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Organized Capital and Coordinated Market Economy: Swiss Business Interest Associations between socio-economic regulation and political influence

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Part II
Economic actors
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5 Organized capital and
coordinated market economy
Swiss business interest associations
between socio- economic regulation
and political inuence
Pierre Eichenberger and André Mach1
Business interest associations (BIAs) are broadly recognized in the literature as
being crucial actors in the organization of the Swiss economy on account of their
active role in self- regulating important economic and social issues, as well as in
Swiss politics, due to their close involvement in decision- making processes and
their connections to political actors. As a case in point, the director of the Swiss
Federation of Commerce and Industry (Vorort, now economiesuisse) was gener-
ally seen as the eighth federal councillor. Despite their central role in Swiss
society, BIAs have largely remained neglected in social science literature.2
Where they have been addressed, the focus has been on the political inuence of
‘peak- level’ (Spitzenverbände) BIAs.3 Yet, as we will see, these associations
also full important economic and social functions.
Our contribution aims to show how and why BIAs became such powerful
actors. We show that, in a comparative perspective, three factors are of decisive
importance: their early organization since the end of the nineteenth century, the
context of an underdeveloped central state and weak political parties and, last,
the strong cohesion within the Swiss business community. Furthermore, we
analyse the complex internal structures of Swiss BIAs, and how they took a
central role in Swiss politics and in organizing the economy. Finally, the 1990s
represented a turning point for Swiss BIAs and new economic and political chal-
lenges related to growing international pressure led to important changes in the
functioning and strategy of BIAs.
In this chapter, we will use the term ‘business interest association’ to desig-
nate private- law voluntary associations which organize and represent rms in
economic and political matters. These formal private associations of rms or
groups of rms differ from employees’ associations (trade unions) in the sense
that they unite rm’s owners and managers. In addition, in this contribution we
will not be examining associations of independent professionals, such as lawyers
or medical doctors.
Our analysis is largely inspired by two streams of literature: rst, works by
Streeck and Schmitter (1999 [1981]) which highlight the organizational charac-
teristics of BIAs, and distinguish between the logic of membership, referring to
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the relations of BIAs with their members, and the logic of inuence, focusing on
their relations with the state, political actors and organized labour. Second, the
Varieties of Capitalism literature (Hall and Soskice 2001), which distinguishes
between coordinated market economies (CMEs) and liberal market economies
(LMEs). According to this literature, the collective organization of capital, either
through formal BIAs or through informal networks between business elites, rep-
resents a central collective mechanism of coordination among CMEs and plays a
crucial role in shaping the strategy of individual companies (for more details,
Wood 2001; Swenson 2002; Martin and Swank 2008).
Our chapter is divided into four sections. First, we present a historical outline
of the development of Swiss BIAs. Sections two and three provide insights into
the organizational structures and cleavages between Swiss BIAs and stress the
importance of these characteristics for the Swiss political economy, as well as
the collective regulatory function of BIAs and their political inuence. In the
fourth section we address recent challenges that the BIAs have encountered since
the last decade of the twentieth century.
The historical development of Swiss BIAs: a brief outline
Building on the previous studies by Gruner (1956), four main phases in the long-
term evolution of Swiss BIAs can be identied. Economic crises as well as the
two World Wars played a key role in the organization of BIAs and their relation-
ship with the state.
The decisive ‘foundational’ phase began during the 1870s and lasted until the
First World War. It was during this phase, marked by the international economic
depression and by increasing state interventionism in economic and social
matters, that the four major national BIAs still active today were founded
(Gruner 1956, 1964; Humair 2004; Mach 2007). The different rounds of negotia-
tions of the trade tariffs during this period represented a central political issue
for the various economic interests. Gruner (1956: 32) even stressed that all the
major BIAs were the ‘children of the protective tariff ’.
This early foundation of the main peak associations went through a process of
evolution from local and sectoral associations to national ones (Hauser 1985). The
current economiesuisse (Vorort until 2000), the most preeminent BIA, was thus set
up as long ago as 1870 and established itself early on as an ‘encompassing’ associ-
ation. The case of the Vorort is also crucial with respect to the fact that it also
resulted from a demand on the part of the (weak) central state for both technical
knowledge it could not obtain by itself and a representative interlocutor of busi-
ness interests (Humair 2004: 317–38). The Schweizerischer Gewerbeverband
(Swiss Industry and Trade Association, hereinafter Gewerbeverband), which
organizes the domestic- market-oriented crafts sector and small and medium- sized
enterprises (SMEs), followed the example of the Vorort, and was founded in 1879.
The Schweizerischer Bauernverband (Swiss Farmer’s Union, hereinafter
Bauernverband), organizing the farmers who at that time (1900) represented
around 30 per cent of the active population, was created a few years later in 1897.
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Swiss business interest associations 65
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The Schweizerischer Arbeitgeberverband (Swiss Employers’ Association, from
now on Arbeitgeberverband), representing the same interests as the Vorort, but
dealing with labour market and social policy issues, was created in 1908 (during a
period of growing labour unrest and strikes). Finally, the last important national
BIA, the Schweizerische Bankiervereinigung (Swiss Bankers’ Association, herein-
after Bankiervereinigung), organizing and representing banking and nancial
interests, was founded in 1912.
