Low Statism in Coordinated Market Economies: The Development of Job Security Regulations in Switzerland

Abstract

Despite the prominent role of job security regulations in the “varieties of capitalism” literature and although Swiss law gives only limited protection to workers against dismissal, Switzerland is normally classified as a coordinated market economy. This apparent contradiction is often explained by emphasizing the trade-off between extensive job security regulations and generous unemployment insurance benefits. This explanation, however, is not convincing for the Swiss case, as the coverage of the unemployment insurance system was very low until the late 1970s. This article argues that low levels of job security regulations are the result of the weakness of the federal state, which attempted several times to enact restrictive job security regulations. Each attempt to enact job security regulations, however, has been blocked by an alliance of liberal-conservative political groupings and employers’ associations. The present article traces the historical development of job security regulations in Switzerland and reveals the political coalitions that successfully kept the federal state weak.