Executive Search in Switzerland – 2019 Outlook
Uncertainty Slows Swiss Growth
After a very good 2018 – with a growth rate of 2.7% – we expect growth to slow down to below 2%. The main reasons for this are a difficult global environment, with a potential for substantial disruptions, and the absence of any major sport event in 2019.
Uncertainties at the global level are toxic for investments and consumption alike – especially for a small and open country like Switzerland. As a result, the export industry’s books are thinner, investments are postponed, vacancies remain open longer and consumers react cautiously.
Since Switzerland is host of many international sport bodies and the licensing receipts are included in the GDP, this is one source of growth which will disappear for a year. In addition, since the immigration rate seems to have steadied, this past origin of growth will cease to exist. Baby boomers will start to retire, thus creating more downward pressure.
Switzerland is lucky to have a very stable political environment and a general public with a positive attitude towards free markets, entrepreneurs and fiscal austerity. In the past years, however, the situation has worsened slightly. Several votes restricted or threatened to restrict entrepreneurial freedom and free markets or expanded the social safety net, thereby increasing the ratio of government expenditures to GDP.
Both developments have started to undermine the image of a business-friendly country. To make matters worse, Switzerland saw several votes directed against skilled immigrants, who are an important source to fill high-qualified jobs. The real effect of a single event on the overall environment may be close to zero, but all events taken together have deep repercussions.
In 2019, Switzerland has the chance to move again in a positive direction. Several trade agreements – most noticeably the one with MERCOSUR – are in their final phase, and an update for a new tax system may provide a return to fiscal certainty for foreign companies. Furthermore, if Switzerland signs a framework agreement with the EU, we will see an additional upturn of economic activity as of 2020 at the latest.
Although high-skilled professionals are in demand, we expect a slight reduction in recruiting services compared to 2018. The overall mood is more cautious than in 2018, and many companies tend to postpone decisions, hoping the fog of this uncertainty will soon lift. Also, hiring individuals from abroad is becoming more and more of an administrative uphill battle.