The end of the nineteenth century also represented a decisive period for the
institutionalization of relations between BIAs and political authorities. First,
instead of developing its administration, the Federal Council chose a much
simpler solution: offering subsidies to the main peak- level associations to under-
take a series of tasks in the public interest, such as gathering statistics, organ-
izing vocational training or writing reports on the economic situation. Thus, as a
result of subsidies from the Confederation, the four peak associations were able
to set up permanent ofces.4 The consolidation of the economic associations
through the creation of permanent secretary positions was therefore not only the
result of demands from the economic associations, but was also a strategy
employed by the political authorities to support the creation of representative
peak- level economic associations (Hauser 1985: 49). Second, BIAs were also
closely involved in the decision- making process with regard to economic and
social policies through various decision- making instances (extra- parliamentary
committees), or during more or less formalized consultation procedures.
The second period extends from the First World War until the Second World
War, and can be seen to deepen the development of the associative order and
overall coordination of the economy. The huge impact of wartime economy and
the constitution of a national elite network (Schmid 1983; Schnyder et al. 2005;
David et al. 2009) went hand in hand with the strengthening of the major Swiss
BIAs vis- à-vis their members and their connections to the public authorities.
Economic mobilization in the First World War led to a signicantly closer col-
laboration between the state and BIAs, a phase described by Gruner (1956: 11)
as the de facto ‘coercion corporations’. Gerster (1921: 81–2) also shows that the
number of members signicantly increased during the war. In addition, the eco-
nomic crisis of the 1930s and the Second World War resulted in a very intense
phase of creation of cartels. As Hotz (1979: 123) puts it, economic self-
regulation was at its apogee during the 1930s.5 Gruner (1964) describes it as the
time of ‘associative interventionism’. In the same way, the Second World War
suspended the freedom of commerce and industry and was characterized by
‘very close collaboration between the state and the BIAs at the level of inter-
vention’ (Gruner 1964: 61).
A third phase of consolidation, marked by economic growth and political
stability, began in the immediate post- war period. It was characterized by the
formalization of the political role of BIAs and the consolidation of BIAs’ regula-
tory function. On the one hand, the economic articles of the Constitution (1947)
formalized the central government’s obligation to consult all major interest
groups, including major BIAs, in legislative procedures. Thus, the BIAs’ input
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received a kind of constitutional recognition, strengthening their inuence and
legitimacy in decision- making processes. On the other hand, the post- war period
witnessed a development in collective bargaining processes in the labour market.
Private sector coverage rates by collective labour agreements jumped from 25
per cent of the workforce in 1938 to 50 per cent in 1950 and remained stable at
this level until the 1990s (Oesch 2007; Zimmermann 2009). The period from the
1950s to the 1990s was characterized by the absence of any signicant changes
among major BIAs.
Finally, it is possible to distinguish a fourth phase starting in the 1990s, where
the impact of globalization and economic stagnation represented important chal-
lenges for BIAs. We will touch on this recent period in more detail in the fth
section of this chapter.
The Swiss system of BIAs
This brief historical summary highlights two specicities of Swiss BIAs: their
early foundation in comparison to other European countries and their close rela-
tionships with the political system. In a comparative perspective, Crouch (1993:
70) emphasizes that ‘Swiss capitalists were in many respects in a class of their
own’ earlier than in other European countries. The Zentralverband Deutscher
Industrieller (Central Association of German Industrialists, 1876), is the only
comparable case with a foundation date close to that of the Swiss examples. In
Sweden (1902), in the Netherlands (1899) and in Italy (1919), however, no
equivalent can be found earlier than at the turn of the century (Lanzalaco 2008:
305, see also Martin and Swank 2008). In addition to these two factors, it is also
possible to distinguish specic dimensions related to the organizational features
of BIAs and to how BIAs succeeded in overcoming potential tensions and con-
icts produced by structural cleavages existing between individual BIAs.
Organizational structures of Swiss BIAs
The Swiss system of BIAs can be described as highly structured and differenti-
ated. Even though there is no reliable data on membership density, the represent-
ativeness of BIAs is generally considered to be very high. In terms of
organization density, sectoral associations frequently reached afliation rates of
80 to 90 per cent during the post- war ‘consolidation phase’ (see NZZ 1977;
Farago and Kriesi 1986).
Swiss BIAs are structured along three organizational dimensions: (a) the
regional versus sectoral representation of business interests, (b) the division
between employers’ and trade associations and (c) the distinction between peak-
level associations and sectoral and regional associations, and the division of
tasks between these two levels.
This rst dimension refers to the regional versus sectoral representation of
business interests. This reects the dual position of every rm insofar as it
belongs both to a specic region and a specic domain of economic activity.
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Swiss business interest associations 67
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Territorial representation is provided by cantonal chambers of commerce. These
institutions have a long history that dates back to periods far beyond the scope of
our investigation (Maurer 1924). Each Swiss canton has a chamber of commerce
(smaller cantons may have one intercantonal chamber). Chambers of commerce
are the core afliates of the Vorort and represent virtually all entrepreneurial
activity in their relevant territorial unit, even though membership is not compul-
sory for individual companies. They full, on the one hand, a broad and ever-
changing series of technical duties (from setting up vocational education to
regulating transport or export certication, see Maurer 1924). On the other hand,
they represent local business interests vis- à-vis local (communal) and regional
(cantonal) authorities.
