How can the public sector capitalize on megatrends?

Addressing social change with integration and automation

Demographic structures have a major impact on governments and their citizens, from shifts in economic power and supply constraints through to changing social standards. While industrial nations will often have low birth rates and declining mortality rates, developing countries tend to have younger, growing populations. In Switzerland, the percentage of older people is increasing as a result of a low birth rate and high life expectancy. The percentage of the total population in employment is declining, leading to higher social expenditure for pensions, health and care and thus a heavier financial burden for the employed. In addition, continued population growth in other countries results in more migration to Switzerland.

Wind and solar energy are the most important renewable energy sources of the future. Rare earth elements are required to manufacture batteries, solar panels and wind turbines. To avoid over-reliance on these rare resources, we must abandon the predominant, linear economy and embrace a circular economy. A circular economy is good for the climate too: large volumes of emissions can be saved if raw materials and goods are recycled and reused as input for production instead of being thrown away. 

The public sector plays a decisive role in greening the private economy. It needs to design a regulatory environment that supports the efforts of the private economy and, ideally, spurs it on as a kind of catalyst. Specifically, this means the public sector must, for example, provide finance and infrastructure to implement a circular economy. Environmentally friendly business practices should also be rewarded. Incentives will need to be created for this and embedded across all administrative levels.

Strengthen Switzerland as an innovation leader

While economic growth in western nations has been stagnating at low levels for years, countries such as India, China or Nigeria attained persistently high growth rates in recent years before being halted by the pandemic. This has led to a realignment of global economic and business activities, which is transforming growth countries from centers of labor and production to consumer-driven economies. Capital flows are being redirected as these economies transform into exporters of capital, talent and innovation. In addition, protectionist tendencies are reemerging in the form of new customs duties or regional free trade zones along with a clear trend toward regionalization of the economy and economic blocs. The war in Ukraine is amplifying these shifts. 

To preserve Switzerland’s economic output, the Confederation must secure energy supply in the short and long term and encourage businesses to establish resilient and crisis-proof cross-sector supply chains. The Confederation can also make supply even more secure by changing its procurement structures, for example, by placing a greater focus on the supplier’s risk management. Since Switzerland does currently not participate in the Horizon Europe research program, Swiss research institutes have no access to research funds and networks. This could weaken Switzerland’s attractiveness and innovative strength in the future.

Prosperity through technological innovation

The development of new technologies is central to innovation. While technology previously played a largely passive supportive role in the execution of tasks, it will shift to playing an active and direct part in how we work. Many of these breakthrough technologies, such as artificial intelligence, augmented and virtual reality and new-generation robots and drones, already exist but have not yet found their place in our day-to-day lives. The transition will require massive investment in the necessary infrastructure, such as 5G, high-precision sensors, batteries and quantum computers. 

Although Switzerland ranks at the top of the global innovation index, there is still a degree of aversion toward the use of new technologies in many parts of the public sector. This can lead to delays in creating the required structures. The internal administrative structures that promote digitalization and technologization are frequently fragmented, making them less efficient and effective than they could be.

In order for Switzerland to remain an innovation leader, it must consolidate and coordinate its technology, science and industrial policies and foster public-private partnerships. It must promote the development of digital skills in the wider population and use public-sector data for social, scientific and commercial advantages. To do this, however, it will need to win the trust of the Swiss people that personal data are used for our democratic legal process and to the personal advantage of the person concerned.

Agile and fast response to changes in political behavior

According to the democracy index of the Economic Intelligence Unit, the level of the world’s population living in a democracy is falling. The effects of this are profound, not only for the citizens of the affected countries but also on the international system. In autocracies, there is a higher likelihood of armed conflicts and associated disruptions to international trade and flows of refugees. The renaissance of nationalistic tendencies is also a problem. They destabilize international security and make it difficult to cooperate internationally; nationalistic governments prioritize their own interests. However, many global challenges such as climate change and the COVID-19 pandemic require large-scale global cooperation. Switzerland could thus be increasingly called upon in the future to build bridges.

There is now a certain degree of mistrust in the government in Switzerland due what some believe to be the inadequate implementation of approved referendums as well as the growing politicization of many citizens during the pandemic. The public sector needs to acknowledge and factor these uncertainties into internal administrative processes. Responses to changes in the political landscape can be swiftly and flexibly managed by developing alternatives. A modified organizational structure, for example, one that incorporates agile elements, can stave off disruptions caused by external factors and megatrends. The division of responsibility between the different administrative levels should not be overlooked either. Historically, federalism and the principle of subsidiarity have been key factors in Switzerland’s success story. However, the division of duties can also be a driver of inefficiency, by slowing the digitalization of the administration or making it onerous.