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Switzerland: Brexit deal is ‘good news for the whole world’

Switzerland's incoming president Guy Parmelin said Sunday the post-Brexit trade agreement between Britain and the European Union was "good news for the whole world".

Published: 28 December 2020 11:01 CET

Switzerland: Brexit deal is 'good news for the whole world'

Swiss President Guy Parmelin and former British trade secretary Liam Fox. Photo: Stefan WERMUTH / AFP

Switzerland, which is not an EU member but has a relationship that guarantees market access, is also in its own tricky negotiations with the bloc which is eager to create an overarching agreement for the patchwork of deals.

In the first comments by the Swiss government on the post-Brexit deal, economy minister Parmelin — who takes over the annually rotating presidency on Friday — said the agreement was also welcome news for Switzerland.

“It is good news for the whole world that an agreement has been reached. For Switzerland too,” he told the Sonntags Zeitung newspaper.

London and the EU struck a trade deal on Thursday after 10 months of intense negotiations allowed them to soften the economic shock of Brexit.

When Britain leaves the EU single market at the New Year, it will not now face tariffs on cross-Channel commerce.

Parmelin did not comment on what the deal might mean for Switzerland's own framework agreement negotiations with the EU.

“We are now waiting for the text and will analyse the whole situation,” he said. Experts believe that the Swiss government is now coming under strong pressure to negotiate a better agreement with Brussels, the SZ reported.

After turning down EU membership in 1992, the Swiss voted in 2000 for a range of bilateral accords with the bloc.

Brussels has made no secret of its growing impatience to pin down a “framework accord” to pull together various bilateral agreements touching on access to the single market and fine-tuning applicable Swiss and EU laws.

Since 2008, the EU has insisted Switzerland must sign a framework agreement before concluding any new bilateral deals with the bloc.

Parmelin had to go into quarantine before Christmas after visiting London to sign an agreement which secures reciprocal, facilitated market access for service providers from Switzerland and Britain from January.

Parmelin takes over as president from Simonetta Sommaruga on Friday.

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The pitfalls of Switzerland's social security system you need to avoid

The Swiss social security system has several branches: old-age, survivors’ and disability insurance; health and accident insurance; unemployment benefits, and family allowances.

This is a pretty comprehensive package, which covers everyone who pays into the scheme for a wide variety of ‘what ifs’.

As the government explains it, “people living and working in Switzerland benefit from a tightly woven network of social insurance schemes designed to safeguard them against risks that would otherwise overwhelm them financially.”

But while most residents of Switzerland are able to benefit, at least to some extent, from this system, others don’t.

What is happening?

If someone becomes ill or has an accident, Switzerland’s compulsory health insurance and / or accident insurance will cover the costs.

However, a prolonged absence from work can become costly.

That is especially the case of people employed by companies that don’t have a collective labour agreement (CLA), a contract negotiated between Switzerland’s trade unions and employers or employer organisations that covers a wide range of workers’ rights.

READ ALSO: What is a Swiss collective bargaining agreement — and how could it benefit you?

It is estimated that roughly half of Switzerland’s workforce of about 5 million people are not covered by a CLA.

If you just happen to work for a company without a CLA, your employer is not required to pay your salary if your illness is long.

You will receive money for a minimum of three weeks – longer, depending on seniority — but certainly not for the long-haul.

You may think that once your wages stop, the disability insurance (DI) will kick in.

But that’s not the case.

The reason is that DI can be paid only after a year after the wages stop. In practice, however, it sometimes takes several years of investigations and verifications to make sure the person is actually eligible to collect these benefits, rather than just pretending to be sick.

In the meantime, these people have to use their savings to live on.

What about ‘daily allowance insurance’?

Many companies (especially those covered by a CLA) take out this insurance, so they can pay wages to their sick employees for longer periods of time.

However, this insurance is optional for employers without a CLA is place.

As a result, small companies forego it because it is too much of a financial burden for them.

And people who are self-employed face a problem in this area as well: insurance carriers can (and often do) refuse to cover people they deem to be ‘too risky’ in terms of their age or health status.

Critics are calling the two situations —the length of time it takes for the disability insurance to kick in and gaps in the daily allowance insurance—”perhaps the biggest failures of the social security system.”

Is anything being done to remedy this situation?

Given numerous complaints about the unfairness of the current system, the Social Security and Public Health Commission of the Council of States (CSSS-E) will look into the “consequences of shortcomings and numerous dysfunctions in long-term illness insurance.”

But not everyone in Switzerland sees a problem in the current situation.

According to the Swiss Insurance Association (ASA), for instance, “making it compulsory to maintain wages beyond the legal minimum would not have the desired effect. Due to false incentives, this would only accentuate the upward trend in costs and premiums.”

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