RESTRICTED  
  
S/C/W/340/Add.1  
 
30 September 2013  
(13-5218)  Page: 1/6  
Council for Trade in Services  Original: English  
 
COMMUNICATION FROM SWITZERLAND 
THE SERVICES SECTOR, SMALL AND MEDIUM-SIZED ENTERPRISES AND EMPLOYMENT:  
THE CASE OF SWITZERLAND  
Addendum  
The following communication, dated 25 September 2013, from the delegation of Switzerland, is 
being circulated to the Members of the Council for Trade in Services.  
_______________ 
  I. INTRODUCTION AND QUESTIONS 
1. In September 2011 Switzerland presented a paper concerning small and medium-sized 
enterprises (SMEs) in Switzerland's tertiary sector.
1 The paper analyzed the importance of SMEs 
with regard to employment and identified the th ree most important sub-sectors in Switzerland's 
services industry. Additionally, the submission ill ustrated the relative importance of these three 
sub-sectors for employment in the services sector in general. 
2. Other relevant questions remained open, such as the relationship between the size of an 
SME and its importance for employment, respectively its capacity to create jobs. The same counts 
for the different sub-sectors – an important ques tion here is: Which sub-sectors are the most 
effective in creating new jobs in the long-term perspective? To find answers to that question a different set of statistical data had to be chosen, since the previously used data would not allow to 
differentiate as much as needed.
2 Therefore, the data used in the present submission are based on 
an exact establishment census. Twelve sub-sectors have been analyzed: 1) Artistic, Entertainment 
and Recreational Services; 2) Distribution Services; 3) Educational Services; 4) Financial and 
Insurance Related Services; 5) Health Related and Social Services; 6) Hotels, Restaurants, 
Gastronomy in general; 7) Housing and Real Estate; 8) Information and Communication Services; 9) Other Economic Services (e.g. car rental, travel agencies, etc.); 10) Other Services (e.g. 
professional associations, lobbies, building repa irs, etc.); 11) Professional Services and 12) 
Transport and Storage Services. 
II. WHICH SIZE OF ENTERPRISE FOR WHICH SERVICES SUB-SECTOR? 
3. An examination of the three size classes of SMEs
3 in the different services sub-sectors in 
Table 1 indicates which sub-sector is dominated by which size of SME. 
                                               
1 The Services Sector, Small and Medium-sized Ente rprises and Employment: the Case of Switzerland 
(S/C/W/340). For information about SMEs in Switzerland an d their activities in the field of e-commerce see: 
The Services Sector, Small and Medium -Sized Enterprises and their activiti es related to Elec tronic Commerce: 
the Case of Switzerland (S/C/W 345). 
2 All statistical data provided by Federal Statistical Office, Neuchâtel, Switzerland. 
3 There is no common definition of what constitutes an SME. In Switzerland the following definition is 
most commonly used: Enterprises with (a) 0 to 9 FTEs are micro-sized ente rprises; with (b) 10 to 49 FTEs are 
small-sized enterprises and with (c) 50 to 249 FTEs are medium-sized enterprises (FTE means Full-Time-
Equivalent). S/C/W/340/Add.1 
 
