Paper-it-Properly wants to open a new manufacturing plant in Switzerland. This consultancy report gives an insight into the different aspects of the HR perspective of moving into the new country and the feasibility of doing so. Only a few of the key points like political and social trends, demographic composition, cultural differences, the legislation in the country and the educational and skill levels are considered as this report has to be only added to previously gathered information.
Switzerland is geographically placed in the middle of Europe and surrounded by land on all sides. It is the most neutral country in Europe and hence has maintained political stability over the years (BBC news, 2011). The capital of Switzerland is Bern and Zurich is the largest city in the country. German, Romansch, Italian and French are all the national and official languages along with few other languages like Spanish, Albanian, English and Serbo-Croatian (CIA Factbook, 2011). CIA Factbook (2011) states that 41.8% of population follows the Roman Catholic religion while the other religions that are also followed in the country are Protestant, Muslim and others.
Political and Social Trends in Switzerland:
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Switzerland is known to be a formally neutral country since a very long time (BBC news, 2011). Swiss Confederation, as it its formal name, consists of 26 cantons (basically states) and have their own governments and parliament with a little more freedom as compared to other countries (The Swiss Confederation Brief Guide, 2010). People have a direct say in their issues, which is incomparable to any other country because the government gives them the authority to propose legislations and bring constitutional changes through referendums (Swissinfo a, 2007). Fluckiger (1998) mentioned the same thing in his article, which implies the political stability in the country over the years. In fact Swiss politics stands out for its stability in the world and there has been little change in it since the first time the parliament was formed in 1919 (Swissinfo b, 2010). Fluckiger also noted that the only 27% of the workforce is associated with trade unions in this country and there is no central single trade union group in existence here. This is an advantage as it results in lesser number of strong protests. The country has kept diplomatic relations with most of the countries and served as a neutral intermediary for international conferences (Bureau of European and Eurasian Affairs, 2010) . Switzerland is not yet a part of the EU but has permitted skilled and unskilled workers from other EU countries for employment (BBC news, 2011). This is an advantage for the industry.
Switzerland is said to have the most stable, flourishing economy along with highly skilled labour, low unemployment rate and per capita GDP, which is one of the highest in the world (CIA Factbook, 2011). The current per capita GDP of the country is $ 42,900, which is stated to be 16th in the world and the GDP growth rate in 2010 is 2.7% (CIA Factbook, 2011). This clearly indicates the high economic standard of living.
[Adapted] Figure [a] Gross Domestic Product in the Last Quarter Half of 2010. [Online] SECO. Available at http://www.seco.admin.ch/themen/00374/00456/index.html?lang=en [accessed on 4th May,2011]
The table illustrates the GDP growth over the last five years. It can be seen from the graph how drastically recession affected the country's GDP growth rate. The only dip in the rate is in the year 2008, which the country seems to have recovered from as soon as the third quarter of 2009. This shows the economic strength of Switzerland. Exports and foreign trade make maximum contribution to the countries GDP (Swissworld, 2010). Quayle (2001) suggested that over half of GDP comes from foreign trade and more than one third of domestic demands are met by imports.
[Adapted] Figure[b] Kindersley,D. 2004 The Financial Times World Desk Reference [online] Availaible at http://dev.prenhall.com/divisions/hss/worldreference/CH/crime.html [accessed on 4th May 2011].
The crime rates in Switzerland are relatively low when compared to other countries over the world. Thefts seem to be the only prominent form of crime from the chart (The Financial Times World Desk Reference, 2004). Nicati and Daams (2006) during their study noticed that due to globalisation entrepreneurs are exposed to law breaking situations that lead to corruption in the host country, which is a crime. Also, money laundering is one of the biggest crimes in Switzerland due to its banking sector secrecy policies. However the country is undertaking measures to tackle the issues.
