ISG Provider Lens™ Future of Work Services - Workplace Strategy and Enablement Services - Switzerland 2025

Trust and transparency are the building blocks to fulfilling the promise of augmenting work with AI

The Swiss workplace in 2025 is characterized by a central paradox: a nation demonstrating remarkable technological leadership and workforce adaptability, set against a backdrop of subdued economic growth and significant employee apprehension. While Switzerland maintains its reputation for stability and innovation, its trajectory is being shaped by powerful, often conflicting, forces. The Swiss economy is navigating a period of belowaverage growth, with forecasts for 2025 and 2026 pointing to a slowdown driven by persistent global trade tensions and weak external demand. This downturn, however, is counterbalanced by a resilient domestic economy, supported by the Swiss National Bank’s strategic shift to a zero-percent interest rate to combat exceptionally low inflation.

Persistent skills gap in critical sectors remains a primary concern

The labor market, while still robust, is showing signs of softening, and a persistent skills gap in critical sectors remains a primary concern for employers. The workforce is highly skilled, innovative and competitive, benefiting from world-class educational institutions and stable governance. However, this high level of skill does not preclude significant challenges. A persistent and acute skills shortage remains one of the most pressing issues for Swiss employers, particularly in fields such as IT and technology, including cybersecurity, data science, AI and cloud computing, as well as in engineering and healthcare. This gap between the skills demanded by a rapidly digitalizing economy and the available talent pool poses a direct threat to future growth and innovation.

Demographically, the workforce is evolving. The share of women in the economically active population has risen slightly to 47 percent according to FSO’s Labour Market Indicators 2025. While this indicates progress, a persistent gender wage gap remains, despite narrowing over the long term. Furthermore, the labor force is diverse, with a significant share of employed individuals being foreign nationals holding settlement permits (42.6 percent), residence permits (30.7 percent) or crossborder commuter status (21.7 percent), as per the same source.

Flexible working models have become the standard in contemporary workplaces

The post-pandemic evolution has established hybrid work as an enduring norm. This model, however, has matured into a doubleedged sword. While appreciated for its flexibility and reported productivity gains, it has also given rise to the infinite workday concept, characterized by blurred work-life boundaries and overwhelming influx of digital communication, which poses a significant risk of employee burnout.

This shift is not solely the result of top-down policy changes; it is propelled by strong demand from the workforce itself. The desire for greater flexibility has become a primary driver in the talent market and significantly influences employees seeking new roles.

This constant digital connectivity has given rise to a productivity paradox. While surveys consistently indicate a belief that hybrid work enhances productivity, objective telemetry data on increasing work hours suggests a complex reality. The reported productivity gains may, in fact, mask a situation in which employees are simply working more hours spread across the day and week. This pattern is unsustainable and contributes directly to burnout, which is identified as a leading reason for employee disengagement. Consequently, the challenge for companies has shifted from simply enabling hybrid work to actively managing its psychosocial impacts to prevent widespread exhaustion.

Workplace flexibility can lead to a new axis of inequality, if not managed properly

Access to remote and hybrid arrangements is not distributed evenly, with senior-level professionals possessing over five years of experience having significantly greater access to these opportunities compared to their entry-level counterparts. This disparity creates a two-tiered system: senior knowledge workers benefit from reduced commutes and better work-life balance, while junior and frontline workers in less flexible roles are left behind. This inequity has profound implications for equity, career development and organizational culture in the long term.

The AI imperative: Switzerland at the forefront of adoption

of global AI adoption. Swiss organizations are not merely experimenting with AI; they are strategically integrating advanced AI technologies, particularly autonomous agentic systems, at a rate that outpaces that of their global and European counterparts. The commitment to AI in Switzerland is both robust and industry leading. According to Microsoft’s comprehensive 2025 Work Trend Index, 52 percent of Swiss organizations are already using AI agents to automate entire business processes. This figure places Switzerland significantly ahead of the global average of 46 percent and the European average of 43 percent, indicating a higher level of maturity and strategic intent. This momentum is driven by a strong conviction among the leadership. A remarkable 80 percent of Swiss leaders view 2025 as a pivotal year to rethink their core business strategies and operations in light of AI’s capabilities. This strategic focus is further backed by substantial capital investments. In a clear indication of market momentum, Microsoft announced a $400 million investment in June 2025 to expand its cloud and AI infrastructure in Switzerland, directly citing a significant increase in Azure OpenAI usage among its Swiss customers since mid-2023.