- 2 - 
 
  Table 1: Percentage share of the three differe nt size classes in Switzerland's SMEs sub-
sectors in 1995 and 2008, always rounded to one decimal figure 
Nr. Subsector Year 0-9 FTEs 10-49 FTEs 50-249 FTEs  
1) Artistic, Entertainment and 
Recreational Services 1995 88.5 10.1 1.5 
2008 84 13.8 2.2 
2) Distribution Services 1995 87.5 11.1 1.3 
2008 86 12.4 1.5 
3) Educational Services 1995 67.3 23.3 9.4 
2008 77.3 17 5.6 
4) Financial and Insurance 
Related Services 1995 80.7 14.7 4.6 
2008 78.8 17.8 3.4 
5) Health Related and Social 
Services 1995 86.1 9.5 4.4 
2008 79.3 14.6 6.1 
6) Hotels, Restaurants,  
Gastronomy in general 1995 78.1 20.3 1.6 
2008 80.8 17.6 1.6 
7) Housing and Real Estate 1995 90 8.6 1.4 
2008 91.1 8 0.9 
8) Information and  
Communication Services 1995 88.3 9.9 1.9 
2008 87.6 10.5 1.8 
9) Other Economic Services 
(e.g. car rental, travel agencies) 1995 85.9 11.5 2.6 
2008 84.5 13 2.6 
10) Other Services 1995 93.9 5.6 0.7 
2008 91.8 7.3 0.9 
11) Professional Services 1995 91.9 7.4 0.7 
2008 91.7 7.5 0.8 
12) Transport and Storage 
Services 1995 82.1 15 2.9 
2008 79.9 16.5 3.6 
 
4. Table 1 shows a stable picture for both years under consideration and for all sub-sectors. 
All twelve sub-sectors are strongly dominated by micro-sized businesses with less than ten FTEs. These companies are followed by the mid-sized ones  within the world of SMEs and the bigger ones 
with fifty or more FTEs are clearly placed at the bottom. In a cross-sectoral comparison, the three 
sub-sectors that have a higher amount of big SMEs are 3) Educational Services, 4) Financial and Insurance Related Services and 5) Health Related and Social Services. But this does not affect the 
class ranking within the subsector. It is reasonable to conclude that SMEs are primarily micro-sized 
enterprises. After having identified that no sub-se ctor shows a noticeable particularity with respect 
to the distribution of the three size classes, sub-sectors should be identified which show a 
noticeable "instability" respectively a significant growth or decrease in institutional unities over the 
observed period. Such findings will allow us to dr aw several conclusions, such as the correlation 
between the change in number of entities and structural adjustments in the various industries or the number of entities and the changes in respect of employment figures. A closer look at the 
employment figures will be provided further down in this document. 
III. TRENDS IN THE NUMBER OF ENTITIES PER SIZE OF ENTERPRISE 
5. To identify the various changes in number of entities by size of SME in the twelve sub-
sectors, this section will examine for each su b-sector the years 1995 and 2008, as these years 
mark the beginning and the end of our sample period. S/C/W/340/Add.1 
 
- 3 - 
 
  Table 2: Development in the number of entities from 1995 to 2008 with respect to the 
different size classes, expressed as a pe rcentage, rounded to one decimal figure 
Nr. Subsector 0-9 FTEs 10-49 FTEs 50-249 FTEs Total 
1) Artistic, Entertainment and 
Recreational Services -0.9% +43.3% +59% +4.6% 
2) Distribution Services -9.2% +3.4% +5% +7.6% 
3) Educational Services -13.7% -45.1% -55.1% -25.5% 
4) Financial and Insurance 
Related Services +83% +128% +37.2% +85.2% 
5) Health Related and Social 
Services +3.4% +59% +47% +5% 
6) Hotels, Restaurants, 
Gastronomy in general +10.7% -7.2% +9.5% -45.9% 
7) Housing and Real Estate +55.7% +44.2% +2% +54.4% 
8) Information and 
Communication Services +89.6% +103% +89.7% +91% 
9) Other Economic Services 
(e.g. car rental, travel agencies) +50% +71.6% +50.9% +52.6% 
10) Other Services -5.2% +26.3% +27.2% -3.2% 
11) Professional Services + 26% +28.7% +44.6% +26.4% 
12) Transport and Storage 
Services +1.7% +15.1% +29.5% +5.4% 
 Total +9% +16.7% +16.7%  
 
