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Switzerland labelled a ‘pimp state’ for its attitude towards prostitution

Switzerland has been blasted as being a "pimp state" for its laws around prostitution, in a special UN report set to be released on Friday.

Switzerland labelled a 'pimp state' for its attitude towards prostitution
A TV camerawoman films the so-called "sex boxes" on the opening day of Switzerland's first sex drive-in on August 26, 2013 in Zurich. Photo: FABRICE COFFRINI / AFP

Reem Alsalem, the UN’s special rapporteur on violence against women and girls, was set to present her annual report to the UN Human Rights Council in Geneva today.

In it, she is particularly critical of Switzerland’s stance on prostitution, which is not only legal in the country, but also treated like any other service industry.

Alsalem said this approach has led to a “significant increase in foreign women” engaged in prostitution in the country, calling Switzerland a “pimp state” which benefits from taxes levied on sex workers and brothels.

In response, PROCORE, the national network for the rights of sex workers, countered that prostitution, as it is practiced in Switzerland, cannot be equated with violence and coercion.

READ ALSO: Five things that reveal Switzerland’s unique attitude to prostitution

Prostitution has been legal in Switzerland since 1942, though, like everything else in this country, it is heavily regulated.

However, the rules are intended to protect sex workers and allow them to work freely — that is, to rule out any attempts by third parties at foul play (read more about this below).

Today, there are more than 20,000 prostitutes of all genders registered in Switzerland.

Interestingly, the trend in this ‘profession’ mirrors the one observed in the country’s labour market in general: because of the high earning potential, Switzerland is a mecca for foreign sex workers, mostly from South America, Eastern Europe, and EU nations.

All of them are considered to be self-employed contractors and can choose venues where to ply their trade, such as brothels, clubs, or streets.

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SWITZERLAND EXPLAINED

Why German-speaking Swiss cantons pay money to the French-speaking ones

Nearly every one of Switzerland’s French-speaking cantons will be receiving financial support from German-speaking cantons in 2025. How does this happen, and why is there such a wealth disparity between the two language groups?

Why German-speaking Swiss cantons pay money to the French-speaking ones

As outlined in annual data published by the Federal Finance Administration this week, six of the seven cantons where French is recognized as an official language will be receiving support from German-speaking cantons in 2025.

Geneva will the the sole exception – in fact, it’s contributing. 

Overall, 18 out of Switzerland’s 26 cantons will receive money and 8 will pay out to other cantons. In all the total transfer between cantons next year will add up to 6.2 billion Swiss francs.

Valais will be receiving the most financial support per number of residents – 2,469 francs per capita, followed by Jura at 2,229 francs and Neuchâtel at 1,818 francs per capita. 

The three cantons contributing the most – Zug (CHF 3,321 per capita), Schwyz (CHF 1,520) and Nidwalden (CHF 1,081) all recognise German as an official language. The other contributing cantons are Zurich, Geneva, Basel-CIty, Obwalden and Shaffhausen. 

Image: Federal Finance Administration

Why are cantons redistributing funds?

For decades each of Switzerland’s 26 cantons was able to hold onto the entirety of the taxes levied at the cantonal level, under the country’s devolved administration. 

This changed in 2008 when the Federal Council introduced the national financial equalisation mechanism, which had two purposes – reducing inequality in wealth between the country’s cantons, and ensuring that each could fulfil their responsibilities at the same level. 

Essentially some cantons (see below) take in far more in tax receipts than others and the mechanism is aimed at reducing the inequality that creates.

The redistribution also allows cantons to pay for public services which are harder to provide in certain parts of Switzerland than others, due to geographical challenges such as the Alps.

Using a complicated formula that has undergone several revisions, the cantons giving and taking funds are identified, before funds are distributed each year. 

READ MORE: EXPLAINED: Why Switzerland’s cantons are so powerful

So why are German-speaking cantons subsidising French-speaking ones? 

The distribution of specific industries and businesses within Switzerland’s cantons plays a significant role in the disparity. 

The German-speaking cantons of Zug, Nidwalden and Schwyz, who will contribute the most, are each significant centres of economic activity across multiple sectors.

Approximately eight percent of the country’s GDP is generated between these three cantons and it has seen dramatic growth over the past decade.

These three cantons also feature the highest overall concentration of startups in Switzerland, with Zug (13.7 per 1000 residents) in the lead, followed by Schwyz (6.07) and Nidwalden (4.42). 

Additionally, it’s also worth noting that ‘Crypto Valley’ – the concentration of cryptocurrency and blockchain businesses focused on the canton of Zug – is worth approximately $611.81 billion (CHF 548 billion). 

In comparison, many of the cantons receiving funds, in Switzerland’s French-speaking west feature a more specialized economy. 

For example, the cantons of Vaud and Valais, Jura and Neuchâtel are home to a significant proportion of Switzerland’s farms. 

Neuchâtel and Jura also have economies that are focused towards watchmaking and precision engineering. 

READ MORE: EXPLAINED: Why is Switzerland so famous for watches?

There have been efforts to diversify the economies of these cantons and embrace developing industries, such as the life sciences-focused ‘Health Valley’ and autonomous vehicle ‘Drone Valley’ initiatives, centered on the country’s west but these are still in their early years. 

Cantons set own tax rates

This leads to the role played by tax policy. 

Under Swiss law, cantons can set their rates of taxation – and they’re able to use it to continuously draw an influx of business and new arrivals. 

Zug (22.2%), Nidwalden (24.2%)  and Schwyz (25.3%) can afford to set some of the country’s most competitive individual tax rates, as opposed to Valais (36.5%), Jura (39.0%) and Neuachtel (38.1%). 

While not as wide a gulf, the company tax rates for Zug (11.85%), Nidwalden (11.97%) and Schwyz (14.6%) make them a far more attractive investment proposition than Valais (17.12%) and Jura (16.0%). 

Such competitive rates are possible because these ‘richer’ cantons have a wider economic base, diversified across several sectors.

This ensures greater resilience and a continual draw of new arrivals and enterprises, more so than cantons where one particular industry dominates and is subject to fluctuations from outside factors.

So does it run smoothly?

There is a fine balance to strike in the redistribution formula.

“The greater the support given to resource-poor cantons, the lower their incentive to seek to increase their tax base, and the more the resource-rich cantons have to hand over, the less the incentive to enlarge theirs,” Andreas Stöckli of the University of Fribourg told Swiss Info.

In other words the transfer from cantons that tax-attractive to those that are less tax-attractive needs to be well-balanced.

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