The Swiss government has shaken-up the business education sector. Switzerland’ MBA providers are wary of the threat, but insist nothing has changed – yet.
Early on a Monday morning in February, Professor Stéphane Garelli began drafting a response to the events of the night before. The IMD professor would have spent the past 24 hours tentatively watching political events unfold in Switzerland.
On Sunday evening, the results were in. His release would provide some scope to the national referendum, which had seen the country vote to impose strict quotas for immigration from European Union countries and shake-up the country’s business school industry in the process.
Details of the nation-wide referendum had come to the fore on Sunday. A 567-word response to the decision, compiled by Prof Stéphane, was posted the following day. For him, the collective vote of Swiss wishes was a confirmation of what the higher education community had been dreading for months.
Citizens had voted, 50.3% in favour, to invalidate the Swiss-EU agreement on freedom of movement. It would bring back strict immigration rules. It would also present a problem for Swiss MBA providers.
Business schools, which rely on international candidates for both class diversity and tuition, have been left in the dark. It is unknown what the affect will be on candidates’ abilities to study in the country. But it is not thought to be good for business.
“It certainly presents challenges,” said Winfried Ruigrok, dean of the Executive School at the University of St Gallen. But he remained defiant: “It poses some issues – but no major problems.”
Switzerland, considered fiercely independent, is not part of the EU. But it has adopted various EU policy en masse.
Swiss business schools like St. Gallen and IMD have enjoyed a higher international standing. Yet this decision threatens to make like difficult for the regions’ two best MBA providers.
The referendum results may plunge some schools into even deeper waters after the economic crisis. When the Euro currency was under pressure, the Swiss franc was seen as a safe heaven. As a result, the Swiss MBA programs suddenly began to look very expensive compared to their French and German rivals.
“The Swiss industry was struggling with it as well,” said Winfried. “The number of applications within the Eurozone and particularly from Germany went down considerably.”
Founded in 1898, St. Gallen has transformed itself from a business academy to a school of management, economics, law, social sciences and international affairs. With a budget of more than CHF 200 million, there are some 7,000 students currently enrolled. The MBA classes, which have a high global MBA ranking, are more tight-knit.
However, it is unclear how the country’s referendum will affect applications. In a world where business schools fight for a more diverse class and a global outlook, Switzerland may be seen to have a closed door.
In Switzerland, constitutional initiatives allow citizens to propose and vote on issues like mass immigration. By re-introducing quotas, the initiative puts Switzerland at odds with the so-called bilateral agreement it has with Europe.
A quarter of the eight million-strong population is foreign, and last year 80,000 new immigrants arrived.
Freedom of movement is a key pillar of the EU single market – a market which accounts for more than half of Swiss exports. Yet Switzerland’s economy is booming at the moment, and unemployment is low.
“The economy is growing 1.9%, the balance of current account has a surplus of 11.8% of the GDP, the budget is balanced and unemployment runs at a low 3.2%. Are the Swiss fed up with the Swiss Miracle?” quipped Prof Stéphane.
Winfried struck a defiant tone: “One thing is certain: we will not – Switzerland will not – give up its business success model, [which is] based on a strong contribution of foreign citizens to economic growth in the country.”
Aside from the effect on the education system, supporters of quotas believe free movement has put pressure on housing, health and transport.
But the Swiss government and business leaders say free movement is key to Switzerland’s economic success, allowing employers to choose skilled staff from across Europe.
That is echoed in St. Gallens’ cohort reports. More than 90% of the schools’ MBA students are international – yet over 70% of the class are employed in Switzerland after graduating.
It is understood that even if the government doesn’t impose tough restrictions on education, international candidates may be put off simply because of the media hype.
Swiss business schools are wary of the problem. But Winfried insisted there are too many unknowns. “What may appear initially to be a tough situation will, for individual applicants, not be so dramatic,” he said.
He went further: “As far as professors are concerned, nothing is going to change.”
It is thought that the Swiss government has some margin of manoeuver to water down the immigration laws. But it will do little to assuage the already “tense relationship” with some EU states.
“Swiss and Europe have today a very tense relationship, especially on banking and fiscal issues,” said Prof Stéphane. “Adding one more level of complexity and frustration might not be what negotiators really need today.”
In a strongly worded statement, the European Commission said the Swiss vote “goes against the principle of free movement of persons between the EU and Switzerland”. It continued: “The EU will examine the implications of this initiative on EU-Swiss relations as a whole.”
Commentators also say that a vote could be recast. But Prof Stéphane said this is unlikely. “Not in the short term. The voice of the people in a democracy cannot be disregarded.”
For St. Gallen, the effects are unlikely to prove too damaging. The MBA program enjoys a hugely diverse class – 95% of which last year were considered international.
“It’s early days because we frankly do not know yet what the Swiss government will come up with,” said Winfried.
Meanwhile, other schools will no doubt be getting twitchy. Things are still unclear – but it will not make things easier for Switzerlands’ business schools.
But others are not convinced that this will be the last we hear from the Swiss education sector.
“Meanwhile, it will be business as usual,” said Prof Stéphane. “The Swiss are pragmatic people. And if they lose touch with reality – from time to time – they never have any philosophical problem to stand up again and chose a different direction.”