meant a change in qualifications for labor. The industrial sector offered a large number of jobs with low skill requirements. These jobs were staffed to a disproportional extent by foreign labor. Due to the rules of the work permit systems, many foreign workers gained access to unlimited work permits between the mid-1970s and the mid-1990s. Given their low skills, there is not enough demand for these employees in the modern high-skills service sector. Hence, the unemployment curve has shifted upwards, and is characterized by high unemployment among the foreign workers.
At the same time, employers recruit increasingly highly skilled labor for the service sector. It is true that Switzerland has depended on the inflow of highly skilled employees for the last century, but this process has further intensified during the last 15 years. One implication has been a pronounced increase in social tension. Historically, the highly educated Swiss middle classes have been very much in favor of a pro-foreigner policy, as long as these foreigners did not offer major competition for this social sector’s jobs and housing opportunities. With the increasing inflow of highly skirled German labor, this tolerance has changed, as one can see in recent developments. For example, significant populist opposition to the hire of professors from Germany at the universities of Zurich and Berne was led both by right- and left-wing politicians. Hence, one of the pillars of Swiss economic success will arguably be politically less sustainable than in the past. This creates problems, since Switzerland has long acted as a free rider on the education expenditures of neighboring countries, by employing foreign workers that have been trained in their home countries.
(2) Globalization has led to the increasing importance of international organizations such as the WTO. Given its reliance on sectors such as chemical or machine production, banking and tourism, Switzerland has had no option but to accept the liberalization of trade and services. Otherwise the retaliation by other nations would be economically extremely expensive. However, this has implied that sectors once strongly shielded by protectionist policies have become liberalized. Agriculture offers a major case in point. Through this liberalization from outside, the previous fit between protected domestic industries and a world-market-oriented industry – the core of Switzerland’s post-war economic success story – became strained.
(3) Switzerland has not solved the question of whether it should belong to the European Union or not in a sustainable way. The provisional solutions have been bilateral agreements between the European Union and Switzerland, which have major implications for further liberalization of the service and agriculture sectors. In addition, immigration policy has changed substantially. Switzerland has abstained from any further recruitment of foreign labor from non-EU countries (for which there is little demand anyway), and has liberalized the immigration regime with EU countries. Essentially, this has meant free movement of labor between Switzerland and the European Union, intensifying the new problems and cleavages associated with the recruiting of highly skilled employees from abroad.
(4) Switzerland was a laggard in the development of the welfare state, though it caught up in the post-war period. Today it is a mature and generous liberal-conservative welfare state. In times of demographic change, this welfare state is only sustainable through high rates of economic growth. However, the protectionist elements of the policy regime inhibit strong growth. Therefore, the benefits offered by the welfare state are endangered, prompting opposition by trade unions and the political left.

The major problems and achievements of Switzerland’s labor market policies have been described above (see also Economic Policy). Although the “golden age” of unemployment containment is past, the achievements of Swiss labor market policy are still remarkable. In the last quarter of 2009 (Source: OECD website), the harmonized unemployment rate remained half or even less of the unemployment rates of neighboring Germany, France and Italy. The one percentage point increase in the unemployment rate between 2007 (before the recent global crisis) and the last quarter of 2009 was much less than that seen in France and Italy. Even in comparison with Austria, Switzerland performs well: Austria’s unemployment rate in late 2009 was higher than Switzerland’s, although the increase during the crisis period was more pronounced in Switzerland than in Austria, as the latter showed only a 0.5 percentage point increase.

Switzerland scores high in terms of competitiveness. Tax policy is very employer-friendly, with a corporate tax rate that at 21.2% is significantly below the OECD average of 26.8%. During the past 15 years, the government has reduced the level of protectionism, a trend arguably triggered or facilitated by changes in the international environment. Still, the old traditions of collusive pricing and the expectations of state protectionism remain discernable in the agricultural and small and medium-sized business sectors. However, it is difficult to argue that current public policy is innovation-averse. This said, it is unclear to what extent public policy itself has contributed to the formation of strong levels of innovation and entrepreneurship, combined with strong competitiveness and a medium level of private corporate investment.

The Swiss tax rate is significantly below the OECD average and tax rates, particularly for business, are moderate. Taxation policies are competitive and generate sufficient public revenues. As a lean state with relatively low levels of public sector employment, the federal and cantonal states have less need for high tax revenue than do more ambitious states. Nonetheless, it is important to note that due to the principle of federalism, tax rates can differ substantially between regions, as individual cantons and local communities have the power to set regional tax levels.

