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Eric Scheidegger, head of the Economic Policy Directorate SECO

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Eric Scheidegger, head of the Economic Policy Directorate SECO

The upsides and downsides of regulation


No functioning markets without efficient regulations: there is a political consensus on this. Nevertheless, excessive regulation is also criticised in Switzerland. The Federal Council and Parliament recently passed new binding guidelines to ensure that the authorities pay more attention to better regulation.

There are economic policy issues that are inherently difficult to answer. A typical representative of this category is as follows: Do we have too little, enough or too much regulation in Switzerland? If you ask people on the street, a clear relative majority of around 50 per cent seem to be satisfied with the regulatory practice in Switzerland.

Conversely, company surveys show that 60 per cent of companies rate the administrative burden of regulation as high or rather high. There is a simple reason for this apparent discrepancy: state rules are indispensable in a modern market economy and contribute to economic prosperity. However, the same interventions are accompanied by an administrative burden for citizens and companies.

Regulation is necessary, but results in costs
One of the upsides of regulation is its benefit to society, for example by ensuring public safety, protecting the environment or improving healthcare. A large number of social challenges can be effectively mastered through targeted regulation.

The downsides of regulation include state-imposed obligations on companies (e.g. reporting obligations) and individuals (e.g. authorisation procedures). They restrict their freedom of action and thus lead to regulatory costs. This means that economic actors cannot utilise resources for productive activities. As regulatory costs often have a fixed cost character, they burden SMEs more than larger companies.

"Federal Bern" has recognised the need for action
Reducing the regulatory burden on companies has been a key political and economic issue for many years. Parliamentary initiatives to stem the lamentable flood of regulation are regularly referred to "Federal Bern". The Federal Council and Parliament have recognised the need for action: In the 2023 autumn session, new binding requirements for the regulating authorities were adopted with the Corporate Relief Act.

The new foundations for a better regulatory policy are aimed at reducing the regulatory burden on companies and further expanding the digitalisation of government services for companies. The proposed measures apply to both existing and new regulations. Regulations should be systematically scrutinised for potential relief and the regulatory costs for companies should be reported more transparently.

I am confident that there is a cross-party willingness for "better regulation". The state should not intervene in the behaviour and decisions of citizens and companies without paying attention to the lowest possible enforcement costs.


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