Apart from the cantonal chambers of commerce, other BIAs also show some
territorial differentiation, such as the cantonal crafts associations (Gewerbekam-
mern), which represent small and medium- sized enterprises vis- à-vis local
authorities and regulate the local crafts sectors, and are all members of the peak
Gewerbeverband. Regional specicities are also apparent in the BIAs’ ideolo-
gies and practices, such as the stronger corporatist mindset of BIAs in the
French- speaking part of Switzerland (Kriesi and Farago 1989).
As well as territorial associations, there are also sectoral associations such as
the powerful BIAs representing the machine and the chemical- pharmaceutical
industry (ubud.) or the domestic- market-oriented Schweizerischer Baumeister-
verband (Swiss Construction Industry Employers’ Association, hereinafter
Baumeisterverband) or Schweizer Fleisch (Swiss Meat), which represent the
construction and meat processing industries respectively. Virtually every sector
of activity has its own association that typically issues technical rules, organizes
vocational training and provides different collective goods such as pension
schemes or cooperative buying schemes. Some of these sectoral associations
also have regional entities, mainly in the Gewerbe sector.
The distinction between employers’ and trade associations originates from the
dual function of companies as both sellers of products and buyers of labour. Fol-
lowing Lanzalaco (2008: 294), ‘[Capitalists] may act either as employers, when
they interact with workers and trade unions in the labour market, or as producers
(or businessmen) in their relationships with customers, suppliers, politicians, and
other rm managers in product and capital markets’. Trade associations thus deal
with interests on the product market of the represented companies, while
employers’ associations deal with labour market and social policy issues.
This duality is best represented by the traditional division in the machine and
metal industry between the Verein Schweizerischer Maschinenindustrieller
(VSM, 1883) and the Arbeitgeberverband der Schweizer Maschinenindustrie
(ASM, 1905), which merged in 1999 to become one single association, Swiss-
mem.6 While the VSM deals with the product market, the latter represents
employers on the labour market, and in particular during the negotiation of
CLAs (collective labour agreements). The same dual functionality can be
observed at the level of peak associations. Thus, economiesuisse deals with
product market issues such as economic and scal policies or national
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infrastructure, while the Arbeitgeberverband focuses on labour market related
issues such as vocational training, social policy or labour relations (for an over-
view see Table 5.1).7 That said, boundaries between BIAs are strikingly porous:
an entire spectrum of collaborative and overlapping activities can be found in
between these two ‘pure’ examples. Historically, the Vorort or the VSM fullled
both functions until their employers’ twins associations were founded. The form-
ative periods of these two types of associations differ markedly. The trade asso-
ciations appeared two or three decades earlier than the employers’ associations.
While the rst category developed in response to the growing intervention of the
state in the economy, employers’ associations can be seen to have developed in
parallel to the development of class conicts, most notably due to the unioniza-
tion of the workforce and strike action. Employers’ associations were created
some decades later, during the rst decade of the twentieth century (Lanzalaco
2008). Most associations of the Gewerbe sectors full both types of function.
Hotelleriesuisse (Swiss Hotel Association) or the Baumeisterverband in the con-
struction sector, for instance, are mixed associations, and operate as both trade
and employers’ association. They are members of economiesuisse (trade), of
Arbeitgeberverband (employers’ association) and of the Gewerbeverband.
Finally, it is important to stress the difference between peak- level BIAs,
whose members are other associations (either of a sectoral or regional nature),
and the sectoral and regional associations that are composed of individual com-
panies. We can observe both a division of labour and some important differences
between these two categories of BIAs.
Typical peak associations are the four main peak- level associations: the
Vorort/economiesuisse, the Arbeitgeberverband, the Gewerbeverband and the
Bauernverband. To this group, we could add the Bankiervereinigung, which,
though not a national peak association, plays a crucial role in all issues related to
monetary policy, nancial regulation or scal policy on account of the weight of
the nance sector. One of the main roles of the peak- level associations is to pre-
serve the cohesion of business interests. These types of associations undeniably
play a critical role in lobbying political actors such as the government, the
federal administration and political parties (David et al. 2009). Peak BIAs thus
Table 5.1 Employers’ associations versus trade associations
Regional Sectoral Peak
Employer Regional labour
market (CLAs)
Arbeitgeberverband
Basel
Sectoral labour
market regulation
(CLAs)
• ASM
Labour market and
social policy issue
• Political function
Arbeitgeberverband
Trade Product market
regulation
Local political
function
Handelskammern
Economic regulation,
self-regulation
• VSM
• Product market
• Political function
Vorort
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play a fundamental role in organizing internal debates between the different
sectors of the economy and help to maintain ‘long term strategies’ in creating a
united front by restricting conicts to the ‘back rooms’ (Leimgruber 2008: 257).
The ability of the peak associations to unify Swiss employers is key to explain-
ing their strong inuence in policy making (see below).