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Only 6.9% of the total population of Switzerland lives below the poverty line (CIA Factbook, 2010). The quality of life is high in Switzerland and this scenario is constant over time and hence can serve as a good testing market for new businesses (Bureau of European and Eurasian Affairs, 2010). In fact an article in TIME by Bachmann (2002) mentioned that it is hard to find statistics on poverty in Switzerland. Stephane Fleury, at Federal Statistical Office, has admitted that colleting data about the poverty level has not been a tradition in the country. The article also mentions that the entry of immigrants and the recession can be major reasons for the rising poverty in Switzerland. Any single person household earning less than 2200 francs per month or 4600 francs for household with 2 children was the official poverty line (Swissworld a, 2010).
Organisational culture is said to be “ a pattern of basic assumptions” (Schein, 1984 cited in Nazari et al, 2011). Storey and Legge (1995, cited in Redman and Wilkinson, 2009) have mentioned that organisational culture is developed mainly due to the human resource management practices been implemented. Hofstede's (1991, cited in Redman and Wilkinson, 2009) research suggests that people from different countries have different attitude towards handling issues that also influences the organisational culture.
The business culture in UK and Switzerland seem to be totally different. In Switzerland, people look for security of job whereas in UK people believe in growing by working for more than one employer. Pre-planning and unwillingness to face risk is characteristic to Swiss culture while UK appreciates the skill to tackle unexpected risks. The business is hierarchical in UK and the board of directors hold a lot of power while it is very decentralised in Swiss culture. This Swiss culture can be said to have its roots in the liberal government of the country and also the fact that most of the organisations are small here. In UK, management skills and practical experiences are preferred over the technical ability of the manager. This is totally opposite in Switzerland, where technical abilities and academic qualifications are more important than the general perspective. Meetings in Switzerland are formal and follow the pre-decided agendas and in UK they are more like debates with agendas loosely set. This illustrates the difference in the decision making process. Both the countries take good advantage of the perks of team working. However Swiss business culture allows an individual to perform tasks without any interference or supervision and apply one's expertise while UK prefers discussion on issues and helping the team members within the team. (World Business Culture, 2011)
Although this information pertains more to the management level, it gives a better insight into the culture differences to be considered. Also like mentioned earlier the management drives the culture in the organisation. The cultural differences indicate the problems that can be faced while dealing with the labour force.
The total population of Switzerland is 7.6 million and 4.62 million of this is into the labour force (CIA Factbook, 2011). European Commission (2005) stated that there is a decline in the population increase and that most of the Europe has to fight it in the immediate years. Switzerland is no exception to it with a population growth rate of only 0.21% noted in 2010 (CIA Factbook, 2011). This has brought drastic changes to the demographic trends. Dixon (2003) had stated that there will be an increase in older working population and major changes in employment trends which affect the aspects of labour market like skills, wages etc. The employed population rate between the age 55-64 is 68.4% and that is more than the employed population rate between the age 15-24, 62.4% (OECD Factbook, 2010). Although there are no exact statistics, but there is evidence that women in developed countries have started entering the labour force, which brings major difference to working population (Lucas et al, 2006). Women participation in labour force has increased from 51% in 1960 to 58% in 1990 (Fluckiger, 1998). The unemployment rate in Switzerland in the year 2010 is 3.9%, which has slightly risen from 3.7% in 2009 (CIA Factbook, 2011). There has been slow but steady increase in the rate of unemployment in the country primarily because of the recession. However other factors like immigration also play an important role in it (Fluckiger, 1998). The net migration rate for the country in 2010 was 1.29 migrants/ 1000 population, which is 48th as compared to other countries in the world (CIA Factbook, 2010). McGovern (2007) noted that the biggest fear from immigration seems to be its effect on wages even when it has little effect on it. In fact he said that immigrants are paid lesser than the locals. This can be an advantage for a new industry as cheap labour would be available. The major ethnic groups in Switzerland and their distributions are also mentioned in the CIA Factbook. The country consists of 65% German, 18% French, 10% Italian, 1% Romansch and 6% of others.
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As mentioned earlier also, the labour market seems to have liberal or decentralised legislation. The country also seems politically stable wit rare occurrence of strikes. However there are a few labour laws incorporated in the constitution.
