Social Security During the Economic Crisis

The recession of 1974/1975 brought almost thirty years of economic growth to an end. A general sense of crisis spread as a result. Nationwide compulsory unemployment insurance was introduced in 1976 to address the crisis. This was accompanied by controversies over the growing costs of social security.

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In 1974/1975, Switzerland slid into a two-year recession that necessitated socio-political intervention. It also called into question the further expansion of social security. The beginning of the recession in the mid-1970s was marked by the collapse of the Bretton Woods currency system (March 1973) and the oil crisis (autumn 1973). By 1977 the gross national product had fallen by five to seven percent. As a result, incomes were under pressure and employment conditions insecure. Despite the limited availability of unemployment insurance, the return migration of foreign workers contributed to keep official unemployment figures low despite job cuts. However, labor disputes and tensions over income distribution rose. On the one hand, left-wing parties and trade unions demanded counter-cyclical economic policy. On the other, bourgeois parties called for ‘sound downsizing’ in the economy, tax reductions and deregulation.

The end of the boom years also had an impact on social security. The restructuring of unemployment insurance in 1976 concerned a measure that became necessary due to the slump in employment. The costs of disability insurance rose, while the tense situation on the labor market also made it more difficult for people with disabilities to integrate wage work. In 1976, the Federal Department of Home Affairs appointed a working group to review the organization of disability insurance. Although the group presented proposals for administrative improvements, no solution to contain long-term cost increases was forthcoming. The situation concerning old age and survivors’ insurance also changed considerably. Since the 8th AHV revision in 1972 still represented a further expansion of social security, Parliament refused the indexing of pensions to price and wages proposed by the Federal Council in 1974, thereby deferring the whole proposal. It was not to be introduced until 1979. Instead, Parliament passed a number of cost-cutting and emergency measures that were intended to provide short-term relief to the federal budget. This resulted in in interrogations regarding the general sustainability of social security and the long-term consolidation of social welfare became the focus of political debate.

Literatur / Bibliographie / Bibliografia / References: Tabin Jean-Pierre, Togni Carola (2013), L’assurance chômage en Suisse. Une socio-histoire (1924-1982), Lausanne; Müller Margrit, Woitek Ulrich (2012), Wohlstand, Wachstum und Konjunktur, in P. Halbeisen, M. Müller, B. Veyrasset (ed.), Wirtschaftsgeschichte der Schweiz im 19. Jahrhundert, 91–222, Basel; Ischer Philipp (2006), Ausbau oder Konsolidierung? Der politische Diskurs der 1970er Jahre in der Schweiz im Bereich der AHV, Studien und Quellen, 31, 141–166.