6. Table 2 shows an inconsistent picture which demonstrates that the SMEs are a 
heterogeneous economic phenomenon. For all three size classes no regularity can be identified and no size class can be considered as "the outperfo rmer" within the world of SMEs in Switzerland's 
services sector. This finding underlines the fact  that the success and economic strength of the 
SMEs as a whole category of enterprise in many sectors is due to their unique mix of different companies with different sizes. The cumulated percentage growth in the various sub-sectors shows that in most sub-sectors a significant increase in institutional entities since 1995 has been 
registered. Only two sub-sectors among these twelve suffered a significant loss in their number of 
business entities: 6) Hotels, Restaurants, Gastronomy in general and 3) Educational Services. Normally, a declining growth in one size class in a sub-sector has been compensated by other size 
classes. Micro-sized enterprises with less than te n FTEs and medium-sized enterprises with less 
than fifty FTEs are widely considered as the fundament or "backbone" of the SMEs by absolute numbers of individual entities. However, based on  the percentage growth in number of individual 
entities this assessment cannot really be confirmed.  This finding might be explained by the nature 
of many SMEs. Many of them produce niche products or very specialized high-tech products which require high flexibility, lean organization struct ures and the ability to quickly meet consumers' 
needs. This key requirements are naturally to be  found much more pronounced among the smaller 
companies within the SMEs in general. The relatively inconsistent picture within the SMEs could 
also be interpreted as an implication of the natural business life cycle – SMEs may fluctuate between the different size classes over the years, a fact which underlines the unstable picture. 
7. The paragraphs above shed some light on th e number of individual entities within the 
SMEs in Switzerland. Despite the fact that no significant regularities could be found, it is obvious that some sub-sectors performed better than others. The best performers with respect to the 
creation of new business entities from 1995 to 2008 have been sub-sector 8) Information and 
Communication Services, 4) Financial and Insurance Related Services and 7) Housing and Real Estate. But how is the development with regard to the employment figures? Because of the nature of the definition of what constitutes an SME, it is not possible to draw any solid conclusion from 
the number of entities to the effective employment  figures. The following paragraphs demonstrate 
the development in employment for the different size classes within the SMEs and the services sub-sectors in general. 
 S/C/W/340/Add.1 
 
- 4 - 
 
  IV. SMALL AND MEDIUM-SIZED ENTERPRISES AND THEIR ABILITY TO CRATE JOBS 
Table 3: Development in employment from 1995 to 2008 with respect to the different 
size classes, expressed as a percen tage, rounded to one decimal figure 
Nr. Subsector 0-9 FTEs 10-49 FTEs 50-249 FTEs Total 
1) Artistic, Entertainment and 
Recreational Services +11% +39.2% +55% +32.4% 
2) Distribution Services -10.5% +3.4% +12.5% -0.5% 
3) Educational Services -20.9% -45% -55% -48.2% 
4) Financial and Insurance 
Related Services +72.2% +131% +30.5% +70.1% 
5) Health Related and Social 
Services +5.3% +47.6% +42.4% +32.7% 
6) Hotels, Restaurants,  
Gastronomy in general +3.7% -8.2% +12.1% +0.1% 
7) Housing and Real Estate +54.3% +37.4% +14.6% +39.7% 
8) Information and  
Communication Services +85.1% +112.7% +71.7% +89.6% 
9) Other Economic Services 
(e.g. car rental, travel agencies) +54.5% +69.5% +51.1% +57.8% 
10) Other Services -1.9% +26.7% +34.5% +11.5% 
11) Professional Services + 18.2% +34% +46.4% +27.1% 
12) Transport and Storage 
Services +6.5% +15.3% +32.3% +19% 
 Total per size class +7% +10% +18.1%  
 Grand Total  +13.4%  
 