By contrast, sectoral and regional associations are less involved in politics.8
Their main activities focus on the provision of collective goods to their members
(e.g. vocational training, social policies, legal advice) and on the economic and
social regulation of economic sectors or regions (see below). The professional
staff of BIAs is also largely concentrated among the sectoral and -regional asso-
ciations, whereas the permanent secretaries of the peak- level associations are
much less numerous.
Cleavages and cohesion within business representation
As underlined by Coleman and Grant (1988), a central task of BIAs is to dene
collective interests despite the large diversity and divergence of interests among
rms. In the Swiss case, two important cleavages can be distinguished: domestic
versus export- oriented rms, and the cleavage between the nancial sector and
industrial companies.
One particularly noteworthy characteristic of the Swiss economy relates to its
dualist structure, divided between competitive export- oriented sectors (Switzer-
land’s major industries, as well as its nancial services, including large multina-
tional companies) and more or less sheltered sectors producing mainly for the
domestic market (agriculture, construction and retail trade). This cleavage is also
reected in the structure of BIAs, from the regional and sectoral levels to the
peak- level: the Vorort, the Arbeitgeberverband and Bankiervereinigung protect
the interests of the main export- oriented sectors, and the Bauernverband and the
Gewerbeverband those of the sectors producing for the domestic markets (see
Table 5.2). This division is particularly signicant with regard to trade policy
issues (for more details, Knöpfel 1988; Mach 2006).
Another traditional line of division among business interests relates to the
cleavage between the nancial and industrial sectors, especially on monetary
Table 5.2 Business representation along export- and domestic-oriented sectors
Regional Sectoral Peak
Export-
oriented
sectors
Chambers of
Commerce
• ASM
• VSM
Schweizerische
Bankiervereinigung
(SBVg)
Schweizerischer Handels-
und Industrieverein
(Vorort)
Schweizerischer
Arbeitgeberverband (SAV)
Sheltered
sectors
Cantonal
Gewerbeverbände
Schweizerischer
Baumeisterverband
(SBV)
Schweizerischer
Gewerbeverband (SGV)
SBV
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policy or on issues concerning the nancing of companies. Until 2000, the Bank-
iervereinigung was not a member of economiesuisse, and remained independent,
following its own policy and focused mainly on nancial and monetary policy
issues.
So how did Swiss the business elites and their formal organizations succeed
in overcoming their highly differentiated organizational structure to promote a
cohesive position and unitary front among their members and vis- à-vis third
parties? To encourage and strengthen the cohesion of BIAs, Coleman and Grant
(1988: 472) stress the three following conditions: (a) BIAs must encourage cohe-
sion within the business class and manage internal conicts and tensions, (b)
they must establish a general strategy with respect to the labour movement and
(c) they must entertain a good relationship with the government and political
parties. These three points are particularly relevant when characterizing the col-
laboration and political strategy of Swiss BIAs.
A decisive factor in this strategy was the formation of an informal coalition
between the major BIAs and the Bauernverband towards the end of the nine-
teenth and at the beginning of the twentieth century. It was at this time that what
was later referred to as the bourgeois bloc took shape, comprising the three
major peak- level associations of the Swiss economy (Bauernverband, Gewerbe-
verband and Vorort), and the major right- wing parties. During this period, the
three associations were closely involved in the preparation and negotiation of
various trade tariffs. Despite their diverging positions, they succeeded in nding
compromises that satised all those involved. This political alliance constitutes a
cohesive coalition among the different groups, small and medium business in the
Gewerbeverband, big exporting rms in the Vorort and farmers in the Bauern-
verband. Since the beginning of the twentieth century, the major BIAs have
coordinated their position vis- à-vis the government during the consultation pro-
cedures with respect to all important economic and social policy issues (for more
details, Gruner 1956, 1988: 517–28; Baumann 1993; Humair 2004: 617–718;
Mach 2006).9 Although not directly involved in the formation of the ‘bourgeois
bloc’ at the beginning of the century, the Bankiervereinigung always entertained
close relations and informal coordination with the Vorort and other major BIAs
(Wehrli 1972: 107; see also next section). In addition, it was also possible to
resolve differences between nancial and industrial interests through the close
ties between banks and industrial companies. Since the beginning of the twenti-
eth century, the high density of the interrelations between the boards of directors
of the largest banks and the major industrial companies helped to encourage
common political positions and develop business complementarities in terms of
nancing or coordination. These types of informal network provide a kind of
relational infrastructure that favours the cohesion and coordination of business
elites (Schnyder et al. 2005).
Second, in the face of the growing power of the labour movement and its
more conictive strategy at the beginning of the twentieth century prior to the
general strike of 1918, this ‘patriotic- capitalist coalition’ maintained a united
front and managed to preserve its decisive inuence on major socio- economic
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Swiss business interest associations 71
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policy issues. Despite the political integration of the Social Democratic Party
and the trade unions since the 1930s on a minority basis, the ‘bourgeois bloc’
remained stable for most of the twentieth century and set the pace in matters of
economic and social policy.
Third, and nally, all major BIAs maintain close links with the dominant
right- wing (bourgeois) political parties (FDP, CVP and SVP). In the context of a
weakly professionalized parliament, it is very common that members of parlia-
ment sit in the executive committee of the peak- level BIAs or in the boards of
directors of large companies (for more details, David et al. 2009).
