Visiting Switzerland, I'm struck by three words: punctuality, precision, and above all, pragmatism.

It's that pragmatic streak which underpins the country's dual education system, allows Swiss people to determine their own future through direct democracy, keeps the Euro-sclerotic influence at bay and helps ward off the complacency which often accompanies success.

With a home market of just 8.3 million people, it is clear that high-value exports are a major contributor to Switzerland's success - underpinned by the national brand for quality, first-class infrastructure and strong innovation.

Other times I have been to Switzerland, it has been straight to Geneva to the World Trade Organisation's HQ for trade discussions, or to observe the World Economic Forum in Davos. Not to look at what underpins Switzerland's own resounding economic success.


But when an invitation arrived to join a group of business leaders on an NZ Initiative study tour, it was time to do something about that.

The think tank's programme focused on gathering ideas on how to develop an environment in New Zealand in which globally competitive businesses can thrive and create highly paid employment.

Unlike New Zealand, the Swiss political system is highly decentralised; there are 26 cantons or federal states which set their own competitive taxes, run their own universities and fund their own healthcare, welfare, law enforcement and public education.

"Private and central bankers, economists and journalists, federal and local politicians alike - in fact everyone we talked to - agreed that this was the most crucial component to the Swiss success formula," says NZ Initiative executive director Oliver Hartwich.

The federal Government is there, of course. But, refreshingly, many parliamentarians hold on to their day jobs and their decisions are contestable through referenda.

For mission leader Fraser Whineray, the biggest lesson was that Swiss citizens were sovereign. "They had the ability to have legislation put to a binding referendum. This places the onus on Government to ensure that they are collaborative with other parties and genuinely consultative and connected to the citizens whom they serve."

Whineray was also struck by towns' and cantons' ability to compete with each other to provide an attractive environment for citizens and businesses, through their tax, education and labour settings.

"This again keeps all layers of Government focused on providing the best possible environment for citizens and businesses to mutually prosper."


Adds Hartwich: "All too often we take things for granted. And then you travel to a country that does things differently, and radically so.

"Switzerland's decentralised nature is the best example. It shows us what we are missing by sticking to our highly centralised government arrangements in New Zealand.

"We are missing a trick in New Zealand if we do not learn this lesson and start reforming our own local government system accordingly."

If all this sounds as if some of New Zealand's leading businesspeople have drunk the Kool-Aid as far as Switzerland's political framework is concerned, think again.

The study tour was compelling enough that Hartwich was able to persuade 40 or so business leaders to leave their desk jobs for the week. They included Air New Zealand's Christopher Luxon, Foodstuffs' Chris Quin, ASB's Barbara Chapman, Mainfreight's Bruce Plested, Google NZ's Stephanie Davis, investor Peter Cooper and more.

"You have to be tempted to understand and emulate a country that has one quarter of our land mass but twice our GDP per citizen," says Quin.

Chris Quin, CEO of Foodstuffs. Photo / Doug Sherring
Chris Quin, CEO of Foodstuffs. Photo / Doug Sherring

Switzerland's economy is markedly different to New Zealand's. It sports many multinational companies, is home to international institutions ranging from Unesco, to the WTO, to Fifa. Switzerland is also home to CERN (the European Organisation for Nuclear Research), the world's largest particle physics laboratory, straddling the Swiss/French border, and Google Zurich's "tech hub", which is pioneering new developments in artificial intelligence.

And then there is the banking industry - offshore and otherwise - which still accounts for 10 per cent of GDP.

None of this would be possible without an army of highly skilled workers.

And that's where Swiss pragmatism comes into play.

It may seem ruthless to stream students at an early level into academic and vocational education training (VET) streams. But Switzerland does just that.

About 20 per cent go into the university stream and the rest into the upper secondary school vocational education training stream, where students combine school learning with skills developed in the workplace.

This system serves 70 to 80 per cent of Swiss young people, preparing them for careers ranging from high-tech jobs to health sector roles and traditional trades. Both white collar and blue collar roles are appreciated. There are about 230 vocational categories.