8. Tables 2 and 3 indicate that the total number of entities and employees during the period 
of review move in parallel. Additionally, Table 3 illustrates that with regard to the growth in 
employment three sub-sectors performed best, these are the sub-sectors 8) Information and Communication Services, 4) Financial and Insurance Related Services and 9) Other Economic 
Services. In total, the growth in employment in th e segment of SMEs over the period of review is 
plus 13.4 percent. 
V. SMEs VS LARGER COMPANIES: A COMPARISON 
9. The consideration of the different sub-sectors in Table 3 compared to Table 4 below 
indicates that SMEs normally have a stronger growth in employment than larger companies. This can in particular be seen in the three sub-sectors 8), 4) and 9). However, in the sub-sector 2) 
Distribution Services SMEs obviously had to suff er from a harder competitive pressure, while in 
other sectors they could grow but were outperform ed by the larger entities, such as in the sub-
sectors 10) Other Services and 11) Professional Services.
4 
10. Globally, the growth in employment in the se gment of larger companies for the period of 
review is 6.4 percent. Thus, with a growth of 13.4 percent between 1995 and 2008, SMEs in 
Switzerland performed more than twice as strongly as larger companies. 
                                               
4 Note that no reason could be found for the negati ve figures in the Education sector in all sizes of 
entities. S/C/W/340/Add.1 
 
- 5 - 
 
  Table 4: Development in employment from 1995 to 2008 for companies with 250 or 
more FTEs, expressed as a percenta ge, rounded to one decimal figure 
Nr. Subsector ≥ 250 FTEs 
1) Artistic, Entertainment and Recreational Services +16% 
2) Distribution Services +14% 
3) Educational Services -60.1% 
4) Financial and Insurance Related Services +0.1% 
5) Health Related and Social Services +32.9% 
6) Hotels, Restaurants, Gastronomy in general +7.2% 
7) Housing and Real Estate -*5 
8) Information and Communication Services +3.6% 
9) Other Economic Services (e.g. car rental, travel agencies) +0.7% 
10) Other Services +90.6% 
11) Professional Services +74.5% 
12) Transport and Storage Services -10.9% 
Total  +6.4% 
 
VI. THE INFLUENCE OF STATE-OWNED ENTERPRISES 
11. Questions may be raised concerning the reliability of raw statistical figures presented in 
previous sections, including the issue of the statistical "significance". In addition, in the services sector the usually important presence of state-ow ned service suppliers on the market should be 
kept in mind. The statistical series used in this paper provide details relative to the juridical form 
or entities, and permits, to some extent, to  segregate "governmental and semi-governmental 
entities", defined to include entities of the central, regional and local administrations, entities of state-approved churches (e.g. caritative food se rving premises and pilgrims' lodging), of public 
foundations, co-operatives, and associations. In Switzerland, the sub-sectors where the number of 
FTEs in such government-owned service suppliers is highest compared to "privately organized entities" are the following: 
 Artistic, Entertainment and Recreational servic es (e.g. national parks, operas, stadiums)  
 Education Services (e.g. schools and universities),  
 Financial and Insurances Related Services (due to the existence of cantonal banks for 
instance),  
 Health Related and Social Services, 
 Transport Services (e.g. school buses, railways, cable cars, airports), and  
 Other Services. 
12. Now, the question, which cannot be answered with the available data series, is whether 
the employment across sizes-classes of single en tities is distributed differently and evolved 
differently in the governmental segment compared  to the private segment. If the answer were 
positive, then this would create a bias in the analysis to the extent that changes in the government 
segment is typically determined by policy decisions and not by the market. 
                                               
5 * Random error, no data available. S/C/W/340/Add.1 
 
- 6 - 
 
  VII.  CONCLUSION 
13. In Switzerland's third sector, most SMEs are small businesses with less than ten FTEs. The 
prevalence of entities with more than 49 FTEs is  comparatively rare – on average, less than three 
percent. 
14. The sub-sectors which performed best among SMEs with regard to employment between 
1995 and 2008 are 8) Information and Communication Services, 4) Financial and Insurance Related Services and 9) Other Economic Services. SMEs have a stronger growth in employment 
than big companies: between 1995 and 2008 SMEs pe rformed more than twice as strong as larger 
companies. 
 
__________