Executive enthusiasm must be paired with efforts to address workforce anxieties regarding AI

However, this executive enthusiasm needs to be accompanied by initiatives aimed at alleviating workforce concerns about AI. A recent EY study reveals that a significant majority of Swiss employees fear AI-driven job losses. This apprehension is compounded by a perceived failure of employers to provide adequate training and transparent governance regarding this powerful new technology.

Setting the course: Switzerland’s unique regulatory approach to AI

Switzerland is opting for a tailored approach to AI regulation rather than a one-size-fitsall statute. Instead of mirroring the EU’s comprehensive AI Act, the Federal Council plans to integrate AI safeguards into existing sector laws, creating a flexible and risk-based model that remains nimble and interoperable. In February, the Swiss Federal Council announced its long-awaited approach to AI regulation, making it clear that Switzerland would not implement a broad Swiss AI Act equivalent to the EU’s landmark legislation. Instead, the nation has opted for a more flexible, technology-neutral and sectorspecific regulatory framework.

This strategy is built on three core pillars:

1. Ratification of the Council of Europe’s AI Convention: Switzerland will incorporate the principles of the convention into its law, focusing primarily on the activities of public authorities rather than imposing extensive new obligations on the private sector.

2. Sector-specific amendments: Where new regulations are deemed necessary, they will be integrated into existing laws on a sectorby- sector basis (for example, in healthcare, transport or finance) rather than through a single, overarching act.

3. Non-binding measures: The legislative framework will be complemented by soft law instruments, such as industry-developed standards, codes of conduct and selfdisclosure agreements.

The EU AI Act’s long shadow: implications for Swiss companies

Despite its regulatory autonomy, Switzerland does not exist in isolation. The EU AI Act, with its significant extraterritorial scope, will profoundly impact Swiss businesses. The Act applies not only to companies based in the EU but also to any entity that places an AI system on the EU market or whose AI system’s output is used within the EU.

Given that the EU is Switzerland’s main trading partner, this has profound implications. For a vast number of Swiss companies, particularly in key export-oriented sectors, compliance with the EU AI Act will be non-negotiable. This necessity is especially true in highly regulated fields. For instance, a Swiss medtech company developing an AI-powered diagnostic tool will need to comply with the EU’s Medical Device Regulation (MDR) to access the European market. As the EU AI Act becomes applicable to such devices, the Swiss company will be bound by its requirements, regardless of domestic Swiss law. This situation creates a challenging dual regulation scenario, where Swiss companies must navigate both the specific requirements of Swiss sectoral laws and the comprehensive, risk-based framework of the EU AI Act. Such a dual-compliance landscape could lead to increased compliance costs, legal uncertainty and a significant administrative burden, potentially creating a Swiss finish that policymakers aim to avoid, characterized by an increased compliance burden without clear corresponding benefits.

For many of Switzerland’s most economically vital industries, the EU AI Act will effectively become the de facto standard, with the Swiss regulatory framework governing primarily domestic applications and the public sector. This high-stakes strategy aims to reinforce Switzerland’s status as a premier innovation hub by leveraging regulatory arbitrage. However, it also creates a complex dualcompliance landscape for Swiss companies, which remain heavily exposed to the EU AI Act’s extraterritorial reach. Providers face the challenge of not only incorporating EU AI Act policies but also ensuring compliance while advising on Switzerland’s approach to secure the use of AI.

Fostering a responsible AI ecosystem: national initiatives

Switzerland’s strategy extends beyond passive regulation to the active cultivation of a responsible and innovative AI ecosystem. This is being pursued through various national initiatives and public-private partnerships:

Innovation and research: The government is actively promoting the transfer of research into practical applications. For instance, Microsoft is partnering with the national network of Switzerland Innovation Parks to accelerate the application of AI research, with a particular focus on empowering small and midsize enterprises (SMEs). Concurrently, organizations such as the Swiss National Science Foundation (SNSF) are directing funding toward research focused on the responsible use of AI.

Regulatory sandboxes: To foster innovation within a controlled environment, regional governments are creating testbeds for new technologies. The Canton of Zurich’s Innovation Sandbox for AI enables companies to develop and test AI projects in close collaboration with regulatory bodies, helping identify and address legal issues at an early stage.

Workforce skilling: Recognizing that a skilled workforce is essential, there is a major push toward enhancing AI literacy. Microsoft has set an ambitious goal of training one million people in Switzerland by 2027, working with partners across the education and industrial sectors. The federal government’s State Secretariat for Education, Research and Innovation (SERI) is also actively engaged in developing AI training programs to prepare the workforce for the future.