In sum, thanks to highly differentiated organizational structures combined
with a high degree of coordination between the different associations, BIAs suc-
ceeded in overcoming the potential tensions between the logic of membership
and the logic of inuence by satisfying all of the major interests of the various
BIAs.
The central role of BIAs in the economic and political arena
Historically, leading BIAs largely succeeded in containing central state interven-
tionism in various economic and social policy issues and preserving their relative
autonomy to self- regulate economic and social problems. BIAs thus play a
central role in various elds, such as industrial relations, vocational training,
nancial market regulation, technical normalization, competition regulation or
social policies. As a result, they became a central pillar of the Swiss coordinated
market economy. The economic role of BIAs can be best understood in the
context of a political economy characterized by a particularly high level of
collective private governance among the Swiss business community that draws
heavily on BIAs (see also Maggetti et al. in this volume). Of course, Switzerland
is not the only country that relies on the role of BIAs in the organization of its
economy; however, Swiss BIAs are certainly among the most inuential in this
role (for some comparative elements, Crouch 1993: 308–9).
While sectoral associations mostly deal with service provisions and economic
regulation, peak organizations are active mainly at the political level. We present
these roles here. First, we will explain the BIAs’ role in economic regulation
(including labour market and social policy issues) before going on to address the
political function of BIAs.
Economic arena
Sectoral BIAs are best conceptualized as ‘solutions to problems [of the competi-
tion] through organization of the market’ (Hotz 1979: 16). Economic regulation
by BIAs, sometimes in collaboration with the state, nds a place ‘in between the
domain of the competition [market] and the state (the political- administrative
system)’. It can thus be described as a ‘para- state domain’ (Hotz 1979: 15).
Accordingly, Gruner (1964: 51) goes as far as describing the situation in the
Gewerbe sectors since the end of the nineteenth century in terms of the market
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becoming the ‘valet’ (servant) of the associative- and-cartel economy(see also
Tschan 1960; italics in original).
Sectoral trade associations play a particularly important role in various eco-
nomic regulatory functions, such as technical normalization,10 the coordination
of research and development or the production of statistical studies. They can
also directly assume the function of a cartel. In such cases, they regulate com-
petition by xing the prices, conditions and quantity of the production, vertical
agreements, rationalization and common advertisement (on the textile sector,
Tschan 1960: 75). Quality control and the ght against ‘illegal commercial
habits’ can lead to denunciation and, ultimately, sanctions such as a boycott of
those companies that fail to conform to collective regulations (Gruner 1956;
Tschan 1960: 47–80). They also facilitate knowledge transfer through formal
commissions and have advisory ofces for members as well as for external
purposes.
With regard to nancial market regulation and corporate governance issues,
the Bankiervereinigung, generally in collaboration with the Vorort, adopted
various collective agreements or ‘gentlemen’s agreements’ (e.g. on the transfer-
ability of shares, proxy voting by banks, private codes regulating takeovers), that
largely codied the behaviour of individual companies (for more details, Sancey
2004; Mach et al. 2007; Schnyder and Widmer in this volume).
In the domain of social and labour market regulation, we can distinguish two
contributions by BIAs, through the negotiation of collective agreements with
trade unions and through the provision of collective goods to their members.
One of the main functions of sectoral BIAs is to represent companies during
bargaining with trade unions. In this context, they negotiate and conclude CLAs.
Even though the rst agreements can be traced back to as early as the rst half of
the nineteenth century (Gruner 1956) in sectors such as the printing industry,
BIAs in major industrial sectors did not recognize trade unions and refused to
negotiate collective agreements until the 1920s and 1930s (Billeter 1985). The
real development of CLAs took place around the time of the Second World War.
The coverage rate by CLAs climbed to 50 per cent and has remained stable until
now.
The most signicant CLAs in all major industries, including construction, the
machine industry, chemicals, watchmaking and hotels and restaurants, were con-
cluded between 1930 and 1950. One of the central reasons why BIAs concluded
such CLAs with trade unions was due to the frequent inclusion of a ‘labour
peace’ clause, which restricted trade union strike action and employer lockouts
while the CLA was in force. These clauses largely explain the peaceful character
of post- war industrial relations in Switzerland.11 From a comparative perspec-
tive, however, Switzerland has one of the lowest rates of collective agreements
coverage in the private sector, just after the UK, and has a highly decentralized
system of industrial relations (Mach 2006). However, this does not indicate any
lack of coordination among employers concerning wage bargaining. As under-
lined by Soskice (1990: 41), through their representative sectoral BIAs, employ-
ers can play a crucial role in developing collective strategy on wage negotiations
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Swiss business interest associations 73
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through the intense exchange of information between the major companies
within the sector (see also Mach 2006: 274–85).
Sectoral employers’ BIAs also provide collective goods such as vocational
training, collective social institutions, legal advice or all kinds of information
useful to rms. Alternatively, BIAs can organize the provision of social policies
on a completely private and independent basis for their members. They have
developed many services to rms such as the collective provision of skills (see
Rohrer and Trampusch in this volume), information on salaries in the different
rms, legal advice, technical regulations or private social benets (Leimgruber
2008).
