The header image, showing a blue background and a portrait of Jakob Richi
echo-Interview, May 2018

Same deal for everybody with a flat rate


echo-interview with Jakob Richi

echo-interview with Jakob Richi, Chairman of the Board of Directors of Richi AG, Weiningen

elipsLife echo: Mr Richi, In the Zurich region, Richi gravel trucks are a common sight. But the company does more than just transport gravel. What are its other activities?

Jakob Richi: We have three firms in Weiningen. Richi AG produces and sells gravel, manufactures ready-mix concrete and offers a dumping service for waste from construction sites. Lifting gear and specialised transport using mobile cranes, able to lift up to 350 tons, are another service provided by Richi AG. The Richi AG recycling facility, the EZR AG, deals with all kinds of recycling and disposal work: Wir demolish houses, reprocess the resulting material and basically turn old into new. And then we have Richi Bau AG, whose focus is on construction sites. Our overall corporate philosophy centres on closed-loop recycling, and the facilities we have in Weinigen enable us to fully implement our goal.

How many employees work in your companies and how large is your vehicle pool?

The three companies, Richi AG, EZR AG and Richi Bau AG, all of which are wholly family-owned, employ around 150 people. These comprise drivers for our roughly 60 trucks and mobile cranes, operators for 40 excavators, construction equipment and power shovels, as well as 40 people working in our gravel plants, sorting centres and concrete plants. Then there are ten or more employees in leadership and administrative functions.

Your recycling centre houses a biomass powerplant, which generates 17,500 megawatt hours of electricity, enough to power 2,500 to 3,000 households. Does this make economic sense given the current feed-in tariffs?

Just about. But we don’t run the power plant for reasons of profitability, but above all on ecological grounds. We used to export the waste wood, up to 900 truck-loads a year to northern Italy. There it was either incinerated or processed into chipboard. However, the introduction of the Heavy Goods Vehicle Tax turned this into a very costly undertaking. At the same time, the waste wood transports were a contradiction of our closed-loop recyclying philosophy. So around 12 years ago, we had the idea to incinerate the wood right here, generate energy in the process and feed it into the grid.

You need experienced people to operate your special-purpose vehicles. Does the company train them itself?

You need a heavy goods vehicle licence to be allowed to drive a mobile crane. A driver has to produce proof of this licence if or she is to be offered a job with the company. The company will then train the person to drive and operate a mobile crane. That said, the drivers subsequently have to pass a special examination at the Association of Master Builders in Sursee.

Interview with Jakob Richi

What are the ingredients for business success in your view?

If you want to do business in the construction industry with its particular kind of practitioners and customers, you need to have the necessary flair for the work. As in every sector, you also need skilled people with the right attitude and a high degree of commitment. Almost as important as these factors are to have the appropriate vehicles as well. And crucial in our case, is our company’s ideal location. The firm’s premises in Weiningen, stretching over 120,000 sq mtrs, is a key factor in our success. The fact that we concentrate on supply and waste management, our location 8-10 kilometres outside Zurich with its vigorous building activity is ideal. In our industry, close proximity to customers is vital.

Does the topic of pension provisioning come up during recruitment interviews?

Job candidates hardly ever mention the topic, which I find very surprising. If it does come up, then only among those over 50. For young people, the topic is just too far down the road. However, we as a company do take the topic seriously. And our policy in this regard does meet with the interest of employees with dependents. We offer these people special benefits such as additional lump-sum death payouts. As a company, we’ve always tried to make sure our employees with dependents receive peoper insurance coverage.

Old age provisioning is perhaps the major cause for concern in Switzerland, but for 20 years now no reform of the system has been possible. The Federal Council now wants to prioristise the restructuring of the first pillar and finance this largely through raising the value-added tax. Is this a good idea do you think?

This is probably the only practicable solution. I don’t see another way out of this problem. Anyway, this is probably the easiest route for the politicians to take. I keep hearing that raising the value-added tax is the only possibility that’s politically feasible.

Where do you stand on raising the retirement age for women to 65?

For me, this is a no-brainer. I don’t see any reason why women shouldn’t work until they’re 65. Societal norms demand gender equality. So I’m astounded by the political outcry. And while we’re on the subject, I don’t see why any of us shouldn’t go on working beyond 65. All of us are living and staying healthier longer, after all.

Interview with Jakob Richi

On the subject of the pension funds: Isn’t there a danger that the interest rate environment coupled with demographic development could unhinge the second pillar, and we become victims of benefit promises we can’t keep?

Ever since we’ve had low interest rates, many things have become cheaper, for example building a house. And it’s just a question of time before rents will have to fall too. But pension levels are supposed to stay untouched or even hoisted. We have to realise that the situation has changed and we all need to tighten our belts a little. Currently, interest rates are too low just to go on as before. We’re all in the same boat and we have to accept the fact.

Should retirees also be expected to help put the second pillar back on a healthy financial footing or are already secured pension rights taboo?

If funds are inadequate, then benefit payments need to be reduced to a point where they are once again sufficient. In light of this fact, I would not consider already secured pension entitlements to be a taboo topic. Guaranteed pension levels are just not viable. Despite the fact that it becomes a political issue, there’s no way we can avoid adjusting benefits. Nowadays, the older generation is emptying the coffers at the expense of the young.

Should the state make greater efforts to support the third pillar to take the pressure off the first and second?

The AHV, the pension funds and private provisioning currently make up our old-age pension system. And a three-pillar set-up doesn’t collapse provided it’s properly organised. The limits on payment contributions into the private third pillar, an independent, voluntary system, should be raised, perhaps even abolished altogether. Even though this would cost the state tax revenues, you would be supporting those people willing to make voluntary provisions for old age. Those individuals who’ve saved little for their old age and are reliant on supplementary benefits are by far the bigger problem for the state.

If you could give the pension funds some advice, what would it be?

Since 1985, the contribution system underlying occupational pension schemes has been based on rising percentage contributions for employers, up to 18% for the oldest on the payroll. This has led to older employees becoming too expensive for companies to finance. We need to curtail this system. I’m a strong supporter of a flat rate for all, regardless of age. Admittedly, such a move would intially hit young people because their disposable income would shrink as a result. On the other hand, the argument that older job candidates are too expensive would no longer be relevant. And the younger generation would of course benefit with increasing age. The pension funds should take a closer look at this idea and run the numbers. Moreover, when it comes to deciding the level of the flat rate, the politicians could rely on statistics. And there are more than enough of those.

We also need to revisit the inflation allowance issue. Employees as of a certain age will have to come to terms with a future without an inflation allowance. We have to make sure that people of this age don’t become even more expensive in the labour market. But every time I talk to politicians about this topic, I hear the same thing: “It’s politically too controversial, it’s not doable.“ Why not?

echo interview with Jakob Richi
Personal Profile
Jakob Richi
Chairman of the Board of Directors of Richi AG, Weiningen

Born in 1957, from Weiningen (Canton Zurich), Jakob Richi is a logistics entrepreneur and since 2008 has been Chairman of the Board of Directors of the three family-owned businesses: Richi AG, Entsorgungszentrum Richi AG (recycling facility) and Richi Bau AG. From 1985 he was also General Manager of these three companies until he ceded this function to a successor in 2017. Richi is married with three grown-up children. His hobbies include navigating the canals of France, classic car racing and Scottish highland cattle.

echo-Interview with Jakob Richi