Sustainability, ESG and carbon reduction: the foundation of Switzerland’s future workplace

Switzerland is at a critical point where sustainability, environmental, social and governance (ESG) initiatives, and carbon reduction have become fundamental elements shaping the nation’s work environment, workforce development and workplace culture. As the country pursues its ambitious goal of achieving net-zero emissions by 2050, these elements are not merely regulatory compliance requirements; they are strategic imperatives that define organizational success, talent attraction and long-term competitive advantages.

Swiss sustainability regulation: key takeaways

● Net-zero mandate: The Climate and Innovation Act mandates that every non-agricultural company in Switzerland, regardless of size, achieve net-zero direct and indirect emissions by 2050. This law reinforces Switzerland’s reputation as a frontrunner in corporate climate accountability.

● Mandatory ESG disclosure: Amendments to the Swiss Code of Obligations now require large public-interest firms to publish comprehensive ESG reports.

● Capital-linked road maps: Firms seeking public climate funding must file detailed net-zero road maps, including negativeemission pathways and interim targets for 2030, 2035, 2040 and 2045. This requirement connects access to capital directly to measurable sustainability performance, thereby reshaping corporate strategy and financing practices.

Impact of sustainability on the workforce

Sustainability has emerged as a strong differentiator in Switzerland’s competitive talent market. Companies that lag in implementing transparent carbon strategies face higher recruitment costs and retention risk in an already tight skills market. Conversely, sustainability-focused employers enjoy substantial business benefits; Swiss companies with strong ESG strategies experience significantly lower turnover rates.

The transition to a sustainable economy is creating unprecedented demand for green skills and specialized competencies. These positions are characterized by higher educational requirements, younger demographics and increased immigration rates, reflecting the specialized nature of sustainability-focused roles.

However, this transition also presents significant challenges. There is a pronounced shortage of skilled labor in jobs with high green potential, particularly within managerial and professional categories. This skills gap necessitates increased efforts in education, post-qualification programs and upskilling initiatives to meet the growing demand for sustainability expertise.

Strategic recommendations and outlook

The Swiss workplace in 2025 is at a critical juncture, defined by the tension between technological ambitions and economic realities, as well as between executive strategy and employee experience. Navigating this landscape successfully requires decisive and nuanced action from both business leaders and policymakers. The following recommendations are designed to address the core challenges and opportunities identified in this report.

1. Embrace proactive work design: The era of simply enabling hybrid work is over; the new imperative is to actively design it for sustainability and well-being. Leaders must directly confront the infinite workday phenomenon. This requires implementing clear, organization-wide policies on communication hours, establishing etiquette for after-hours messaging, protecting focus time by auditing meeting culture and advocating for a genuine right to disconnect. The goal must shift from maximizing availability to optimizing focused, productive and sustainable work within healthy boundaries.

2. Lead the AI transition with trust: Employee anxiety surrounding AI is a rational response to the current governance vacuum rather than an irrational fear of technology. Leaders must close this trust deficit by developing a comprehensive and transparent responsible AI framework that is clearly communicated to all employees. This framework must detail which tasks AI will be used for, how employee data will be protected, what ethical guardrails are in place and how human oversight will be maintained. Acknowledging these anxieties and addressing them with clear, trustworthy policies is the most critical step toward unlocking AI’s full potential.

3. Invest massively in human skills: The greatest long-term competitive advantage will come not from technology alone but from a workforce that can effectively collaborate with it. This requires a twopronged investment strategy. First, companies must invest in broad-based AI literacy to demystify the technology and ensure all employees have the foundational skills to use it effectively. Second, and more importantly, they must invest heavily in developing the uniquely human skills that AI cannot replicate: critical thinking, complex problem-solving, creativity, emotional intelligence and leadership. This means redesigning training programs, performance metrics and career paths to value and cultivate these durable human capabilities.

4. Navigate the dual regulatory landscape with diligence: The Swiss way of AI regulation does not grant immunity from the EU AI Act. Companies must assume that any business connection to the EU market exposes them to its requirements. This requires conducting a thorough audit of all current and planned AI systems to assess their risk classification under the EU framework. Compliance with Swiss sectoral law should not be assumed to be sufficient. Companies also need to establish cross-functional teams comprising legal, technical and operational experts to manage the complexities and potential costs associated with compliance under both regulatory regimes.

For business and policy leaders, the path forward requires navigating these tensions with strategic foresight. The key imperatives include transitioning from merely enabling hybrid work to actively designing sustainable work models; leading the AI transition with trust and transparency; investing massively in both technical and uniquely human skills; and ensuring that policymakers support the national innovation strategy, while addressing regulatory interoperability and the societal anxieties that accompany such profound change. Switzerland’s ability to successfully manage these challenges will ultimately determine its long-term prosperity and its role as a leading global hub for work and innovation.

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