SWEDEN not exist. d. Minimum Age of Employment of Children Compulsory 9-year education ends at age 16, and full-time employment is normally permitted at this age under supervision of local municipal or community authorities. Young people under 18 years may work only during daytime and under a foreman's supervision. e. Acceptable Conditions of Work There is no minimum wage law. Wages are set by collective bargaining contracts, which typically are observed even at nonunion establishments. The standard legal workweek is 40 hours or less. The amount of overtime is regulated as are rest periods. A designated and trained trade union steward monitors observance of the regulations governing working conditions. Occupational health and safety rules are closely observed. Safety ombudsmen and safety committees are required by law in large enterprises. The Swedish authorities have started a program to improve the situation for those employees in jobs that are hazardous and tend to cause long-term health problems. f. Rights in Sectors with U.S. Investment Sweden has long been in the forefront of labor and social legislation, and has a well-developed system to protect labor from abuses. The labor laws apply to all firms, Swedish or foreign, and apply in some form to all sectors of the economy. Among goods-producing industries, U.S. investment is mainly in the food, chemicals and related products, primary and fabricated metals, machinery, electric and electronic equipment, and wholesale trade. (D)-Suppressed to avoid disclosing data of individual companies Source: U.S. Department of Commerce, Survey of Current Business August 1991, Vol. 71, No. 8, Table 11.3 4/ September rate as measured over the same month of the previous year 5/ Rate as of end of October Sources: Die Volkswirtschaft, Swiss National Bank Bulletin, Swiss Foreign Trade Statistics, Foreign Population Statistics 1. General Economic Framework Switzerland has an internationally oriented, open economy, characterized by a high savings rate, a large services sector, a highly skilled workforce and a developed manufacturing sector. Although Switzerland enjoyed its eighth consecutive year of economic expansion in 1990, growth rates were somewhat lower than in the two preceding years. The main economic development in 1990 was the acceleration of inflation, triggered mainly by spiraling rents which were the SWITZERLAND result of hefty mortgage rate increases, an overheated economy, and rises in interest rates and oil prices. On an annual average, inflation rose from 3.2 percent in 1989 to 5.4 percent in 1990. The rise in prices is worrisome since Switzerland, like Germany, is usually considered a low-inflation economy. The Fiscal policy is not actively employed as a countercyclical device. In the Swiss federal system, the weight of the cantons and communities in the fiscal equation is both heavy and largely independent of federal policy. budgeted federal share of both total public expenditures and revenues is approximately 35 percent. Recently, increased government spending (particularly for international economic assistance) and declining tax revenues have led to a deterioration of the public sector budget situation. For the first time in seven years, the federal government is expected to incur a budget deficit (SFR 1.5 to 2 billion) in 1991. Cantonal budgets, which have been in the red for several years, are expected to be equally high. The proposed 1992 federal budget anticipates a deficit of SFR 2 billion, while the combined overall public sector deficit is expected to widen to SFR 5 billion in 1992. Switzerland is likely to face budget deficits at all levels of government until the mid 1990's. On June 2, 1991 Swiss voters rejected a government sponsored tax package which would have modernized the country's tax system and made it more "Euro-compatible" by introducing a Value Added Tax (VAT). This was the third time in 15 years that Swiss voters rejected the VAT. Analysts predict the Federal Council and Parliament will put off for the next several years any new attempt at making Switzerland's new tax package like that of its neighbors. The Government must introduce a new tax package before its present authority to levy taxes expires in 1994. With the exception of an anticipated reform in the Stamp Tax on securities transactions and the introduction of a new tax on gasoline, major revisions of the current tax system are unlikely. The primary objective of the Swiss National Bank (SNB) is to control inflation. After introducing a restrictive monetary policy in mid 1988, recent consumer price index statistics show that inflation finally peaked and is now declining. However, monetary policy remains and is expected to remain tight until inflation is brought down further. The financial market's reaction to the policy is demonstrated by the persistence of higher short-term than long-term interest rates. With other EFTA countries, Switzerland has concluded an agreement with the EC establishing a "European Economic Area" which is scheduled to become effective on January 3, 1993. The European Court of Justice has determined that certain sections of the agreement violate the Treaty of Rome. Renegotiation of those sections may be required. Switzerland's inclusion in a larger European Economic Area will require that the Swiss government enforce a wide range of EC directives and regulations. 2. Exchange Rate Policies SWITZERLAND There are no multiple exchange rates, nor any significant capital controls. The SNB's past concerns about an internationalization of the franc have diminished and capital controls have been progressively dismantled. At present, reporting requirements on foreign exchange flows are essentially for the purpose of statistical collection. Relatively high Swiss interest rates and tight monetary and fiscal policies have been factors strengthening the Swiss franc over the past year. In recent years, the SNB has focused increasingly on the need for a stable exchange rate to maintain the competitiveness of the country's export-oriented industries. This is especially true with respect to the German mark, since Germany accounts for approximately one third of Swiss trade. The Swiss use market mechanisms to establish prices for most manufactured product categories. The retail trade is dominated by a few large organizations with one, Migros, accounting for 40 percent of supermarket sales. Switzerland also has a wide variety of cartel-like arrangements which are not prohibited under Swiss law. However, under the 1986 Cartel Act, a government cartel commission determines whether a cartel is in the public interest. Government agencies use competitive bids for procurement. The Defense and the Post Telephone and Telegraph (PTT) Departments have some restrictions on foreign purchases (small arms, clothing and boots, telecommunications equipment). The PTT requires foreign vendors to have local representatives and service facilities. At the same time, the use of government subsidies in industry is rare. Except for telecommunications, the impact of Swiss pricing policies on U.S. exports is insignificant. Although government influence on pricing is usually diluted as value is added in processing, it often remains important even at the retail level. Government offices administer retail price controls for many items (including bread, potatoes, some fruits and vegetables) and conduct price surveillance of others. Farmers receive guaranteed prices for bread grains, sugar beets, and other basic products. Actual overseeing of prices is often delegated to private sector or mixed cartel-like organizations (e.g., "fruit bourses" for fruits and vegetables). Prices of imports are raised to domestic levels by variable import charges and by requiring importers to take over domestic products at high prices as a condition of importing. With respect to taxation, Swiss citizens have the right of initiative and referendum at all levels of government. Although the government must introduce a tax package before its present authority to levy taxes expires in 1994, major revisions of the current system are unlikely, with two possible exceptions. Parliament has already approved the |