Budgetary policy in Switzerland is fiscally sustainable. Gross public debt (general government) started to increase in the mid-1990s from a low level of 38% of GDP to reach a peak of 58% in 2004, but receded to 44% in 2009. Structurally adjusted budgets were balanced even during the crisis of 2008 – 2009.
This fiscal sustainability is mainly due to the political decisions to have a low tax load and a lean state. In addition, keeping the public deficit and debt low has been a major concern of politicians at all levels of the political system. Various rules and means have been developed in order to avoid the dynamics of expanding budgets. For example, on the federal level, there is the constitutional “debt brake” (Article 126, Article 159): “The maximum of the total expenditures which may be budgeted shall be determined by the expected receipts, taking into account the economic situation.” Direct democracy offers another effective means of keeping the budget within limits. In popular votes, the people have proven reluctant (compared in particular to members of parliaments when elections are drawing near) to support expansion in state tasks, and a corresponding rise in taxes and/or public debt (Kirchgässner et al. 2002).


Even taking into account the fact that some individual cantonal and municipal governments do pursue unsustainable budgetary policies, the total (i.e., general government) budgetary policy achievement arguably puts Switzerland in the OECD’s top group in terms of fiscally sustainable national policies.

Health policy in Switzerland is said to be qualitatively excellent, to include the total population due to mandatory health insurance policy, and to be expensive. There are serious doubts about cost efficiency, in particular with regard to the organization of hospitals. Life expectancy is very high, with male life expectancy at birth 79.4 years and female life expectancy at birth 84.2 years (2008, Bundesamt für Statistik). This is about two years more than in Germany or Austria. Obviously, the health care system is important in this respect but is not the only explanatory variable; differences may also be due to the socioeconomic resources of the country, the quality of its natural environment, or other variables.
Health insurance is managed according to a very liberal formula: Premiums for health insurance do not depend on income, and premiums do not take into account the number of family members. Hence, insurance must be bought for each member of the family, but there are reduced levels of premiums for children. In the past years, however, this liberal model has been modified by subsidies for low-wage earners and their families. Therefore, there is now some limited progressivity and family-friendliness at the lower end of the income distribution. Nonetheless, health care reforms have not been particularly successful in terms of improving efficiency and controlling the structural rise in health expenditures.

Switzerland prevents poverty to a large extent. On the one hand, this is due to an effective system of social assistance, in particular with regard to older generations. It is rare to fall into poverty after retirement. On the other hand, Switzerland is one of the least redistributive countries (if post-tax/post-benefit income is compared to pre-tax/pre-benefit income), thereby limiting socioeconomic disparities only to a very limited extent. Income inequalities created on the labor market are ameliorated only marginally by public policies and the tax system. This stands in stark contrast to most other developed democracies, in which the Gini index of pre-tax income inequality is substantially higher than the Gini index of post-tax income (cf. Pontusson 2005: 154, 171).
The major social insurance programs regulated on the federal level (sickness, unemployment, accident, age) work effectively and are comparatively sustainable. The benefits are generous. Social assistance is means tested and carries some stigma.
Life satisfaction is very high, income inequality is moderate, the share of working poor in the population is small and gender inequality has been reduced substantially in recent years.

In international comparison, Swiss family policy offers relatively little benefit to women. In a recent analysis on the ability to reconcile work and family, Switzerland scored lowest among 21 OECD nations for 2005 (Thoenen 2010). The new federal law on family subsidies, which took effect in January 2009, is unlikely to change much in international comparison; nor will it change the substantial cantonal variation, one of the most salient characteristics of Swiss family policy. The new federal law defines minimum child and education benefits, and cantons may add a variable amount to this basic federal benefit level.
Swiss family policy has a clearly conservative outlook with a strong liberal undertone. Basically Swiss family policy is mildly supportive to the traditional family; there are some tax deductions and a period of parental leave offered to mothers (but not to fathers), as well as a very limited amount of child care facilities. As is virtually always true in Switzerland, there are substantial cantonal variations. The canton of Ticino has a very generous family policy, which helps mothers to reconcile work and family; other cantons (and their municipalities) fail to offer any substantial help such as child care facilities on a broad scale. Likewise, tax disincentives to stay at home or to reenter the labor market vary from canton to canton. However, taking the median canton and municipality, the portrait of a liberal-conservative family policy applies. These policies create incentives for young mothers to stay at home during the first years of their children’s lives. Afterwards, mothers have a reasonable opportunity to get a job; however, these are in most cases part-time jobs. This allows mothers to care for their children, but also to take up some limited employment. Taking part-time jobs usually reduces the chance to have a career, as compared to the opportunities offered by full-time jobs. Hence, the system works in the sense that it mobilizes women within the labor market, but without giving them fair and equal chances for income and career advancement as compared to men.

