“Every fifth job in Zurich depends on the financial center” 

The financial industry is still the most important sector for the economy of the Zurich Region. However, the outlook for Zurich as a financial center is not very optimistic. A decrease in both value created (-2.1 percent) and in employment (-3.1 percent) is already expected for this year. The value created by the Zurich financial sector for the period 2010-2020 will lag behind other industries with average growth per year of only 1 percent. The number employed is expected to shrink by an average of 0.3 percent per year. We won’t, though, simply abandon ourselves to this fate and will take measures to counter it. Our study ‘Finanzplatz Zürich 2011’ (‘Zurich Financial Center 2011’) should help the business and political world in their efforts to contribute to actively shaping the future of the financial sector.

The financial sector directly generates every fifth Swiss franc and every tenth job. If you add indirect effects it is every third franc and every fifth job. This certainly shows how strongly our local economy depends on the financial center. Over and above this, high incomes and company profits generate corresponding tax revenues. This impacts positively on the quality of our services and on infrastructure. Public sector investments for example in the S-Bahn network (the Zurich suburban railway), in our polytechnics and universities and in health care can in turn benefit the economy.

If the outlook is proven to be true, subcontractors in particular could suffer from the consequences of a decrease in the value created and in jobs. I’m particularly talking about the IT sector. Smaller companies that provide services for banks will also feel the effects of the rather bleak outlook for the local financial center. Even the Canton could be affected through falling tax revenues due to the projected decrease in value creation and jobs.

Looking at the share of regional GDP in the last year, the public sector (14.4 percent), corporate services (10.1 percent), the wholesale trade (7.7 percent) and the construction sector (4.7 percent) are worth mentioning. Overall, the secondary sector contributes some 17 percent and the tertiary sector just under 82 percent to regional GDP.

The Business and Economic Development Division of the Canton of Zurich is making a significant contribution to the good economic conditions of Zurich as a business location through the development of clusters of industries with promising futures. Particular reference can be made here to information and communications technology, life sciences, the creative sector, the area of cleantech and tourism. A wide variety of industries reduces the dependency of the Zurich economy on the financial sector.

Taking into consideration the subsidiary principle, we endeavor to promote innovation and cooperation between polytechnics, universities and the private sector by networking them with each other through industry-specific value creation chains. This primarily happens in our cluster networks and is supported by the academic sector.

 

An impressive and increasing number of spin-offs are emerging from the ETH and Zurich University. Constantly intensifying partnerships with industry and business and promoting the entrepreneurial spirit of graduates are key objectives. In this interaction we adopt the role of a coordinating link – for example through our internet platform gruenden.ch – or we are an incubator for various collaborations between the academic world and industry.

I think the reality is somewhere in-between. You certainly wish sometimes that administration and its processes were better understood. In principle it acts as a link to politics, or to be precise to the executive. It thus provides fundamental services and endeavors to ensure optimum conditions not only for the Zurich Economic Area but also for the living environment.

 

In principle I support a liberal concept of the state: as little state as necessary, as much autonomy as possible. This doesn’t mean, though, that the state and its administration relinquish responsibility completely. Through compensation for reduced working hours or insolvency, for example, we offer instruments that the business world can make use of in difficult times and are very greatly appreciated, to mention just a small part of our activity.

With respect to public transport, the cross-city link and the fourth phase of expansion of the S-Bahn will create more capacity in the short to medium term. A further extension will, however, be inevitable in the long term in order to handle the increasing demand for mobility.

 

Only recently the Federal Council confirmed its intention of wanting to secure long-term financing of the rail infrastructure. It has submitted a strategic development program for rail infrastructure to parliament as well as an initial concrete expansion phase for the time frame up to 2025. Well-functioning transport routes are the lifelines of a prospering economy. In this respect great importance is placed on motorways as the dominant network.

 

The Cantonal Department for Economic Affairs is strongly encouraging the government to expand the high-volume road network. Top priority is the expansion of the Zurich northern ring including a third Gubrist tunnel tube. Rapid expansion is urgently needed at this major bottleneck in the Swiss national road network which sees over 100,000 vehicles every day. Consequently, the construction of the Glattal motorway must be driven forward to relieve the interchange in north Zurich. In addition, there are other important motorway projects that must be undertaken soon.

Nothing is perfect, not even the bilateral agreements. In principle our Economic Area in particular has benefited considerably from the free movement of workers. Companies have actively made use of the greater opportunities to recruit skilled employees from the EU/EFTA.

 

The opening-up of the labor market has impacted favorably on both economic development and population growth in the last few years and strengthened our position overall. Negative effects of immigration on the local workforce remain limited. There is admittedly a marginal displacement effect in isolated sectors, in particular among the low-qualified. But to date a convincing correlation cannot be made between the free movement of workers in the sense of immigration in the labor market and pressure on wages.

 

Finally: where will the Zurich Economic Area be in 20 years’ time?

 

The financial services sector will have lost some of its importance in relative terms. It can be assumed that it may increasingly concentrate on corporate financing and related services as well as on private client business. On the other hand, other sectors will grow increasingly. If, for example, our cleantech cluster succeeds in expanding and growing in strength with well-known companies, Zurich could establish itself long-term as an international center for sustainable investments. For the insurance industry, future growth may involve increased risks as well as rising income in emerging countries.

 

And a high level of value creation and innovation potential are features in the fields of chemistry, pharmaceutics, electronics and precision engineering. Here Zurich is regarded as an ideal business location due to the concentration of highly qualified employees as well as its renowned polytechnics and universities. It is essential to build on this competitive edge in the region.

 

Interview: Andreas Hammer, Marketing & Communications