The power of making labour laws is with the Confederation. It caters to many labour issues like discrimination, protection of labours, relations of worker and employers. The federal legislation is the main source of legislation and the employment contract effective from 1911, consists of Arts. 316-392 of Code of Obligations (CO). With these obligations the Swiss Constitution protects employers against all sorts of discrimination on grounds of ethnicity, language, age, sex, disabilities and many others. Basically there are no special legislations for these fundamental rights of the labour. Any employee, who faces discrimination, is liable to compensation since the employment contract is breached. If the dismissal proves to be an allegation than the compensation is reversible. (ILO, 2007)
However discrimination on the grounds of gender is given special protection in the legislation. The Federal Act of Gender Equality (Gender Equality Act) was added on 24th March 1995. The act was implied to all employment relations included in the public law and the Swiss Code of Obligations. The law prohibited any form of discrimination on the grounds of sex either direct or indirect on the basis of the employee's marital status or their family situation or, for female employees, on pregnancy. This prohibition has to be taken care of at every level of HR practices like recruitment and selection, wages, training, promotion and dismissal and even the working conditions setup. Any harassing behaviour affecting dignity of the employee, promising advantages or exerting pressure to get favours is also considered as discrimination. It is the employee's right under this law, to apply to administration, for an order to stop the threats of discrimination, or cease the existing one's, confirm the discrimination if it has a continual troublesome effect or ask for any salary due. (Classified Compilation of Federal Legislation, 2011)
This proves that the labour force is well protected by the constitution and the company should be careful of this fact.
Education and Skill Levels:
Although education is said to be the most basic part of human capital, the importance of out-of-job and on the job training that gives practical knowledge and adds to the skills of an employee should also be considered (Marelli and Marcello, 2010). Switzerland has very little natural resources due to which it depends on the brainpower for development and hence has a very high standard of education (Swissworld b, 2011). The literacy rate in Switzerland is 99% (CIA, Factbook, 2011).
The OECD Factbook mentions that educational attainment is basically the skills in the labour force and the population. The definition is given as “the highest level of education completed by each person, shown as the percentage of all persons in that age group”. OECD has noted the education attained for the different age groups, in the year 2007. The age group 25-64 having education below upper secondary is 14.6%, upper secondary and post-secondary non-tertiary is 55.5% and tertiary is 29.9%. (OECD Factbook 2010) 
Fluckiger (1998) has mentioned that the education system in Switzerland allows less emphasis on theory and more on practice, which results in many non-university higher level training establishments. This results in increase in highly skilled labour force. He also noted that majority of young people start working because of the apprenticeship system. Highly skilled labour is said to be characteristic to the Switzerland's labour force (CIA Factbook, 2011). The different profession in which the population is involved gives a slight picture of the labour skills and trends in the country. While only 4% of population is involved with agriculture and forestry and 23.5% is involved in Industry and Construction, maximum of the workforce, that is 72.5% is into Services sector and government (Bureau of European and Eurasian Affairs, 2010). This clearly indicates that labour force is characteristic of highly skilled labour.
The evidence collected and research done help in coming to a conclusion about the expansion of the manufacturing plant in Switzerland. The country is politically stable since the induction of the Confederation and it can be safely predicted that there shall be no upheaval in it in the near future, which is favourable. The industry can be assured of no political interference or changes in policy or increased unionism. The GDP growth illustrates the economic strength of the country and how the economy has bounced back despite the recession. This again is a favourable for the industry as it indicates low inflation risks. The crime rates are low except for the banking sector, which due to its secrecy policies facilitates money laundering but this does not affect the paper industry. However it is mentioned by Swissworld c (2011), that banking sector influences the employment in other sectors directly or indirectly.
The population below poverty level and the unemployment rate both are low for Switzerland. This points to the fact that cheap labour will not be easily available in the country. This is a huge disadvantage for the paper industry, since it requires more of working labour in the manufacturing plant. However the increasing migrants may change this trend in the labour force of Switzerland and can be source of labour for the plant. Also the free moving migrant workers from the other EU countries can be of help.