Knowledge

Advantages and development of SMEs in Switzerland

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Small and medium-sized enterprises play a decisive role in the Swiss economy. From a small bakery to a machine manufacturer to an IT start-up, SMEs are representing the overwhelming majority of companies, accounting for two thirds of available jobs in Switzerland. They contribute significantly to entrepreneurial creativity, economic growth and national prosperity.

The Confederation is aware of the importance of SMEs in Switzerland, which is why it pays special attention to these companies and strives to respond to their needs. With a policy tailored to their specific needs, it is constantly working to provide them with an optimal environment for the prosperity of their businesses. The main objectives of Swiss SME policies are:

  • Administrative discharge
  • Development of e-government
  • Promoting business start-ups
  • Improvement of corporate finance
  • Improvement of market access
  • Promoting innovation

The pivotal point of the Swiss SME policy is the State Secretariat for Economic Affairs (SECO). It works with numerous partners in favor of SMEs. For example, with Switzerland Global Enterprise, the Swiss Export Risk Insurance SERV or the four guarantor cooperatives in Switzerland. The State Secretariat for Education, Research and Innovation (SERI) contributes to the optimal framework conditions. Important partners are also business associations such as the Swiss Trade Association, the Association of Swiss Companies Economiesuisse and various other industry associations.

How is a SME defined in Switzerland?

There is no official definition of the term SME in Switzerland. Categorizing a company as small or medium-sized is based on a single criterion: the number of employees. Every market economy enterprise is considered to be an SME regardless of its legal status and activity, provided that it employs fewer than 250 persons, i.e. between 1 and 249 employees. This limit is also used in the European Union.

What should you know about Swiss SMEs?

Numerous surveys among Swiss SMEs have made it possible for entrepreneurs to compare their own results with the national average. The number of start-ups in Switzerland has remained relatively constant in recent years. SMEs are part of the most important economic sectors: the primary sector (agriculture, forestry, fisheries), the secondary sector (manufacturing, energy, water, construction and mining industries) and the tertiary sector (which groups together all services such as retail, wholesale, catering and telecommunications). At the end of 2015, there were more than 580, 000 SMEs registered in Switzerland, the majority of them having between 5 and 20 employees.

Switzerland is also well placed in the international rankings on entrepreneurship. Switzerland, a business location, offers entrepreneurs an excellent framework in international comparison. In the Global Entrepreneurship and Development Index (GEDI) 2017, which measures the dynamics of entrepreneurial activity in the innovation-based economies, Switzerland ranks second, behind the US.

The majority of Swiss SMEs are self-financed and the amount that these companies have to pay in corporate tax depends on the Swiss canton where they are established, as taxes are levied in Switzerland on federal, cantonal and municipal level.

The Swiss company growth policy

In order to boost the Swiss economy, the federal government pursues a powerful growth policy. The measures are also relevant for SMEs. A more productive and consciously open economy, especially in the direction of the EU, which is able to cushion economic shocks and create sustainable prosperity: that is the goal of the growth policy adopted by the Federal Council in June 2016.

In the strategy for 2016-2019, labor productivity is the priority pillar. Half of the measures mentioned in the strategy are linked to this. The term "productivity" is understood by the Federal Council in a broad sense: it includes the opening up of the economy, the removal of barriers to trade, and the ever-expanding markets and outlets for businesses. Using this background, the continuation of bilateral relations with the EU is considered essential, in particular to enable companies to continue to recruit the necessary professionals.

However, the Swiss growth policy also includes measures for domestic SMEs. The aim is to avoid inequality between companies operating in competitive exporting industries and those that are limited to domestic demand and have structurally higher costs.

The most important measures in the Swiss growth policy for 2016-2019, which especially target companies, are the following:

  • Maintaining and developing the bilateral agreements with the EU
  • Expanding market access for Swiss companies
  • Developing the right framework and competitive conditions in the digital economy
  • Liberalization of the electricity market and regulation of the gas market
  • Administrative relief and better regulation for companies
  • Strengthening competition in the internal market by facilitating imports
  • More efficient use and targeted expansion of transport infrastructure

Considering how important it is for Switzerland’s economy to support SMEs, which can easily be observed through the policies and strategies adopted by the Swiss government, Switzerland remains one of the top locations for company formation and especially for small to medium-sized companies.

 

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