Entrepreneurship | Economics in Plain English

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Mar 05 2009

Some good news for Swiss businesses and workers during hard economic times

Two items consisting of good news from the local English language news in Switzerland. The first article says that small and medium-sized enterprises, in other words family owned businesses, are likely to come out of a global economic slowdown relatively unscathed and healthy.

Swiss SMEs are well placed to survive the economic recession. – swissinfo

Family-run firms in Switzerland are well set to survive the global recession having put long-term growth before quick profits in the good years, a report concludes.

Such small- and medium-sized enterprises (SMEs), which account for more than 88 per cent of all Swiss companies, are also cushioned by an aversion to taking on too much debt but still face succession problems.

The survey of 300 Swiss family-owned SMEs found that 68 per cent of companies are less motivated by making money than in maintaining the good name of the firm.

Some 83 per cent of owners put the healthy state of their company down to risk aversion and 39 per cent said long-term planning was crucial to success.

Swiss family business consultant Hakan Hillerström contributed to the study by Barclays Wealth and the Economist Intelligence Unit.

“Often, without a stock market listing, family businesses are insulated from the need to meet the short-term demands of investors and so are better placed to ride out volatility than their listed peers,” he said.

Second is a story about the mobility of skilled labor in Switzerland. When global demand for one of Switzerland’s most famous exports, watches, falls, Swiss watch makers are snatched up and employed by other industries in which demand is actually increasing during the recession: namely, rail car engineering and construction. Similar skills are required of workers in both industries, watches and rail cars. I suspect demand for rail cars has increased because of the multiple fiscal stimulus packages being initiated around Europe, many of which include funding for infrastructure expansion, including upgrading and expanding rail networks.

I am impressed by the flexibility of labor markets in Switzerland in times of economic hardship. Such labor mobility as demonstrated below helps Switzerland weather economic woes more easily than it would if workers laid off from one industry could not easily find employment in others, such as is the case in many countries.

Enterprises in Vaud to exchange workers to beat redundancies. – swissinfo

Skilled workers from the Swiss watchmaking industry could soon find themselves building locomotives instead.

A new project to meet the challenges posed by the financial crisis has been launched in the French-speaking canton of Vaud, with the backing of the major trade union and employers associations, as well as the cantonal government.

The idea is that businesses experiencing a temporary shortfall in orders will be able to lend their workers to others facing a shortage of labour.

“It’s pretty ridiculous to pay people to sit around and do nothing,” Yves Defferrard of the Unia trade union told swissinfo. “But when they have no work for them, employers can often think of nothing better than to lay them off. That’s the wrong way to manage a crisis. It’s what happened in the downturn of 2000.”

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