What impact do SMEs have on the Swiss economy?

Switzerland is an economically prosperous country. In fact, according to the World Bank, it is the 17th largest economy in the world. There are many factors that explain its rise. Switzerland owes this fine performance to its innovative education system, which trains around two-thirds (2/3) of its young people every year. Unemployment is negligible. Its industrial system is characterised by a high export rate. This enables it to make a good profit margin thanks to international transactions. Its GDP is 7.6%, making it the world's leading exporter. SMEs are also a great support to this nation's economy. Find out all you need to know about the economic system and SMEs in Switzerland in the following lines.

What is an SME in Switzerland?

SMEs are small and medium-sized enterprises that employ fewer than 250 people full-time. Examples include catering, pastry-making, hotels, IT and related professions, communications and many others. SMEs are also known as commercial enterprises. In Switzerland, their percentage is close to 99%. These companies are very active and add remarkable value to the country's economy.

What are the characteristics of SMEs?

It's important to point out that SMEs are still divided into several categories. There are micro-businesses, which employ between 1 and 9 people, and small businesses, which employ between 10 and 49 people. Medium-sized businesses employ between 50 and 249 people.

SMEs in general differ from other businesses in a number of ways. Unlike large companies, they have no more than 249 employees. In terms of production, their turnover is less than or equal to €50 million. They also use two main legal forms of company: the SPRL (private limited company) and the SRL (limited liability company).

What is Switzerland's economic system based on?

Switzerland is an economically prosperous country. It did not achieve this status by chance. It has had to clean up all its sectors of activity, equipping them with the necessary resources and techniques so that they can reveal themselves to the world. There is no doubt that the export of products and services is Switzerland's economic mainstay.

Indeed, 25% of its GDP comes from industry. Switzerland has a multitude of industrial sectors, and the figures have been rising steadily in recent years.

The MEM industries

MEM stands for Machinery, Equipment and Metals. The strength of this industry, which has earned it an international reputation, is the quality of its equipment. The MEMs sector made dazzling progress between 2020 and 2021. In fact, during this period, its sales rose by up to 10.4%. Exports are also of great value in this industrial sector, rising by 12.7% over the same period. This is because a large percentage of the products from the various manufacturing processes are exported.

It is also important to note that the MEM industries employ the largest number of workers.

The chemical and pharmaceutical industry

This is no less important than the first. Because of its sense of innovation, it is more easily eligible for the issue of certain documents, particularly patents. In fact, this Swiss industry has already submitted thousands of applications to the EPO (European Patent Organisation) in 2021.

In terms of transactions, the chemical and pharmaceutical sector represents 50% of Swiss exports and 9% of Swiss GDP. Allied companies in this sector include Givaudan, Novartis and Cilag Gmbh.

The biotechnology and medical technology industry

This sector has attracted many national and international partners as a result of the policies implemented to eradicate COVID-19. As a result, these revenues have risen from 4.9 billion to 6.2 billion between 2020 and 2021.

Other sectors of activity in Switzerland

The industrial sector is not the only one contributing to the development of Switzerland's economy. The telecommunications sector is also what sets it apart from the rest of the world. Its mobile networks, internet, radio and TV channels all use the latest technology.

The Swiss healthcare system is also well organised and equipped with cutting-edge materials. In terms of employment, Switzerland provides better support for young people after their training in various fields of knowledge, including banking and finance, accountancy and management, insurance, education and research, etc.

Taxation in Switzerland

Taxation also plays an important role in Switzerland's economy. Taxes play a financial role, an economic role and a social and political role.

Switzerland's tax system is based on federalism, which is a management system in which the state and its federates share various constitutional assets. In this nation, there is an imbalance in taxation. There are many reasons for this. These include: canton and municipality, income level and status.

The tax rate in Switzerland is set at 40%. However, it is not static and varies from canton to canton. It is 20% in some cantons and 30% in others.

There are several types of tax in Switzerland: income tax, which applies to all residents of the country, direct taxes, indirect taxes and social security contributions. Possession and expenditure tax is also levied on certain residents. As a result of all these taxes, Switzerland collects almost 140 billion Swiss francs a year. This is a real strength for its economy.

What policies are in place to support SMEs in Switzerland?

SMEs are a crucial part of the Swiss economy, so it's important to create an environment conducive to their growth. This is the mission assigned by the State Secretariat for Economic Affairs (SECO).

To put it plainly, the policies implemented in favour of SMEs are aimed at reducing their administrative burden, encouraging young people to create jobs, and facilitating access to finance and public procurement. They also aim to encourage and promote innovation. For example, in the canton of Vaud and the other cantons of Switzerland (including the cantons of French-speaking Switzerland), measures are in place to support SMEs in achieving their objectives.

SECO is responsible for mobilising partners at all levels to make life easier for SMEs. Other institutions with which it collaborates are the centre of excellence for the internationalisation of companies, Switzerland Global Enterprise, and Swiss Export Risk Insurance. The State Secretariat for Education, Research and Innovation (SEFRI), the Swiss Union of Arts and Crafts (Usam), the Federation of Swiss Companies and trust companies also provide support for SMEs.

Conclusion

Switzerland is a country that has already reached a high economic level. SMEs have a major impact on this nation's economy because they make up more than half of all businesses.

When it comes to creativity and growth, they are also reliable. Switzerland's economic system is also based on the export of products and services. This brings high added value. This enables the country not only to make its mark internationally, but also to reap sufficient profits.

In terms of taxation, the various taxes levied also help to boost the country's economy. Aware of what SMEs represent, a number of policies have been established to facilitate their integration and growth.