The political function of BIAs
The political function of BIAs has received the most attention in the literature. It
is carried out primarily by the four main peak associations and the Bankierv-
ereinigung, although sectoral and regional associations sometimes also play a
role.
First, as underlined above, BIAs have built institutionalized relations with the
state through numerous extra- parliamentary commissions,12 which play a crucial
role in the preparation of legislation during the pre- parliamentary phase of the
decision- making process, and in its implementation (for more details on this
‘militia administration’, Rebmann 2009).13 In this context, BIAs maintain privi-
leged ties with some federal ofces: for example, between the Vorort and the
Federal Ofce for Foreign Economic Affairs (BAWI), between the Bankier-
vereinigung and the Swiss National Bank, between the Gewerbeverband, the
Arbeitgeberverband and the Federal Ofce for Industry, Gewerbe and Labour
(BIGA). It is not uncommon for former paid ofcials of BIAs to become senior
civil servants in these ofces.
Second, BIAs are systematically consulted on every signicant socio-
economic project in the context of the formal consultation procedure organized
by the government and its administration. When asked to give an opinion in a
consultation procedure, peak- level BIAs generally organize internal surveys of
their members, hold internal debates and produce a compromise that will be
defended publicly as well as within the policy- making process.
Third, BIAs actively participate in direct democracy (referenda and initia-
tives) campaigns. For that purpose, the Vorort, the Arbeitgeberverband and
the Bankiervereinigung, created a well funded ‘propaganda ofce’ in 1942,
the Swiss Society for the Promotion of the Swiss Economy (so called Wirt-
schaftsförderung, WF )14 (Werner 2000). The Wirtschaftsförderung soon
developed a network of ofces in Zurich and Geneva, but also in Lugano and
Berne. While the Vorort dealt with the public authorities, the Wirtschafts-
förderung was the employers’ weapon when political issues came to referenda
and initiatives. Despite the lack of information on this issue, it is generally
assumed that BIAs invest the largest amount of money during political
campaigns.
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As a result of their involvement in the early stages of the decision- making
process, their nancial means and their close relations with bourgeois parties,
Swiss BIAs are generally considered to be very inuential political actors. In his
study conducted during the 1970s, Kriesi (1998: 282) identied BIAs, and most
notably the main peak associations (Vorort, Gewerbeverband and Bauernver-
band) as key players in the Swiss political ‘informal core’ – even more inuen-
tial in fact than the political parties.
The challenges of the 1990s
The 1990s represented an abrupt change in comparison to the post- war growth
period, which was marked by great stability. These changes were not specic to
Switzerland, as BIAs in other countries have also recently undergone profound
changes that affected both the internal organization of BIAs and their political
inuence (for an overview, Zervudacki 1999; Streeck et al. 2006). In the context
of increasing international competitive pressure, Streeck and Visser (2006) high-
light three major trends affecting national BIAs, which are also relevant in the
Swiss case. First, increasing heterogeneity and divisions among business inter-
ests can be observed, notably in the form of multinational companies increas-
ingly operating as independent political actors. Second, BIAs underwent
fundamental restructuring processes, including mergers and concentration proc-
esses, the questioning of the dual structure between employers’ and trade associ-
ations, and a stronger focus on the provision of services to their members rather
than collective regulation. Third, the political strategy of BIAs has become more
pluralistic (and less encompassing), more centred towards the media and more
conictive. We can observe very similar trends in Switzerland concerning these
three developments, with some national specicities.
First, since the beginning of the 1990s the Swiss business community has suf-
fered from increasing divisions among its diverse components. Most import-
antly, an informal group of managers of some of the largest Swiss rms and
various leading economists voiced their political demands not through the tradi-
tional channel of the main BIAs, but through a series of publications that
received extensive attention from the public as well as from the authorities. This
‘neoliberal offensive’ was unprecedented since it did not originate from any of
the major BIAs, with some leading gures explicitly underlining the fact that
they no longer felt that they were represented by the traditional BIAs (for more
details, Mach 2006). These publications developed clear points of criticism with
respect to the BIAs, describing them as rst and foremost representing ‘particu-
lar interests’. Their attack targeted the Gewerbe sectors in particular, which are
largely sheltered from international competition and internally organized through
cartels. In 1999, these same milieux founded Avenir Suisse, an American- style
think- tank nanced by some of the largest Swiss multinational companies. These
initiatives displayed a clear tendency to sidestep traditional political channels
offered by the BIAs in order to make their demands heard. Representatives of
the largest multinational companies also tended to be less involved in the
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decision- making instances of Swiss BIAs and to be more active in transnational
business organizations (Hasler 2006, former director of Arbeitgeberverband,
who criticized this development; David et al. 2009).
These divergences between the export- oriented and the more domestic-
oriented sectors were expressed on various policy issues, particularly with
respect to the liberalization of domestic markets, which was linked to the adapta-
tion of Swiss legislation to meet EU norms in domains such as competition
policy, public procurement liberalization, policy towards foreign workers or
agricultural policy reform (Mach 2006).
