OECD Economic Surveys - Switzerland Volume 2003 Supplement 2.

Table of contents......Page 5
Basic Statistics of Switzerland......Page 8
Assessment and recommendations......Page 10
The downturn in activity has been more pronounced than in other countries since 2000......Page 26
Table 1. Demand and output......Page 27
Figure 1. Output gap and economic activity indicators......Page 29
Figure 2. Competitiveness indicators and export performance......Page 30
The labour market has deteriorated......Page 28
Inflation, already low, has slowed still further......Page 31
Table 3. Structure of registered unemployment......Page 32
The strength of the recovery will depend on the external environment......Page 33
Switzerland suffers from insufficient trend growth…......Page 34
… although income growth has been stronger than real output......Page 35
Table 5. Short-term projections......Page 36
Figure 5. Average growth differential between Switzerland and its main trading partners......Page 37
Box 1. Command GDP: a real income indicator......Page 38
Figure 6. Various concepts of GDP......Page 39
This poor growth performance is essentially due to sluggish productivity growth......Page 40
Monetary policy......Page 41
Monetary policy has been appropriately accommodative over the last two years......Page 42
Deflation risks should not be exaggerated…......Page 43
Table 7. Yield curve......Page 44
Box 2. Deflation risks......Page 45
Figure 10. Downside risks around the projections......Page 46
… but require continued surveillance......Page 47
The exchange rate is an important variable in the management of monetary policy......Page 48
Box 3. The Swiss franc: ever stronger?......Page 49
Fiscal policy......Page 51
Figure 12. Fiscal balances of general government......Page 52
The public accounts worsened in 2002 and the federal budget is in structural deficit in 2003......Page 53
Table 9. Government accounts......Page 54
Figure 14. Federal tax revenues and the stock market......Page 55
Fiscal policy will be slightly expansionary in the short term......Page 56
The main medium and long-term policy challenges......Page 58
Notes......Page 59
Bibliography......Page 61
Medium-term management of federal finances......Page 62
A medium-term fiscal consolidation programme is necessary......Page 63
Table 10. Effects of the 2003 budget reduction programme......Page 64
Figure 15. Tax revenue development in OECD countries......Page 65
Table 11. Changes in public expenditure over the 1990s......Page 66
The debt containment rule should be better incorporated in medium-term management......Page 68
Financing of the AVS must be assured beyond 2015......Page 70
The occupational benefit system must be reformed......Page 72
Figure 16. LPP index and interest rates......Page 73
The growth in the number of disability pensions must be curbed......Page 76
The reform of the federal system is making headway......Page 78
Table 12. The new financial equalisation system: charges, payments and equalisation effects......Page 79
Efforts to reduce the administrative burdens for businesses are welcome......Page 80
Control over the provision of health care services remains inadequate......Page 81
Table 13. Expenditure, resources and utilisation in health care......Page 82
Notes......Page 85
Bibliography......Page 89
Introduction......Page 92
Table 14. Output, employment and productivity......Page 93
Figure 17. Relative price levels and GDP per capita......Page 94
Figure 18. Price levels in Switzerland relative to the EU......Page 95
Figure 19. Indicators of trade openness......Page 96
Table 15. Import penetration by manufacturing industry......Page 97
Figure 20. Productivity in the construction and private non-financial service sector......Page 98
Figure 21. Distribution of enterprises by class size......Page 99
Table 16. Hirschmann-Herfindahl indices of industry concentration......Page 100
The competition law has been reformed…......Page 101
Table 17. Specialisation patterns and indicators of innovation in selected countries......Page 102
Figure 23. Foreign direct investment in OECD countries......Page 103
Figure 24. Staff resources of competition authorities......Page 105
… but still differs from that of other countries......Page 104
The law needs to be implemented with vigour......Page 106
Reform in network industries should be accelerated......Page 108
Figure 25. Electricity prices for industry and households......Page 109
Figure 26. Natural gas prices for industry and households......Page 111
Figure 27. Telephone prices......Page 113
Barriers to entry are restricting competition and efficiency in the food distribution business......Page 117
Table 18. Key structural features of the retail sales sector......Page 118
Vertical agreements are prejudicial to competition in non-food distribution......Page 119
Box 4. Advantages and drawbacks of applying the international exhaustion principle to patent law......Page 121
The reform of professional services requires a bolder and more comprehensive approach......Page 123
The service sector should be opened to greater foreign competition......Page 124
Competition for procurement contracts must be strengthened further......Page 125
The health sector is suffering from regulatory problems......Page 127
Figure 29. Relative health price levels......Page 128
Figure 30. Main impediments to competition in the health care and insurance markets......Page 129
Support to agriculture remains very high......Page 132
Figure 31. Producer and consumer support estimates for agriculture......Page 133
General assessment and the need for further reforms......Page 134
Table 19. Recommendations aimed at increasing competition in the goods and services markets......Page 135
Table 20. Assumptions and effects of sectoral deregulation......Page 139
Notes......Page 141
Bibliography......Page 147
Labour market policy......Page 150
Table 21. Recommendations for further structural reform......Page 151
Participation of older workers has declined......Page 154
Box 5. The agreement with the European Union on the free movement of persons......Page 155
Figure 32. Wage pattern by age in selected OECD countries......Page 156
Table 22. Labour market indicators......Page 157
Unemployment benefits have been reformed......Page 159
The education system is expensive......Page 160
Figure 33. Expenditure per student and GDP per capita......Page 161
Figure 34. Student performance and equity......Page 162
In tertiary education there is room for more private finance......Page 163
Resources for education should be used better......Page 164
Banks have reacted to the international financial market crisis......Page 165
Financial supervision is being reformed......Page 166
Challenges ahead......Page 167
Sustainable development......Page 168
Box 6. The integration of policies across sustainable development areas......Page 170
Climate change......Page 169
Table 24. Main indicators: climate change......Page 171
Table 25. GHG emissions and sectoral indicators......Page 172
Figure 35. GHG emissions and projections......Page 173
Waste management......Page 174
Table 26. Performance indicators: waste management......Page 175
Figure 36. Cost for recycling selected waste streams......Page 176
Water pollution......Page 178
Figure 37. Water quality in selected rivers......Page 179
Table 27. Indicators of water pollution......Page 180
Table 28. Cost-effectiveness analysis of measures to reduce nitrogen run-off......Page 181
Notes......Page 183
Bibliography......Page 185
Annex I. Main features of the tax package......Page 188
Annex II. The occupational benefit system: principal characteristics......Page 189
Annex III. Main features of the Swiss health care system......Page 191
Annex IV. Comco Communications in the realm of the vertical agreements......Page 193
Annex V. Assessing the benefits of the regulatory reforms: methodological information......Page 195
Annex VI. The reform of the unemployment benefit system (LACI)......Page 198
Glossary of acronyms......Page 200