Direct democracy in civil service law: Which lessons can be learned from Switzerland?

Switzerland has undergone a remarkable transformation over the past decades and today operates with hardly any traditional civil servants. Surprisingly to many observers, the country continues to function smoothly and efficiently. Such far-reaching and courageous reforms, as those implemented in Switzerland, are arguably only feasible in a small country where the population can ultimately decide on structural changes through referendums. While this broader democratic context is a topic in its own right, it is essential for understanding the depth and legitimacy of the reforms that reshaped Swiss public service law.

From Administrative Growth to Structural Reform

During the 1990s, Switzerland faced a steadily growing number of public employees, which increasingly strained the traditional civil service system. While Germany, during the same period, engaged in extensive debates through expert commissions and discussed concepts such as “New Public Management,” Switzerland opted for decisive action. In 1997, the Government and Administrative Organization Act (RVOG) came into force, fundamentally reorganizing the structure of the federal executive. This was followed on 14 December 1998 by a draft Federal Personnel Act submitted by the Federal Council, which was adopted by both chambers of Parliament and approved by popular referendum on 26 November 2000. As of January 2002, this legislation completely restructured public employment relationships within the federal administration, decentralized administrative units, federal courts, parliamentary services, and several federal enterprises.

The Abolition of Traditional Civil Servant Status

The long-term effects of these reforms remain significant. The federal government and most cantons abolished traditional civil servant status for more than 130,000 public employees, replacing it with a public-law employment relationship that includes ordinary termination provisions. Civil servant status was retained only for specific functions where institutional independence is essential, particularly within the judiciary. Judges continue to be elected by the people or by parliament for fixed terms to safeguard judicial independence. The same principle applies to executive offices with supervisory or prosecutorial functions vis-à-vis their appointing authorities, such as public prosecutors and, naturally, the police.

Importantly, the new legal framework also applied to existing employment relationships established before 1 January 2002. If holders of these “legacy” positions refused a reasonable alternative job offer, this refusal constituted valid grounds for termination. At the cantonal level, similar developments occurred: most cantons either abolished civil servant status entirely or retained it only under narrowly defined conditions.

Corporatization and Decentralization of Public Employers

Switzerland went even further by separating former state monopolies from the core administration. As early as 1997, the Parliament of the Canton of Bern decided to transform the postal, telephone, and telegraph services into independent companies. This process resulted in Post and Telecom AG, later renamed Swisscom in 1998. From the outset, employment relationships at Swisscom were governed by private law.

With the entry into force of the Federal Personnel Act in 2002, employees of the Swiss Post and the Swiss Federal Railways (SBB) also lost their civil servant status—a development that would be considered highly controversial, if not scandalous, in Germany. Moreover, Switzerland’s approximately 3,000 municipalities are authorized to enact their own service-law regulations. While this has led to considerable fragmentation of public service law, it has not produced any discernible negative effects on administrative performance.

Constitutional Flexibility as a Key Enabler

These sweeping reforms were possible largely because Switzerland did not need to amend its Federal Constitution. Swiss constitutional law merely permits, but does not require, the establishment of permanent civil servants. Unlike Germany’s Basic Law, which institutionally guarantees the professional civil service under Article 33, the Swiss Constitution contains no comparable provision. Even in Germany, such a constitutional guarantee could theoretically be amended by a sufficient parliamentary majority.

Similarly, Swiss constitutional law does not mandate that sovereign tasks must generally be performed by officials in a public-law fiduciary relationship. Under the Swiss legal understanding, significant public functions may also be entrusted to private-law organizations or non-official actors. Furthermore, the cantons are not required to align their service law with federal regulations, as there is no overarching framework law imposed by the Confederation. This autonomy is particularly evident in salary structures, which are determined independently by the Confederation and the cantons and therefore vary considerably.

Fixed Terms and a Distinct Democratic Tradition

Traditionally, Swiss civil servants were appointed “for a term of office” rather than for life. During such a term, they were effectively irremovable, yet the principle of limited tenure reflected a distinctive democratic philosophy. This system was introduced at the federal level as early as 1855, long before the enactment of a comprehensive Federal Civil Servants Act. The underlying idea was that holders of public office should be elected by the people, either directly or indirectly, at regular intervals. Lifetime tenure was seen as incompatible with this democratic ideal; once a term expired, the employment relationship formally ended.

In practice, however, repeated tacit renewals often led to a de facto lifetime career similar to that found in Germany. Nevertheless, the difference remained significant. Changes to civil servants’ remuneration required not only parliamentary approval but also, because the relevant legislation was subject to an optional referendum, the explicit or implicit consent of the electorate. Switzerland thus never developed collective bargaining autonomy in the public sector that would allow wage agreements to be concluded independently of popular approval.

Pension Arrangements and Financial Sustainability

Because Swiss civil servants were appointed for fixed terms rather than for life, they never acquired pension claims against the state comparable to those in German public law. Instead, occupational pensions have long followed social security principles similar to those in the private sector. Benefits are provided entirely through social insurance schemes, with public employers’ obligations limited to contributions. Pensions are therefore not financed directly from public budgets and are certainly not funded through public debt.

This approach aligns with Switzerland’s broader old-age security system, which differs in important respects from that of Germany. Retirement benefits are provided through two pillars: the Old-Age and Survivors’ Insurance (AHV), a nationwide pay-as-you-go system designed to secure a basic standard of living, and occupational pension funds operating under a fully funded scheme. While the AHV serves as a foundational safety net, its benefits are often insufficient on their own. Occupational pensions are intended as a supplement and, in the case of higher incomes, frequently exceed AHV benefits. For low-income public employees, however, occupational pensions may remain modest, particularly when only the statutory minimum applies.

A Two-Pillar System as a Model of Stability

Public sector retirement provision in Switzerland is therefore not a separate system but an integral part of the general pension landscape. The combination of pay-as-you-go and funded schemes has proven advantageous, as each compensates for the weaknesses of the other, thereby enhancing overall stability. Historically, public employers often played a pioneering role in establishing pension funds; the oldest still-existing pension fund dates back to 1818.

A major milestone was the Federal Pension Fund Act of 23 June 2000, which created a new pension fund known as PUBLICA. This institution is responsible for the occupational pensions of federal employees and provides protection against the economic risks of old age, disability, and death. Unlike its predecessor, PUBLICA is legally and economically independent from the federal administration.

Market Orientation and a Progressive Model

PUBLICA was designed to operate according to sound business principles. Investment activities began as early as mid-1999, with several billion Swiss francs reinvested annually in assets such as foreign-currency bonds, Swiss and international equities, medium-sized enterprises, and real estate. The fund’s annual returns depend largely on capital market developments. To mitigate risk, a security fund was established to guarantee benefits in the event of insolvency.

Taken as a whole, the Swiss model of public service reform and pension provision stands out as highly progressive. It combines democratic legitimacy, legal flexibility, financial sustainability, and administrative efficiency in a way that remains distinctive by international standards.