Aargau: an attractive Swiss business location - Annelise Alig Anderhalden
Tax rates are an important factor in the choice of location for any CFO. However, to reap the rewards, a business first has to make a profit. This means looking at all the other location and cost factors - including the business's productivity and capacity to innovate. That's why Aargau, Switzerland's high-tech canton, focuses on promoting innovation, explains Annelise Alig Anderhalden, director at Aargau Services Economic Promotion.
Switzerland is one of the most competitive countries in the world. In the World Economic Forum's Global Competitiveness Reports 2012-13, it ranks number one in the overall ratings. One of the reasons for this is its clear strengths in innovation. Switzerland has topped the ranking of the Innovative Union Scoreboard in Europe for many years, and in 2013 was again awarded the top spot. The country's outstanding performance is due to its concentration of high-quality research institutions, its nationwide investments in research and development, and the excellent cooperation between industry and universities.
Another reason for Switzerland's strong competitiveness is its above-average labour productivity. This is due to a number of factors. The labour force participation rate is 68.2% (2011), combined with traditionally low levels of unemployment; labour force rates in Switzerland are much higher than anywhere else. What's more, Swiss employees are also well trained. Around a third of workers have tertiary-level training and are therefore highly qualified. Switzerland's workforce is also extremely well motivated. Swiss employees rank second in international comparisons. And this high level of morale at work can also be seen in the outstandingly low level of absenteeism.
Another advantage that Switzerland offers is the way in which its labour market is organised. The country benefits from liberal labour laws, low regulation and a high level of social stability. In the ranking of labour market deregulation, Switzerland takes second place, with Germany coming in at number 31 (IMD World Competitiveness Online 2011).
Competitive advantages in unit labour costs
There is a well-balanced relationship between workers' representative bodies and employers in Switzerland. Moreover, representative bodies do not have any codetermination rights; they only have rights to information, hearings and consultation. In spite of this, strikes are practically unheard of in Switzerland. The standard working week is between 40 and 44 hours. In industry, the maximum is 45 hours a week, and in commerce the upper limit is 50 hours. What's more, non-wage labour costs in Switzerland amount to only 15%, which is under the international average.
These non-wage labour costs are what make work in many European countries so expensive. The decisive factor here is not the salaries that workers are paid but the unit labour costs to the employer. Due to workers' high levels of productivity, unit labour costs in Switzerland are significantly lower than in competing markets.
Additionally, they have only slightly risen since 1995. This gives Switzerland a strong competitive advantage. Together with high labour productivity, moderate levels of taxation and low capital costs, unit labour costs for employers in Switzerland are often lower than in other European countries.
Strength in innovation drives productivity
As explained previously, strength in innovation is an important driver of a country's productivity and competitiveness. The decisive factors here are knowledge and technology. Various studies have shown how knowledge and technology transfer can strengthen
a business's capacity to innovate. Businesses that work together with scientific institutions are much more successful. They produce more efficiently and cost-effectively, are much more export-driven and offer outstandingly innovative products. The technology used in production processes of any kind nowadays is becoming increasingly complex, and demands knowledge of many different disciplines. That's why working with specialists in science gives businesses an advantage.
Knowledge transfer is also of key importance in the canton of Aargau. As the home to many renowned research institutions such as the Paul Scherrer Institute (PSI), the Plastics Training and Technology Centre (KATZ) and the University of Applied Sciences Northwestern Switzerland (FHNW), Aargau is in an excellent position from the outset.
The PSI is the largest natural sciences and engineering research centre in Switzerland, and it is a strong advocate of applying research results to the development of new products, procedures and processes in industry.
KATZ is Switzerland's most important plastics technology platform. The association advises businesses and universities on innovative projects, and provides the infrastructure for research and development. The FHNW's School of Engineering has been involved in research, innovation and technology transfer for over 20 years. More than 200 projects are conducted every year with small and medium enterprises (SMEs).
Save on the costs of innovation
Aargau supports the transfer of scientific discoveries and future-oriented technology throughout the region's economy. In December 2012, the Aargau High-tech Centre was founded. The High-tech Centre makes it easier for SMEs to gain access to know-how, technology, universities and industry partners. It analyses innovations, and searches for solutions, appropriate innovation partners and financial support. This helps SMEs in a number of different ways. On the one hand they can reduce the risks that the innovation process poses to the business and thereby save on the costs of innovating. On the other hand, they can spend less time looking for knowledge, technology and partners, and conducting their own initial analysis. Businesses can also take advantage of an active network of public and private research facilities and technology providers such as the FHNW, the PSI or the Swiss Nanoscience Institute (SNI). The aim here is to offer businesses the best possible technology. The High-tech Centre also offers access to financial support at either canton, confederation or EU level.
The High-tech Centre's services are equally available to all businesses that are in the process of innovating. Support is given to businesses of any size, and irrespective of their technological background in the fields of engineering, life sciences, medical technology, information and communication technology, micro and nanotechnology, and energy and environmental technology.
Entrepreneurs in the Aargau also benefit from:
- stable political and economic conditions
- business-friendly authorities and easy access to administrative bodies
- responsive tax authorities that give legally binding answers to taxation queries upfront, thanks to Swiss tax rulings
- no retroactive changes to laws, meaning businesses can plan for the future with legal certainty.
The Aargau economic promotion agency is delighted to offer a range of free services to help you plan your business expansion in Switzerland:
- information on business and location questions
- access to public funds in Aargau
- assistance in locating appropriate real estate and properties
- information of tax and employment laws, legal forms, work permits and social security
- networking with companies, business associations, research institutions and authorities
- support in seeking employees.