The Swiss pension system is based on three pillars, each with its own logic of financing and redistribution. The basic idea is that pension income should not be below the subsistence level, and should provide 60% of average preretirement income. The first pillar guarantees a basic income. The minimum benefit level for a couple is CHF 26,880 (about €18,500) per year, while the maximum benefit is CHF 41,040 (about €28,300 ). Employers and employees finance it via contributions. It is a pay-as-you-go-system, and is highly redistributive since the maximum benefit level (for high-income groups and couples) is just 1.5 times that of the minimum benefit level, whereas contributions are proportional to income, making the maximum contribution level thus much higher than 1.5 times the minimum contribution level.
The second pillar is a funded system financed through contributions by employers and employees. Contributions and benefits are proportional to income. Employees whose income from the first pillar already covers about 60% of their wage income are not entitled to this system. Many pension schemes – particularly in the public sector – are very generous, and provide pension incomes (first and second pillars combined) above 60% of previous income.
The third pillar is tax-deductible savings up to about CHF 6,566 per year (about €4,500). This system benefits high-income groups, since they can afford to put aside these sums and have the highest returns on these savings given the tax advantages.
Demographic changes represent major challenges to the first pillar. Provided there is no major change in economic growth rates, the sustainability of this first pillar is in question unless the average age of retirement (currently 65 for men and 64 for women) is increased or benefit levels fall.

Given the very high share of migrants in the population (about a fifth of the country’s residents), integration policy is hardly a success. There have been many attempts to integrate foreigners starting at the age of kindergarten. But while the lack of a coherent federal integration policy is undisputable, this does not mean that integration policy is failing as a whole. Many local authorities are doing a good and sometimes innovative job of integration, especially for the young. Even more important in this respect are the activities of civil society organizations such as sports clubs.
However, both the success of the right-wing populist Swiss People’s Party and indicators of integration suggest moderate achievements at best. For example, in 2009 – 2010, about 6% of all Swiss students at universities (either Swiss citizens or foreign students who were living in the country before studying) were foreigners. In contrast, 51% of all convicted persons in Switzerland in 2008 were foreigners (calculated from data available on the Federal Office of Statistics website). This has to be judged against the 22% share of foreigners in the population as a whole (2008). One has to add that 12% of all convictions are due to violations of the law for foreigners (e.g., illegal migrants) and that when controlling for other variables such as social status, income and education, status as foreigner alone shows very little independent effect in criminal statistics. Having said this, it is clear that foreigners have a disproportional likelihood to display criminal behavior, and do not attain university degrees in a proportion matching their population share. This latter finding might not be due to individuals’ status as foreigners per se, but rather due to their low social status. Education is still a privilege of the upper and middle class in Switzerland, a major failure of Swiss educational policies at all federal levels. As immigrants until recently belonged to the lower social strata, they are discriminated against not because they are foreigners but because their family background is of the lower classes. Since the immigration pattern is about to change, with the share of highly skilled foreigners increasing, this latter problem could disappear in the long run.

Swiss security policy is still in the process of redefinition. The original idea was one of “armed neutrality” and the prevention of war through defense readiness. After the Cold War, there was a shift to a concept of security through international cooperation. Today, the goals of Swiss security policy are: (1) to contribute to peace and stability through international cooperation; (2) to be capable of defending Switzerland against any military threat by other countries; and (3) to create a civil protection system capable of responding in case of natural disaster (floods, avalanches, etc.). While goals (1) and (3) may be achievable, goal (2) is questionable given the plausibly available military power and military technologies, and the Swiss army’s dependence on (technical) support by NATO.
The country’s external security policy is characterized by a substantial level of polarization. A gentle movement toward reform of the army and its functions has met with major opposition by conservative and right-wing politicians, in particular by the Swiss People’s Party. This opposition seeks a return to the basic idea of neutrality and the possibility of defending Switzerland against any aggressor through its own resources. The practical nature of these goals runs counter to the empirical evidence available; however, they remain very convincing claims for a very large share of Swiss citizens. The lack of realism among citizens and politicians, criticized in the SGI 2009 report, seems only to have increased rather than decreased.

