Mister President,
ladies and gentlemen

It gives me great pleasure to have the opportunity to address the members and guests of the Swiss-American Chamber of Commerce. Your role in assisting Swiss companies in the United States and U.S. companies in Switzerland to expand their businesses is well known, and the United States has been a faithful and trusted partner to Swiss companies for many decades. Over three months ago I came up with a title for this talk: "The challenges our economy is facing due to the overvaluation of the Swiss franc". Since then, events have caught up with us.
It seems to me that all that could be said on this topic has already been said, more than once. I doubt I can tell you anything that you don't already know. Therefore, I chose to reflect with you on the so called "Switzerland - a special case".

What do we have in common with other western countries and what, if anything, makes us different? As far as the United States is concerned, we share many values and have one important point in common:

we are often proud of our country. And rightly so! I recently read on the internet some statements by American citizens, explaining what makes them proud of their country. One read: "We aim for excellence and don't settle for mediocrity." A good reason to be proud and an attitude we share. Another said: "I am proud to be an American because it is the only country in the world that is worth living in. I have been to many foreign lands on business but the greatest point of any trip is when the plane touches down again on American soil". A feeling many Swiss also have. About their own country of course!

What else do we have in common with most western economies? For one, we share a similar past of hardship. For many centuries, Switzerland was poor. So poor that our soldiers rented themselves out as mercenaries to foreign armies in order to feed their families. So poor that in the early 19th century, when famine in our country was rampant, many Swiss moved to the United States, creating villages like Vevay in Indiana, New Switzerland in Illinois or New Glarus in Wisconsin. Like others, we suffered in the 1930's during the Great Recession and, more recently, we had to deal with an extremely difficult situation in the 1970's.

Remember: Between 1973 and 1974, the Swiss franc gained 22% in four short months against the US dollar, the main currency for our commercial exchanges at that time. In just four years it had gained 58% against the dollar. Half the companies active in the watch industry closed their doors. So yes, we, like others, are familiar with tough situations. Of course, since then, the watch industry did more than recover, and - I am happy to say - it did so without the assistance of the State. How did it achieve that? I will try to answer this question later,
when I try to analyze what makes Switzerland different.

What else do we have in common besides past hardship?

We, like others, tend to risk our health to generate more wealth, then spend a good part of this wealth on regaining our health.
Just like most westerners, we are sometimes so worried about the future that we forget to live the present! But on a more serious level:
I came to reflect upon the other elements we have in common when I listened to a speech recently held at the conference of technology, entertainment and design by Harvard history professor Niall Ferguson. Considering the fact that Western nations, representing 19% of the world's population, own roughly two thirds of global wealth, Ferguson asked himself: "How did Western nations - rather poor for many centuries - become so strong and wealthy over the last two centuries?

Why is it that China or the former Ottoman Empire, which were wealthier than western nations centuries ago, were unable to remain so?" His answer: "Ideas and institutions." According to Ferguson, the main reasons for western societies' economic development - and the loss of wealth elsewhere - are:

free competition
industrial and scientific revolution
private property rights
modern medicine
a consumer society and work ethics

So obviously, we do have a lot in common with other Western countries. But to return to my rhetorical question: "What, if anything, makes Switzerland different?"

Why is it that we are not facing the same problems most western economies have?

Out of curiosity, I googled "what makes Switzerland special" and came up with 215 million results! Which led me to believe I was not the only one wondering... even though most links I saw seemed to be devoted to "Swiss made", Swiss chocolate, Swiss businesses and tourism. Needless to say, I stopped checking right there; even if I were to devote 30 seconds to each link, it would have taken me some 200 years to get through!

As I have already said, I am obviously not the only one wondering:

A couple of months ago, the Wall Street Journal wrote a piece on why Switzerland is leading the haven beauty contest for investors. The Financial times recently called Switzerland "a success story". And, according to the AmCham-website, Switzerland enjoys world class infrastructure, a business-friendly legal and regulatory environment, highly educated, a reliable and flexible workforce and a highly automated and efficient manufacturing sector. It also says that Switzerland is a consumer and producer of high quality, value-added industrial consumer goods. Well, that sums it up quite well! But how did we get there?