Tensions between the nancial sector (especially the largest banks) and the
industrial sectors also increased during the second half of the 1990s. Opposing
positions with business representatives advocating shareholder- oriented policies
on the one hand, and those pursuing more traditional industrial and long- term
company strategy on the other, became apparent. This led to important debates
within the business community.15 Illustrative of these tensions, Swissmem and
the Baumeisterverband both threatened to withdraw from economiesuisse in
2006. These disgruntled members complained that the peak- level BIA was too
inclined to defend the interests of the banking, chemical and pharmaceutical
sectors, and criticized the astronomic salaries awarded to top managers of the
largest multinational companies.16
Second, these destabilizing factors began to undermine the organizational
structure of the BIAs. Some leading business gures had expressed their dissat-
isfaction as early as the late 1980s. Some criticized the ‘associative bureau-
cracy’ of the BIAs and demanded a less compromise- oriented strategy (for an
overview, Letsch 1992: Chapter 9). At the sectoral level, the main patterns were
downsizing and re- engineering (Kriesi 2006). The most internationalized
sectors were the rst to react. The associations of the chemical and pharmaceu-
ticals industry and the machine industry downsized their budget and shifted
their priorities towards more public campaigning, and more services to
members.17 The dual structure between employers’ and trade associations was
also called into question. In 1999, the trade (VSM) and the employers’ (ASM)
associations of the machine industry merged to form Swissmem in order to
reduce their costs.
Peak- level BIAs also reacted by following a trend of ‘unication’ and ‘con-
centration’. The prime example of this process was the attempt to merge the
main employers’ and trade associations (Vorort, Arbeitgeberverband and Wirt-
schaftsförderung). This project was set up by the representatives of the most
internationalized sectors (chemical and machines industry, see Lippuner 1999).
However, this plan failed due to the opposition of the Arbeitgeberverband,18 and
only the Vorort and the Wirtschaftsförderung ultimately merged to form
economiesuisse.
A reinforcement of the role of BIAs as service providers to their members in
parallel to a declining role in regulating economic and labour market problems is
also apparent (Kriesi 2006). With regard to the second dimension, the trend in
the 1990s towards neoliberal reforms called into question numerous protectionist
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and anti- competitive practices, often organized or supported by some of the
BIAs, such as cartels, national specic regulations or public subsidies (Mach
2006; Mach et al. 2007). At the beginning of the 1990s, the Arbeitgeberverband
demanded more exibility in CLAs with regard to labour market regulations.
One of the most signicant developments consisted in a move from sectoral to
company level in wage and working time collective bargaining, thus signi-
cantly weakening the normative content of CLAs (Mach and Oesch 2003; Oesch
2007). In some sectors, membership in employers’ associations also declined,
because small and new companies preferred not to be constrained by CLAs and
thus refrained from joining employers’ associations (on the development in the
machine industry, Widmer 2009). However, the ‘anking measures’ designed to
prevent social dumping that accompanied the introduction of bilateral agree-
ments with the EU on the free movement of persons, tended to facilitate the
binding character of CLAs in some sectors (for more details, Maggetti et al. in
this volume).
Finally, at the political level, the traditional cohesion of the ‘bourgeois bloc’,
linking the main BIAs and right- wing political parties, was called into question
because of the increasing divisions between BIAs, but also through the electoral
success of the populist- conservative SVP to the detriment of the FDP and the
CVP. The FDP, which maintained very close links to business circles, lost much
of its leadership in the political arena. This change in the power balance under-
mined the traditional channel of inuence of business interest via the FDP,
rendering their lobbying activities more difcult.
In a context of increasing political polarization and the growing importance
of media campaigns, the political strategy of BIAs also changed substantially.
Swiss BIAs now place far more emphasis on their media presence and seem to
put less energy into their traditional political activities such as the extra-
parliamentary commissions. The creation of economiesuisse is particularly
illustrative in this regard. By incorporating the Wirtschaftsförderung, the Vorort
also reinforced its ‘communication’ and public relations activities rather than
fullling its traditional close lobbying ties with the federal administrative
authorities. Lobbying seems also to be becoming increasingly informal through
the channel of sectoral associations instead of peak- level BIAs.
Conclusions
As intermediary organizations, Swiss BIAs succeeded in reconciling, on the one
hand, the demands of their members (logic of membership), through representa-
tive and differentiated organizational structures, and, on the other hand, ef-
ciently promoting the interests of their members vis- à-vis political authorities
and trade unions (logic of inuence). Despite their highly differentiated struc-
tures, Swiss BIAs succeeded in nding satisfactory compromises between all of
the major business interests in the Swiss economy (between sheltered and
export- oriented sectors, or between nancial and industrial interests) for the
most part of the twentieth century. Due to their united stance and proximity to
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political actors, they succeeded in promoting their interests in the policy- making
arena. Whereas the peak organizations worked to rally the individual members
under one roof, sectoral and regional BIAs played a crucial role in the regulation
of economic, labour market and social issues.
Swiss BIAs also provide a vital contribution to the formation of the Swiss
version of a coordinated market economy (see Mach and Trampusch in this
volume), where non- market mechanisms of collective coordination through
formal BIAs and informal networks of business elites play a decisive role in
organizing various economic and social spheres, such as industrial relations,
vocational training, social policies, corporate governance, the regulation of com-
petition on product markets or nancial market regulations. In all of these
domains, Swiss BIAs, sometimes in collaboration with the state or trade unions,
play a central role in regulating the behaviour of individual companies.
