The light in the switch should glow at half power on the low (first) position and fully on the high position. Chances are that the connections where the wires attach to the rear window heater grid have corroded and are no longer making contact. They can be (carefully!) re-soldered or there are propriety repair kits available which can be effective.

The heater is wired up so that on the high setting current is applied to the entire grid from one side, earthing on the other side. On the low setting current enters half of the grid through one side, travels across to the other side, then up the side bar and back across through the other half of the grid. This effectively doubles the electrical resistance, so halving the amount of current draw. Confusing, ain't it :)