This may seem counterintuitive to New Zealand, where the recent focus has been on obtaining bachelor's degrees (and the personal debt that comes with them) but with no guarantee that those academic qualifications will result in high paying jobs.

You have to be tempted to understand and emulate a country that has one quarter of our land mass but twice our GDP per citizen.

But Switzerland's income per capita is among the world's highest and it frequently rates as No1 on the Insead Global Innovation Index. And all this despite comparatively low numbers of university graduates.

The upshot is that Switzerland enjoys virtually full employment, the youth unemployment rate is among the lowest in developed countries and the Swiss enjoy a very high standard of living. Those doing the VET stream are not locked out from university education, which they can do at a later stage.

A study on the VET system notes: "Imagine a teenager advising a hedge fund client, turning out parts on a multimillion-dollar machine or running a retail phone store. It may sound like a teenager's dream but at Credit Suisse, ABB Turbocharger and Swisscom up to 800 teens take on responsibilities like this through their three or four-year apprenticeships."

Asked if they could import one feature of Switzerland to New Zealand, the consensus of the visiting business leaders was that it would be the vocational training system.

ASB chief executive Chapman says any growing economy relies on a pipeline of skilled and motivated workers for momentum, and "in that context I think there is a lot to learn from the Swiss".

"The Swiss have an enviable record of high youth employment. You can't underestimate the power this has on the optimism and confidence of their youth as they look to their own future."

Says Quin: "The question it created in my mind was how we could evolve our education system to include dual learning as a path the majority of our youth may pursue, developing real world and current skills as well as learning the capability of working in high value engineering, design, retail and manufacturing careers."

The dual system's importance was brought home in visits to Stadler Rail's factory in the canton of Thurgau, to Google Zurich and ETH Zurich, which is one of two federal universities in Switzerland, focusing on high technology and science.

Tertiary Education Commissioner Sir Christopher Mace. Photo / Natalie Slade
Tertiary Education Commissioner Sir Christopher Mace. Photo / Natalie Slade

Tertiary Education Commissioner Sir Christopher Mace says, "to be highly qualified technically rather than academically was totally acceptable in Switzerland."

The NZ Initiative is expected to develop this theme through its own evidence-based study.

"The connection between business requirements appeared to be in lock-step with both universities and training institutes in Switzerland," says Whineray.

"In New Zealand, I am unsure how aligned business needs are to tertiary programmes and funding incentives, though it would appear very important that this is the case for a country and her people to succeed."

Concludes Hartwich: "The most important insight was the fact that a solid vocational apprenticeship is just as respected as a university degree (and sometimes leads to better salaries, too). New Zealand businesses should not only co-operate with institutions but lead the debate on the required reforms."

Seven secrets to nation's performance

Hard work
The Swiss work longer each week (40.7 hours) than their counterparts in France and Germany. The effective retirement age is 66.1 years. It has a flexible labour market with strong integration of foreign labour.
High savings
The Swiss have a higher ratio of savings to national income (38 per cent) than their German and French counterparts. Switzerland runs Budget surpluses and has US$650 billion in foreign reserves.
Global economy
Switzerland is highly integrated into the global economy, with a strong foreign sector (70 per cent of GDP), no capital controls and 2.5 million jobs in Swiss firms abroad.
World champions
Switzerland's home-grown multinationals range across multiple industries. Here are just some of the brands: pharmaceuticals (Novartis, Roche); watches (Swatch, Rolex, Jaeger LeCoultre); machines ( +GF+, ABB, Schindler); financial services (UBS, Credit Suisse, Swiss Re); food (Nestle, Lindt); high tech (Logitech).
Diversified markets
Switzerland is diversifying, moving more into Asia.
Search for excellence
Highly rated education levels; three universities in top 100; high competitiveness and strong R&D (3 per cent of GDP).
Modern economic governance
Swiss federal Government ensures a stable economic framework; continuous dialogue between government and private sector, which independently sets its own strategic goals.

Source: Jean-Pierre Roth, former chairman, Swiss National Bank (Switzerland's central bank)
Fran O'Sullivan funded her programme fee for the NZ Initiative's Go Swiss study tour and received assistance from national flag carrier Air New Zealand to fly to Switzerland.