Switzerland: Selected Issues

This Selected Issues paper examines Swiss labor productivity from a firm-level perspective, highlighting factors that influence recent trends. Switzerland's strong labor productivity is driven by robust R&D, a high-quality education system, and deep global integration. However, challenges such as lower R&D intensity, limited access to financing, and high skilled labor costs persist. A risk-averse financing environment and administrative frictions further constrain business dynamism and innovation. To address these issues, the Swiss authorities are implementing productivity-enhancing reforms, focusing on competition-friendly regulation and expanded market access. Additional reforms are recommended, including simplifying regulatory and compliance requirements to reduce the operational burden on SMEs and investing in education and training systems to alleviate labor constraints. These efforts aim to foster entrepreneurship, innovation, and growth, ultimately supporting Switzerland's competitiveness in the global economy. By advancing these reforms, Switzerland can continue to enhance its labor productivity and maintain its economic strength.