Marie-Gabrielle Ineichen-Fleisch: "Further training is becoming more and more important"
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Marie-Gabrielle Ineichen-Fleisch: "Further training is becoming more and more important"

Marie-Gabrielle Ineichen-Fleisch, Director of the State Secretariat for Economic Affairs (SECO) on the substantial concerns about unemployment, the coming economic upturn, and the threat to Switzerland's success model.

Manuel Rybach: Madam State Secretary, unemployment has been the biggest concern among the Swiss for years, as revealed by the Worry Barometer. Why is this?

Marie-Gabrielle Ineichen-Fleisch: Unemployment is really hard on those suffering from it. So I can understand why it's cited as a major concern. This concern has now decreased significantly, probably due to the good unemployment insurance available in Switzerland. The measures to reintegrate employees into the labor market are particularly important. People who lose their jobs receive support and have a good chance of reentering the labor market.

The unemployment rate is currently low, but do we face big job losses as a result of digitalization?

SECO does not think this will be the case. Digitalization is a challenge, but we view it more as an opportunity. Looking at developments in Switzerland, it is clear that structural change in the past has led to more work, not less. Over the past 25 years, more than 800,000 new jobs have been created. It's true that there has been a shift from the industrial and agriculture sectors to the service sector. However, that's still a lot of new jobs. Whenever I'm abroad, people always ask me how we manage to keep unemployment so low, especially among young people, despite the major challenges.

Our education system, which has a strong emphasis on dual education, has now become very popular in other countries.

What is your response?

First, it's due to our cautious approach to regulation of the labor market. Second, the social partners in Switzerland work closely together. And third, our dual education system allows us to train workers based largely on market needs. The low rate of university graduates in Switzerland has been criticized in the past, but our education system, which has a strong emphasis on dual education, has now become very popular in other countries.

Digitalization is creating entirely new job profiles, for which many employees are not prepared. Some groups are thus calling for government assistance measures, such as a basic income. Do you agree with that?

I understand that people feel insecure. In addition to unemployment insurance, current public support includes disability insurance and social benefits. And if someone experiences significant difficulties, there are supplementary benefits – we are well prepared in this regard. Further training is very important for the future. People should have the opportunity to learn something new, even when they are 40, 50 or 60 years old. I do not mean simply taking a class, but rather participating in further training that really helps an employee to develop or reintegrate into the labor market. This is becoming increasingly important.

Is it the state's role to provide these programs?

It should be a joint effort between the public and private sectors. Companies know best where the jobs of the future will be created and what qualifications will be required. This is the strength of the dual education system.

There is a certain degree of economic uncertainty for companies because the Swiss people rejected the recent third reform of corporate taxation, known as CTR III. Will this have an impact on the economy and the Swiss labor market?

It is difficult to link a single event to macroeconomic developments. What can generally be said is that investments by companies will decline sharply if uncertainty increases. There is little evidence of this at the moment. Investments by companies continued to rise in the first half of 2017. I hope the new proposal for tax reform will pass through parliament quickly.

We cannot rest on our laurels. Doing so is very dangerous.

Whether it's CTR III or the mass immigration initiative, it seems that it has become more difficult to persuade voters on economic grounds.

Maybe voters think that if they're doing well and the economy is running smoothly, there is no need to make further attempts at reform. This concerns me greatly. We cannot rest on our laurels. Doing so is very dangerous.

When asked whether immigration is good or bad for the economy, respondents were split 50–50.

I hope that implementation of the mass immigration initiative has shown citizens that Switzerland does not permit unlimited immigration. At the same time, I am concerned that we will see a shortage of qualified workers. In recent years, immigration has been dependent on economic development. When the economy is healthy, more people come to Switzerland and vice versa. I hope this will continue to be possible in the future too.

Sixty-two percent of respondents say the financial safety net in retirement is insufficient.

Our three pillar system ensures an appropriate standard of living. And if necessary, there are also supplementary benefits. Many older people in Switzerland have accumulated savings. The risk of poverty has shifted in recent decades, from the elderly to other groups, such as women raising children on their own. That is why schools where children can be looked after all day are so important, so mothers can go out to work. Gainful employment is still the best remedy for poverty.

Over the last four years, trust in banks has increased by 15 percentage points. Why is that?

Banks have done a great deal since the financial crisis. They have been actively involved in shaping regulations, driven the tax discussions and made their business more secure. They have done a good job and their work has been rewarded.

What is your assessment of the future of the Swiss success model? Where do you see threats?

First, I am concerned about the reform fatigue that has set in. In particular, social systems urgently need to be secured over the long term. Second, the level of protectionism and the general reservation about open markets and globalization worries me. Foreign trade is very important for the Swiss economy, and Swiss companies earn a significant portion of their income abroad. If we no longer have access to other markets or if our access is limited, then this is a problem. Not only for large companies, but in particular for small and medium-sized enterprises, for whom exports often comprise up to 90 percent of revenue. Third, I'm concerned about productivity. In particular, domestic sectors that are not directly exposed to competition must perform better. I'm thinking of areas like healthcare, education and agriculture.

Banks have done a great deal since the financial crisis.

What needs to be done to ensure that the country continues to prosper?

The good overall conditions must be maintained and improved further if possible. We must maintain a flexible labor market, ensure that young people receive a good education and maintain a balanced tax system. In addition, we must take care of government finances and invest in infrastructure. Not only in roads and railways, but also in the digital area. Federal Councilor Doris Leuthard warned recently that the economy will suffer if we miss out on the switch to 5G, the next mobile network generation. And last but not least, we must also maintain and enhance our relationship with the EU.

Won't other markets such as China or India become increasingly important?

Of course. But the EU will remain our main trading partner over the next ten years. This cannot be offset by other free trade agreements.