Education and housing key areas for reform, says OECD Economic Survey of Switzerland

Switzerland has weathered the economic crisis better than most OECD economies, with a less than 2% decline in activity in 2009, and only a moderate rise in unemployment. The latest OECD Economic Survey of Switzerland encourages closer supervision of financial markets to address more fully the systemic risks to the system. It highlights the need for reforming the education and housing sectors as well as healthcare spending and pensions in order to address the rising costs of an ageing society.

The timing of the exit strategy will be crucial for monetary and fiscal policy; the report recommends maintaining the current expansionary monetary stance in Switzerland until recovery picks up.


Fiscal stimulus has so far been modest compared to other OECD countries, but discipline will be needed in the medium and long term to remain within budgetary rules.

Stronger cross-border arrangements with financial authorities in other countries are essential to ensure effective supervision of the largest Swiss financial institutions. The report recommends internationally coordinated contingency plans to unwind failing multinational intermediaries in an orderly fashion, limiting theneed for bail-outs.

While GDP per capita is among the highest in the OECD, productivity is still held back by low performance in sectors not exposed to international competition, keeping the overall price level of goods and services high. Housing costs, which are some 60% higher than the average for the European Union, contribute to the high living costs.

“The harmonisation of building regulations in the housing sector would promote competition. In order to increase the supply of affordable housing, municipalities’ incentives to develop buildable land should bestrengthened, for example by further raising the weight of real estate tax revenues in municipalities’ budgets”, says Andrés Fuentes, responsible for Switzerland in the OECD’s Economics Department and co-author of the report.

Education outcomes in Switzerland are excellent in international comparisons (OECD Programme for International Student Assessment - PISA), although this largely reflects high education attainment among parents and people with high per-capita income. The vocational education system and universities enjoy a high reputation.

However, Switzerland’s lead in formal qualifications over the other OECD countries has slipped considerably. A number if indicators show that increasing the supply of higher education graduates could improve economic productivity. In this light, the report recommends significantly increasing government-sponsored student loans to facilitate access to tertiary education. The report also recommends an increase in public spending for childcare facilities and new criteria for support to day nurseries, the number of which are still inadequate.