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Swiss welfare runs like clockwork

There is plenty to learn from the way healthcare, education and social security are managed in Switzerland, says James Bartholomew

17 July 2010

12:00 AM

17 July 2010

12:00 AM

In Britain we are now glumly entering the age of austerity and everyone expects unemployment to go on rising. This has been the case in the past: even when the economy starts to grow, there is a painfully long lag before unemployment starts to fall. But not in Switzerland is different. There, unemployment is already falling. Since January, it has fallen from an already low 4.5 per cent to 3.8 per cent, half the UK rate.

If you go to Zurich and ask why there are so comparatively few people out of work, you have a good chance of being told: ‘employment is picking up fast because it is cheap to sack people’. It is a classic paradox and not the only one to be found in this part of the world.

In recent years, British policy wonks have looked at how things are done in America. Meanwhile the left has long had a warm feeling about Sweden — usually unsullied by much research into the country. No one cares much about Switzerland. The country may not, apparently, have invented the cuckoo clock, but it has made a better fist of a welfare state than most. That is to say, it gets better results and, just as crucially, avoids causing nearly as much collateral damage.

The boom in lone and unmarried parenting is one of the ways in which our own welfare state has harmed our society — not only the children involved but also the women and men. Of course I am not blaming all lone parents, only saying that the research shows it is a less than ideal way of bringing up child-ren. In Britain, 46 per cent of our children are born out of wedlock. In Switzerland the figure is where ours was 25 years ago, vastly lower at 16 per cent.

So what happens if you are, say, a young mother in Switzerland with a little baby but no husband or similar on the scene and nowhere to live? There is no countrywide answer to this question because it is not dealt with on a national basis. It is not even dealt with by one of the 26 cantons. It is dealt with by your local commune. There are 2,900 of these and their population can be anything from 30 to 10,000 or more.


Officials from this ultra-small local government will come and investigate your individual circumstances. The father will be expected to pay. The mother’s family, if it is in a position to, will be expected to house and pay for her. As a last resort, the young mother will be given assistance by the commune. But the people who pay the local commune taxes will be paying part of the cost. You can imagine that they will not be thrilled at paying for a birth or separation that need never have taken place. Putting yourself in the position of the mother — and perhaps the father — you can imagine that you will be embarrassed as you pass people in the street who are paying for your baby. Instead of feeling you have impersonal legal rights, as in Britain, you are taking money from people you might meet at your local café. No wonder unmarried parenting is less common.

A similar system applies if you need means-tested benefits. Those made redundant receive, for a while, generous unemployment insurance payments from the cantonal governments. But once these payments run out, people depend again on their local commune. You would be cautious of claiming fraudulently because, if you worked in the black economy, your chances of being spotted would be high. And so it is that Switzerland has the second highest rate of male employment in the OECD. Britain’s rate is about 50 per cent worse.

Switzerland has arguably the most successful system of healthcare in the western world. It is an insurance system with a twist. You are obliged to take out health insurance but you can choose which company to use. There is no state monopoly. So you can choose an insurance group which is connected to your line of work. Or you could go with a trade union-run insurance co-operative. Or a private, commercial company. That means there is some competition among these companies to provide the best possible service for the lowest possible price. Then these companies, in turn, have some choice over which doctors and hospitals they commission to work for them. So again, the doctors and hospitals have to compete to offer the best facilities and treatment at the lowest possible cost. Poorer people get credits which enable them, too, to choose insurance.

The Swiss health service is decidedly superior to that in Britain, too. It has more doctors per capita, more advanced scanners, better results in treating cancer and so on. All right, it is not perfect. People get treated for free, effectively, and, since the service is easily available and good, they tend to overuse it. Thus the costs have been rising worryingly, as with other social insurance systems. The Swiss model remains, however, one of the best around. It provides less of a barrier to employment than most social insurance systems. The cost of the premiums is borne by individuals, not shared among companies as it is in Germany.

Swiss schools are also better, on average, than British ones. That has, again, surely got a lot to do with local control — not the fake kind to which we have become accustomed to. Primary schools are run by little communes and secondary schools and universities by the cantons. It means there are villages where the officials in charge of a school will all know the headmaster and many of the students. There is much less wasteful bureaucracy and much more direct accountability.

But the Swiss system really scores over ours when it comes to preparing people for work. We have become accustomed to Labour politicians and some Tory ones, too, spouting that university education is vital for economic success. The Swiss example is an illustration that this theory is nonsense. While Tony Blair was claiming that half of young people must go on to university for economic success, Switzerland was and remains content to have a mere 24 per cent doing so. It has, at the same time, achieved much greater economic prosperity. Education is only compulsory until the age of 15, yet the vast majority keep going voluntarily because the schools, colleges and universities are good.

Most of the other three quarters of students progress from school to vocational training. They don’t do airy-fairy theory. The training typically consists of one and a half days a week at college and the other three and a half at a commercial company. This truly prepares people with the skills and attitudes desirable for a successful career. The result? Switzerland has only 4.5 per cent youth unemployment compared to 18 per cent in France where they have the supposedly economy-boosting 50 per cent of students at university. It seems that writing essays on Racine does not make you a shoo-in at a pharmaceutical company. Funny that.

No welfare state is perfect. All of them do damage of one sort or another. And there are some claustrophobic, controlling elements in the Swiss system that are unappetising to British taste. There is a continuous pressure there towards centralisation and regulation. But there are plenty of lessons worth learning amid those lakes and mountains. The Swiss way of welfare is a darn sight better than the British.

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