Swiss cities become icons of livability, luring business

Low corporate tax structure and a highly educated work force lure companies.
KNIGHT RIDDER NEWSPAPERS
GENEVA, Switzerland -- When Polo Ralph Lauren wanted to consolidate its European operations into a single headquarters three years ago, one finalist was London. The other best options were all in Switzerland.
Polo eventually moved to Geneva, an elegant, lakeside city of 178,000 that is home to the International Red Cross and the biggest U.N. office outside New York. The clothier joined dozens of other U.S. companies that have opened their European headquarters in Switzerland in recent years, including eBay, Proctor & amp; Gamble, Colgate-Palmolive, Hewlett-Packard and Oracle.
One of the biggest factors luring companies to Switzerland is its low corporate tax structure. Equally important, executives say, is the highly educated work force, top-notch transportation system and unparalleled quality of life in this country of 7.5 million, known for its venerable banks, expensive watches and fine chocolate.
Rich, clean, safe and multilingual -- and ensconced amid stunning natural beauty -- Swiss cities have become icons of livability in the postindustrial age.
Livability factors
Each year, Mercer, the global human-resources firm, surveys 39 factors, including crime, schools and political stability, to determine the world's most livable cities. Each year, Swiss cities rank at or near the top. This year and last, Geneva and Zurich tied for first, while Bern, the capital, was not far behind. The top U.S. cities, Honolulu and San Francisco, ranked 25th.
"The standard of living -- just look over here," said Andrew Sundberg, an American business consultant who has lived for 37 years in Geneva, gesturing toward a promenade along the lakefront. "The cities are clean. They're orderly. There's very little violence.
"For companies, you have incredible human resources here. It's an ideal location. It's easy to find multilingual people."
That's partly because Switzerland has four official languages -- German, French, Italian and Romansh, a Latin derivative. But the Swiss are probably second only to Scandinavians in English proficiency. In French-speaking Geneva, home to a host of international organizations -- 43 percent of the residents come from somewhere else -- English is commonplace.
"We've got a large number of highly educated foreigners," said Russian-born Irina Sakharova Quitt, who makes a living promoting Geneva for the state economic development department. "This is something you might find in New York or London but nowhere else in a city this size."
10th richest ranking
Switzerland's per capita GDP of $33,800 makes it the 10th-richest country in the world.
It is No. 11 on the U.N. Human Development Index, edging out Britain, Germany, France and Spain.
Swiss cities are among the world's safest.
One reason crime is so low, some observers suggest, is that Switzerland was an early adapter of so-called harm-reduction strategies for drug users. Heroin addicts can buy a daily dose from the government and shoot up under official supervision, under a program that Swiss officials say dramatically reduced drug-related crime.
Another issue is the relative lack of poverty.
"When we first bought a house, we noticed that our gardener was driving a Mercedes," Lutz said. "What I see from being a headhunter is that the high salaries are not as high as the U.S., but the low salaries are not as low. What it means is that you never have to step over a guy sleeping on a hot-air grate near your apartment building."
Yet Switzerland, which elected not to join the European Union, has lower taxes and a smaller welfare state than most of its neighbors. The Swiss also maintain an American-style 40-hour workweek, compared with 35 hours in France.
Moving at first
U.S. and multinational companies began locating in Switzerland after World War II, in part because the neutral country had suffered no bomb damage. DuPont opened a European headquarters in Geneva in 1959; Caterpillar came in 1960.
The latest wave of relocations came after Switzerland reduced its already-low corporate tax rate in 1997. The average rate of tax on corporate income is 25.4 percent, compared with a 35 percent American rate. Among the more affluent countries, only Ireland's 12.5 percent corporate rate is lower.