Switzerland has improved its internal security by integration into the Schengen/Dublin regime.

Switzerland has made considerable investments in effective environmental protection. For example, it now has about 8,000 jobs related to protection of the environment at the federal level (500), the cantons (1,500) and the municipalities (6,000) combined. Public spending on environmental protection totals 2.5% of total public expenditure (2002). A new article (Article 84.2) was added to the constitution in 1994, stating: “Transalpine freight in border-to-border transit shall be transported by rail. The federal government shall take the necessary measures. Exceptions shall be permitted only if they are inevitable. They shall be specified by statute.” This article has not yet been effectively implemented, but there have been enormous investments in improved railway infrastructure, particularly with regard to transalpine freight. In certain regards the ecological challenges to Swiss policymakers have been much less demanding than in other countries. Switzerland never had smokestack industries, and industrialization took place as a decentralized process; hence, Switzerland has no regions where industries with large emissions are concentrated.
The country’s record is mixed when looking across the broader environmental policy field, as the following items show (Knoepfel/Nahrath 2007: 706-708):
• Switzerland heads the international league in terms of water pollution control;
• Air quality has improved over the past 25 years, but limit values (of ozone or other substances) in various fields are frequently exceeded;
• Considerable success has been achieved in the area of waste policy. For example, Switzerland’s recycling rate is very high in international comparison;
• Noise pollution control has made little progress, with 25% to 30% of the population exposed to high levels of noise from road and rail traffic;
• Soil protection has improved;
• Average to high levels of success have been achieved in the area of chemical policy;
• The policy for the prevention of hazardous incidents has been very successful; and
• There has been little success in terms of nature conservation and landscape protection. The number of animal and plant species that have become extinct or are at the risk of extinction continues to increase.

In the field of research policy, two peculiarities of the Swiss political system have a strong impact: First, it is a liberal country with considerable reluctance to engage in economic or social-policy interventions. Therefore, research funding is mainly done by private actors. Second, as a federal and decentralized country, university research is done by universities that are financed and regulated by cantons. This does not apply to the two Federal Schools of Technology, though.
The output of the research system is impressive, as the following points demonstrate (Braun 2007: 757):
• Switzerland is at the top of the OECD in terms of per capita publications;
• Switzerland’s share of global publications rose between 1981 and 2001;
• Swiss research is among the most-cited in the world;
• Switzerland is among the world’s leading nations in terms of patent registration;
• The Federal Institute of Technology Zurich (Eidgenössische Technische Hochschule Zürich) is one of the best universities in the world;
• Swiss products enjoy strong demand in the foreign market, while a similar amount of foreign technology products are imported; and
• Swiss companies allocate a significant portion of their assets to research.

However, there are several problems, including:
• a decrease in innovation in recent years (although Switzerland is still one of the most innovative countries in the world);
• the need to improve cooperation between universities and companies;
• weaknesses in social science and humanities research relative to that conducted in the natural sciences or technological fields;
• growing skepticism among the population as to the value of cutting-edge research;
• an unclear relationship between the recently created polytechnics and established universities;
• structural friction in coordinating Swiss research programs with EU research policy; and
• very low levels public spending on research as compared to other countries. As a share of total research expenditures, public spending has declined from 28.4% in 1992 to 23.9% in 2004. This may not be a problem, however, as total research expenditure is probably a better indicator of sustainable growth in developing countries.

Switzerland’s education system is strongly influenced by the federal and decentralized structure of the country, as education policy falls under the jurisdiction of the cantons and municipalities. The system provides a high-quality education. The university system performs very well, as is the case in many other small and open European countries. Vocational training is very solid, and seems to be one of the most important factors in the low levels of unemployment, particularly among younger people. The permeability of vocational and tertiary education has improved as compared to other countries.
The tertiary education system continues to discriminate against students from families with low social status and – probably as a related effect (see also Integration Policy) – foreigners born in the country.
The Bologna reforms are now well under way in Switzerland. However, some experts claim that this process is detrimental to the quality of the technical colleges (Fachhochschulen), and that with academization, vocational training loses its high reputation.