Ease access for high skilled international talent

Switzerland needs to improve its framework for talent from outside the EU, in order to ease access for high-skilled international talent and therefore address the looming labour shortage caused by an ageing population. First, policymakers should create ‘innovation permits’ that improve the framework for young, highly talented individuals. Second, policymakers should reduce the bureaucratic obstacles to business travel and international trainee programmes, and provide guaranteed standards of service for approved businesses (‘trusted company status’). Third, policymakers should gradually harmonise processes across the country, digitalising authorisation processes and introducing key performance indicators for official agencies while preserving cantons’ autonomy and freedom to make decisions.

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Activate domestic labour market reserves by improving regulatory framework

Besides improving the framework for international labour mobility, Switzerland should also focus on the potential of the domestic labour market to address the looming labour shortage. There is a remarkable unused pool of labour in the Swiss labour market, mostly comprising women and people aged 50 or older. The Swiss government could help to mobilise this additional labour potential by improving the regulatory framework. First, it could shift the tax system towards individualised income taxes so that two-income families are no longer penalised and women are given a greater financial incentive to work. Second, it could improve the financial incentives for older workers who want to keep working until or even beyond retirement age.

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Make the retirement age more flexible and link it to life expectancy

Switzerland’s fixed retirement age, 65 for men and 64 for women, is not helping to mobilise the additional labour potential represented by older people. Businesses have few incentives to recruit workers over the age of 60, whom they expect to retire over the next few years. This also makes businesses less motivated to invest in continuing training for older workers. Meanwhile employees, too, have little incentive to continue working beyond the official retirement age. Increasing the retirement age and also making it more flexible would keep workers in the labour market for longer and would also boost investment in the workforce. It would also make the pension system financially sustainable, which is desperately needed given that the state-run AHV pension fund will run out of assets in a few years.

Switzerland could follow the lead of countries such as Sweden or Canada which have both linked increases in the statutory retirement age to measures to make the retirement age more flexible so that employees are no longer required to retire at a fixed age. The longer employees continue working, the larger the pension they receive, and vice versa. The reference point for calculating pensions is average life expectancy.

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Boost STEM in schools

Switzerland’s looming labour shortage will particularly affect industries that rely on scientists, technicians, engineers and mathematicians (STEM). Already many businesses are struggling to fill STEM positions. When it comes to the number of graduates in STEM subjects Switzerland’s performance is only average compared to OECD countries. STEM graduates make up just 9% of the total. In Germany the figure is 15% and in the UK, 17%. Switzerland urgently needs to make improvements here. It is important to generate greater enthusiasm for technical occupations among young people and to strengthen cooperation between schools and businesses.

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Upgrade education system to the digital age

ICT skills are vital for future jobs. According to the OECD, Switzerland ranks fourth in terms of ICT specialists as a percentage of total employment. However, as digital technologies are multidisciplinary, a country’s talent pool should not only consist of IT specialists. Most employees need to be digitally skilled to some degree and Switzerland is not performing particularly well in this regard. Based on an international survey of executives conducted by the International Institute for Management Development (IMD), the availability of digitally skilled workers in Switzerland is only slightly better than the OECD average. It is essential that young people acquire ICT competencies early in their education. A first step in this direction was the ‘Lehrplan 21’ (‘Curriculum 21’) initiative, which made media and computing a separate specialist subject in schools. However, the focus must shift from learning how to use digital devices to understanding how algorithms work or the basics of programming.

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Adopt labour law for the digital age

According to a Deloitte survey, almost 50% of Swiss workers have been working from home during the COVID-19 pandemic. Even though the majority of these people will return to the office once normality has returned, the number of people working remotely is unlikely to go back to pre-COVID-19 levels. Remote working will become the ‘new normal’. As Swiss labour law dates back to the pre-digital age, it will need to be adapted accordingly. For example, if remote workers check their emails at 11 pm they are not allowed under the current law to start working before 10 am the next morning because the mandatory rest period is 11 consecutive hours. Lifting such restrictions would make remote working easier. Questions have also arisen on how to lift restrictions with regard to cross-border employees. As a result of COVID-19, cross-border employees will no longer be travelling every day to work as they used to.

