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Swiss Market Report 2011 - Market Commentary

In 2010 the Swiss economy bounced back from recession and grew a respectable 2.6%. In spite of the headwinds caused by a historically high Swiss Franc, economic growth is continuing in 2011 at a forecast 2.1%. The Swiss economy remains in good shape.

Whilst the recovery is now broadly reflected in the Swiss corporate governance recruitment market, recessions are invariably periods during which companies review their costs and search for savings. These reviews often consider the cost of in-house departments against the comparable cost of co-sourcing or outsourcing. The judgement is generally made on quantitative rather than qualitative factors and therefore recessions usually coincide with an upsurge in outsourcing. This does not necessarily change the total number of people employed, but does shift where they are employed. Unlike other countries there were few recession inspired decisions to outsource corporate governance functions. This was possibly as a consequence of the relatively underdeveloped consultancy sector in Switzerland.

However the strength of the Swiss Franc did cause some companies to choose to relocate their internal audit departments away from Switzerland. This is not a threat simply to Switzerland. Europe-wide non resident multinational groups are hollowing out their more expensive European operations. This is a problem for western economies more generally. If multinational companies can choose where they employ staff, unless there are compelling reasons otherwise, why choose a high cost country with more onerous employment legislation?

The Swiss economy benefited from the recovery in international trade during 2010. Many of the multinational companies that base their corporate governance departments in Switzerland are more dependent on developments in the wider world economy than the local Swiss economy.

Outside of the financial services industry, manufacturing and chemical/pharmaceutical industries are the two dominant sectors. Whilst such multinationals are generally more able to go long periods without having to recruit externally, in reality almost regardless of economic conditions, there is only so long that they can go without recruiting externally.

In Switzerland, as in other countries, there is a broad divide in the recruitment market between financial services and the rest of industry and commerce. The regulatory demands of the banking and financial services industries underpin the demand for corporate governance staff. The rebound in demand from the financial services sector at the start of 2010 continued, whereas demand from the rest of the economy seemed to slow down. It was not until the second half of 2010 that demand broadened out to include all sectors of the economy. Whilst some departments looked to rebuild the numbers lost during the recession, most recruitment was on a replacement basis. By the end of 2010 the number of internal auditors employed in the financial sector was back at pre-recession levels.

During the recession there were no major closures. In 2010, and possibly against expectations, a small number of departments were established.

It was noticeable during 2010 that new recruits had to be justified as a business need. There was more emphasis on closely matching candidates to the requirements contained in job specifications and particularly to the often cited need to have specific industry experience. This requirement is limiting the career development options open to candidates. It also limits the options for departments as it exacerbates the shortage of candidates perceived to have the necessary skills and experience. As a result, employees need to give consideration to the choices they make at a relatively early stage in their careers. In this respect, the consultancies provide a useful service. They allow their more junior staff to experience different industries. A period working for a consultancy can be a career enhancing experience, not only from a technical skills perspective but also a commercial one.

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