A very low debt-to-GDP ratio - 38% - is certainly one thing that makes us different from other western economies these days. So is our very low unemployment rate and our close-to-zero inflation. So, to get to where we are, we used a very old recipe. 2,000 years ago, Roman Senator Cicero said: "If we want to avoid Rome going bankrupt, our budget should be balanced and public debt should be reduced. People need to work, rather than depend on public assistance for their well being." That's exactly what we did. What is the solution for others?According to Professor Dembinski, who runs the "Observatoire de la Finance" in Geneva, there are two ways to deal with the mountains of debt accumulated over the last 40 years, but mainly over the last 15 years:

Either pay it back, which neither he nor most of us believe is ever going to happen, or dissolve it in inflation, an excellent solvent. Either way, the path to recovery will be long and hard and many will suffer.

But avoiding excessive debt is not the only thing that makes Switzerland special or different. It is, to my knowledge, the only country in the world where people with different languages, religions and mentalities have formed one nation which has successfully evolved over centuries, remaining one of the world's most stable and secure democracies. It is also a country with one of the highest percentage of its citizen living abroad - close to 700,000 - and a country with one of the highest percentage of resident foreigners: roughly 22% of our population.

Switzerland also has one of the lowest percentages of civil servants: 15% of the active workforce, versus 18% in Germany, 21% in France, and 25% in the Scandinavian countries. Though I do believe we have very efficient civil servants - a statement some of you who deal with the administration might doubt occasionally. What is atypical is that only 10% of all civil servants are employed by the Confederation, whereas 47% are employed by the cantons and 43% by the communes. This very decentralised structure - all cantons have their own constitution, laws and regulations - allows for most decisions concerning the daily life of the population to be taken locally, and politicians, on whatever level, are constantly reminded, by petitions, initiatives or referendums, that the final word lies with the citizen.

So, this decentralised structure is probably one element of the "Switzerland - a special case". Another one might be that we have a very diversified economy. Our industries are active in many fields: food, machines, pharmaceuticals, watches, finance etc. And our economy is not only remarkable for its diversity, but also for its excellence in various sectors. As Professor Garelli of the IMD says: "There are only a few economies worldwide which can rely on very competitive companies in so many different areas. This is a clear competitive advantage."

A country is also what it produces, and in this respect, our Small and Medium Sized enterprises (SMEs) play a very important role.

While in many countries a small number of very large companies are virtually the only wealth generators, Switzerland has around 300,000 SMEs, which create a very diverse industrial and commercial fabric. I take pride in noting that over the first 8 months of this year, some 26,000 new companies were set up in Switzerland, 7% more than over the same period of last year. Not all, of course, are industrial SMEs or
start-ups, and not all will survive over the years. Yet many are, and will. And through my Department's Commission for Technology and Innovation, we lend support to R&D projects, entrepreneurship and the development of start-up companies. Cantonal banks often provide credit and Universities offer support, so there is relatively easy access to financing and know-how.

All these SMEs contribute to the reason why the words "Swiss made" still mean something. The same cannot be said for many countries, which have lost a large part of their industrial capacity.

Another element which might help explain the "Switzerland -a special case" is the importance we ascribe to research and innovation:
"Switzerland submits the highest ratio of patent requests per inhabitant to the European Patent Office and even ranks amongst the top 10 worldwide in terms of its absolute number of patents." Innovation, creativity, marketing and hard work are certainly the main reasons why the watch industry regained its position as number one worldwide, after the catastrophic 1970's.

But, as we all know, past performance is no guarantee for future results.

The real challenge - besides dealing with the present overvaluation of our currency - is to have a vision of what it will take in the years to come for Switzerland to remain a success story.

