Belfast Telegraph

Forget the football, Switzerland's fancy footwork in dealing with EU may offer Northern Ireland some helpful lessons

Economy Watch

By Esmond Birnie, Ulster University Economic Policy Centre

Switzerland is going to the World Cup in 2018 and Northern Ireland is not. Switzerland's population is four and a half times that of Northern Ireland and yet in November 2017 it had a FIFA world football ranking of eighth and was the twentieth largest economy in the world.

Regardless of what one may think of the hand ball decision, here are four lessons Northern Ireland could learn from the Alpine country:

1: Wealth via high productivity

Switzerland is one of the world's richest countries. It was not always a high income economy. It achieved that, notwithstanding its small size and dearth of natural resources, by developing a high productivity economy. If Switzerland can do that, why can't we?

In 2015, GDP per hour worked in Switzerland was about 57% higher than that in Northern Ireland. In fact, Northern Ireland productivity levels are low compared to a diverse range of comparators such as Switzerland, Canada, Denmark, France, Italy, Japan and the US. Republic of Ireland productivity levels are also now very high indeed, even allowing for questions about the enormous growth recorded in 2015 which reflected royalty payments made to subsidiaries of international firms as they attempted to benefit from the low rate of corporation tax.

Northern Ireland's comparative performance is illustrated in the following chart (based on a combination of Office for National Statistics, Eurostat and OECD data):

2: Excellent apprentice training

When the then Department for Employment and Learning consulted in 2014 about improving our apprenticeship system, Switzerland, where apprenticeships cover more than 200 occupations, was used as an exemplar of a very strong system.

3: Outside EU but maintaining economic relationship with it

In evidence recently to a House of Commons Committee, officials from Switzerland's revenue and customs service noted how their country had managed to operate a "non-hard" border with the EU while maintaining a high degree of free trade across some sectors. They also noted Swiss experience could imply some challenges ahead for Northern Ireland - customs formalities might be avoided at the frontier but still be necessary further back. Switzerland has managed to operate bilateral/sectoral trading deals with the EU but it remains to be seen how far the UK and the EU will make such deals. There has also been a growing tension between the Swiss government's attempts to maintain a high degree of labour mobility and Swiss public opinion, which has become increasingly opposed to immigration.

4: Notwithstanding an historically divided society, Switzerland has kept political stability as a basis for prosperity

In this regard the similarities and contrasts to Northern Ireland are very striking. Switzerland was deeply divided - between Catholics and Protestants and between the major national/linguistic groups (French, German and Italian). Those dividing lines still exist but have been managed.

Switzerland had a brief sectarian civil war in the mid-19th century but the 1848 Constitution put in place the decentralised, federal government structure which operates today (albeit with modifications). During 1999-2002 and 2007-16 Northern Ireland had devolution and Executives were constructed using the d'Hondt formula. During 1959-2003 Switzerland used a 'magic formula' whereby after each election the governing Executive (cabinet) of seven ministers was allocated in the same proportions to the four main parties. Those cabinet seat allocations were in rough proportion to the votes received.

As the more populist, and right wing, Swiss People's Party overtook the support of the Christian Democrats in the 2000s the numbers in the formula were adjusted so that the former now takes only one Executive post and the latter two. A possible lesson for Northern Ireland is that multi-party coalitions allocated through formula can sometimes be consistent with both long run political stability and prosperity.

On another positive point, Northern Ireland is 24th in the FIFA rankings, a position shared with the US. This is one of the few occasions when Northern Ireland shares a global ranking with America.

Belfast Telegraph

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