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Implement a workforce strategy for the future

Faced with technological and social disruptors, businesses’ success depends on having a strategy that reimagines all aspects of workforce management from accessing, engaging and rewarding to, ultimately, leading the workforce of the future. This strategy needs to be aligned with work, workplace and workforce capabilities across the entire organisation. Corporates need to think about how the nature of work is changing and what new skills are required given the rise of digital technologies (affecting work), how collaboration, productivity and consistency can be maximised through physical design and technology (the workplace), and how humans and machines can collaborate to alleviate the labour shortage (the workforce).

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Embrace remote working

The number of people working from home in Switzerland has doubled during the COVID-19 crisis and is unlikely to go back to pre-COVID-19 levels. Faced with a long-term boost in remote working, companies need to make sure that they can successfully enable their employees to be as productive as possible when working from home. It is therefore vital to address a lack of appropriate technology, such as digital devices, virtual collaboration tools and platforms that will support dynamic work locations. Technology, however, is not the only important aspect when it comes to working remotely. Companies and employees need to find ways of organising themselves and reimagine how best to conduct productive team meetings and guarantee efficient teamwork. Managers need to communicate regularly with their teams and make sure they establish a new rhythm to achieve the best possible performance.

Furthermore, managers should act as a role model and pave the way for a healthier and more sustainable work environment when working remotely. Only then can companies fully reap the benefits of working remotely. At the same time, companies need to manage cyber risks and train their employees accordingly. Whilst COVID-19 may have reduced the threat of physical crime, targeted cyber crime is on the rise as criminals exploit widespread anxiety about the pandemic. Employees needs to be made aware of these issues and trained in managing sensitive data.

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Focus on lifelong learning

Ensuring that employees are fully prepared for future trends requires willingness on the part of businesses to raise employees’ awareness of lifelong learning, support them and actively promote continuing training/upskilling. It is important to realise that most careers no longer follow a linear path throughout an individual’s working life but are increasingly dynamic and multidimensional. Businesses need to take steps to deliver learning to their people in a more personal way so that it is targeted to the individual and delivered at convenient times and in accessible ways. People need to be able to learn in their own time. Technology can play an important role in this. With growing numbers of providers now offering video, text, and programme-based curricula in smaller, more digestible formats, businesses have an opportunity to allow their workers to learn as and when they see fit.

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Leverage and manage the ‘alternative’ workforce

Full-time jobs seem no longer to be the dominant career model in the labour market. So called ‘alternative work arrangements,’ such as contract, freelance and gig employment, have gone mainstream. In Switzerland 25% of people of working age are performing temporary, supplementary or project-based work on a full-time or part-time basis. In the US, the freelance economy represents 35% of the workforce. A recent Deloitte survey shows that many businesses are not yet ready to address this issue. To engage alternative workers strategically businesses have to move beyond ‘managing’ contractors and freelancers. What is needed is a wholesale ‘rewiring’ of how organisations operate with alternative labour – so that the appropriate talent is connected with the appropriate roles no matter where or how it is sourced. Part of the answer lies in connecting the various parts of the enterprise involved in hiring alternative workers, such as procurement, IT and HR.

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Rethink the value of older workers

To address the emerging labour shortage, businesses need to think again about the value of older workers , also to foster diversity. According to a recent Deloitte survey, 40% of all economically active 50-64 year-olds’ would like to continue working beyond retirement age. If this potential were fully tapped, it could substantially reduce the labour shortage. However, at present many companies still have few, if any, employees working beyond retirement age. Some regard older workers as disadvantageous to the company, in particular in terms of wage costs, pension contribution rates or productivity. Others may simply be unaware of the potential offered by older workers. Businesses that continue to view older workers as a disadvantage and focus their recruiting on younger age groups are making a strategic mistake. It is time to approach the issue strategically and create genuine cultural change.

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