I believe we need to improve access to international markets by more free trade agreements, as these agreements provide competitive advantages and eliminate discriminatory practices. We also need to improve efficiency in our domestic market, as some sectors are overregulated. For example, the liberalization of the health market, which is looming in the European Union, calls for a fast improvement in cost efficiency.

We also have to reduce the administrative burden on companies. We must achieve our climate objectives and increase the efficiency of our use of resources. Greater sustainability in the economy means new industries can develop and others will experience an extraordinary boost. Moreover, financial stability has to be improved while Switzerland's attractiveness as financial centre has to be preserved. Despite the structural adjustment process which is taking place, including the job cuts it entails, we should not underestimate the potential of this sector. We need to develop our infrastructure, something which must be taken account of in our next growth programme. Of course, demographic development and the increased need for mobility also have to be taken into consideration.

Switzerland needs to be well integrated into international networks to remain competitive, particularly industries with high knowledge intensity and those experiencing rapid growth. We also have to find and implement a mechanism which allows us to finance our social insurance system sustainably.

We should also be very attentive to the problems caused by a potential major lack of qualified workers. I recently presented the report 'Qualified personnel for Switzerland‘, which presents more than 40 measures in labor and educational policy to efficiently improve the situation of qualified staff in Switzerland.
The measures to be explored mainly relate to five categories of the population:

young passive and unemployed people,
passive adults without vocational education,
parents responsible for the education of their children,
people who would like to reintegrate into work life and
older workers

But I believe that the main challenge we will be facing in the years to come will be in the field of education. In order to succeed in the economic, cultural and social domain in the long run, Switzerland has to rely on a knowledge-based society, integrated in an international network. We will therefore need to make a major effort to develop and improve education at universities, federal polytechnic institutes and specialized universities. The dual education system is a fundamental factor for our industry, as it clearly contributes to reducing the time needed from conceptualization to commercialization. Switzerland is, for the time being, one of the most competitive and innovative countries in the world. It is crucial that we defend this position on the international markets. We can only achieve this goal by investing more in high quality and efficient education, research and innovation and by optimizing the use of every franc invested. This, I believe, is the most important long-term strategic issue for our country. The recent decision of the Federal Council to reunite the competencies of education, research, universities, federal polytechnic institutes and specialized universities as well as innovation under the roof of the Federal Department of Economic Affairs is a turning point for our educational policy. It will undoubtedly be one of the most important topics I will devote myself to in the coming years.

"Switzerland - a special case"? To conclude: Switzerland might be atypical, but that does not make us Swiss special or different. To illustrate how atypical we sometimes are, let me end on a personal note: An electrical engineer by profession, I was, until a year ago, president and delegate of the Ammann Group, founded in 1869 and now managed by the sixth generation of family members. Today, I am the Minister of Economic Affairs. Where else but in Switzerland could such a responsibility be given to a 58-year-old who has been a businessman all his life, rather than to a street-trained politician, with dozens of years of experience of the political arena?

A liberal mind at heart, I've always believed in the motto "the Lord helps those who help themselves" rather than "hold out your hand, the State will pay". Yet, during the last year, I came to realize that even though the State should not be the source of industrial policy in our country, it has an important role to play and that, sometimes, calls for compromises. This was recently the case when I and my colleague, the Minister of Finance, had to present a package of measures to counter the negative effects of the rise in the value of our currency. The lesson I learned during my years as a businessman is that win-win situations can only be achieved if we all stick to our values and principles, yet are willing to listen and to compromise. And believe me, by becoming one of seven Federal Councilors, I am sometimes reminded of this lesson the hard way! But in a way, it is a great compliment to be considered by some to be too left-wing and by others to be too far to the right. After all, don't we all try to do what we consider to be "the right thing", according to our values and beliefs? Mr. President, ladies and gentlemen,
I wish you all success and thank you for your attention.

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”Switzerland – a special case”