The ‘neoliberal challenge’ of the 1990s, characterized by slow growth, unem-
ployment, increasing international competitive pressures and the adoption of
market- oriented reforms, went hand in hand with a ‘crisis’ within the BIA
system. As demonstrated by Moran (2006) in his article on British business
interests since the 1970s, Thatcherite reforms have considerably weakened
British BIAs, as well as the collective action capacity of business. He thus sup-
ports the theoretical assumption of a link between non- market forms of regula-
tion and strong BIAs. We can identify a similar trend in Switzerland. The new
economic and political context of the 1990s accentuated the divisions between
business interests (between sheltered and export- oriented sectors, but also
between nancial and industrial sectors). This weakened cohesion and the
increasing heterogeneity among business interests, combined with a decline in
membership, has led to profound changes in the role of BIAs in regulating the
economy and in their strategy with respect to political authorities. On the one
hand, the sectoral and regional BIAs have given priority to the provision of serv-
ices to their members, instead of playing an active role in imposing collective
norms on their members; on the other, the logic of inuence of business interests
has moved towards more informal channels of lobbying, and less through the
formal peak- level BIAs.
Notes
1 We would like to thank Matthieu Leimgruber and Moira Nelson for helpful comments
on a previous version of the chapter.
2 Most of the monographic studies are self- produced, mainly ‘Festschriften’ published
by the associations themselves on the occasion of anniversaries, or historical studies
by former paid ofcials of the associations.
3 Peak- level BIAs can be dened as national- level ‘associations of employers’ associ-
ations’. They congregate under their umbrella a large range of sectoral and/or regional
BIAs.
4 In addition to the Vorort and the Gewerbeverband, the permanent secretariat of the
Worker’s Union and the Bauernverband were also nanced by the Confederation.
5 An important discussion in this respect was the possibility of BIA decisions becoming
legally binding.
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6 A similar structure can be seen in the watchmaking industry, the chemical-
pharmaceutical sector or the banking sector.
7 It should be noted, however, that, in contrast to other countries, the Arbeitgeberver-
band does not negotiate or sign any CLAs. It is only its sectoral associations that
negotiate CLAs with the trade unions.
8 Except, of course, for regional BIAs that entertain close relations with communal and
cantonal authorities. Some sectoral and regional BIAs also participate on their own
accord in federal consultation procedures, in addition to the internal consultation pro-
cedures organized by the peak- level associations.
9 Through its key position between capital and labour, the Bauernverband played a central
role in the formation of the ‘bourgeois bloc’ and, more generally, in Swiss politics.
During the 1930s, some initiatives to promote a ‘red- green’ coalition between the left and
farmers’ organizations, similar to that in Sweden, took shape, but did not succeed.
10 For example, the VSM in the machine industry played a crucial role in technical
normalization.
11 The possibility for the state to declare the agreements binding for the whole branch
(not only for the members of the employers’ associations) also constituted a regula-
tory instrument and is a good example of collaboration between the state and BIAs.
12 According to the ofcial denition, extra- parliamentary commissions are organs
which assume tasks on behalf of the administration, but which are essentially com-
posed of persons who are not civil servants.
13 There is also a certain division of tasks within BIAs between, on the one hand, paid of-
cials that represent BIAs in such neo- corporatist bodies, and, on the other hand, the
elected business leaders who are more closely connected to the companies and respons-
ible for dening the political position of the association (see David et al. 2009).
14 The WF merged with the Vorort to form economiesuisse in 2000 (see last section of
this chapter).
15 Studies of the Swiss intercompany network also show a signicant evolution towards
less cohesion and interrelationships within the business elite, going hand in hand with
changes in the domain of corporate governance towards more shareholder- oriented
management (Schnyder et al. 2005; see Schnyder and Widmer in this volume).
16 Tensions among business interests and the weakened cohesion of the business com-
munity are also illustrated by the sharp decline in the density of interrelations between
the boards of directors of the largest companies during the 1990s. For example, the
largest banks, which were at the heart of the intercompany network throughout the
entire twentieth century, have almost completely disappeared from it (Schnyder et al.
2005; David et al. 2009).
17 The sectoral chemical and pharmaceutical association halved its operational budget
during the second half of the 1990s (Kriesi 2006: 51).
18 Among the Arbeitgeberverband, only two federations (the two largest: chemical and
pharmaceuticals as well as Swissmem) were in favour of the merger, whereas all other
members opposed it.
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... 63 Winterberger was a known participant in the Mont-Pèlerin Society (Franc, 2018), and he often capitalised on the image of a 'paradisiac country' and 'of permanent luck' that Switzerland had gained to promote Swiss liberal recipes in terms of economic policies, which had largely been preserved from Keynesian contagion during the post-war period (Guex, 2012;Longchamp, 2014). 64 While selective forms of protectionism had occasionally been granted by the state (to the agricultural sector, for instance) to secure a liberal-conservative political alliance (David et al., 2008, p. 451), the main Swiss BIAs usually advocated private self-regulation agreements which allowed for flexible and time-limited solutions (Eichenberger & Mach, 2011). ...
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