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COST OF LIVING

EXPLAINED: Why are major Swiss cities so expensive?

Three Swiss cities are ranked among the most expensive in the world in a new international survey. Here's why that is so.

EXPLAINED: Why are major Swiss cities so expensive?
You need lots of those to live in Zurich, Geneva or Bern. Photo by Claudio Schwarz, Unspalsh

Zurich, Geneva and Bern are among the costliest cities in the world for international residents, according to the 2021 Cost of Living City Ranking released by Mercer on Tuesday.

Zurich is in the fourth place, Geneva in the eighth and Bern in the 10th.

Mercer focused specifically on international employees.

“The rankings demonstrate how currency fluctuation and shifts in the prices of goods and services can affect the purchasing power of expatriate employees”, the company said.

The ranking of 209 cities measured the comparative cost of more than 200 items, including housing, transportation and food.

While Swiss locations did not place at the very top, unlike in other similar studies, Switzerland is the only country that has three of its towns listed among the top 10 costliest cities.

Is Switzerland really so expensive?

It is true that the prices for many goods and services are notoriously high here. While the Swiss are more or less used to it, especially those who have correspondingly high salaries, for people coming from abroad, high costs here are the ultimate culture shock.

Various studies have shown time and again that Swiss consumers pay much more for basic goods and services than their European counterparts, with the exception of Norway and Iceland.

For instance, one such study found that people in Switzerland have to pay 168 francs for a basket of consumer goods costing on average 100 euros in the EU.

Some services are also more costly than in other countries, including annual health insurance premiums, housing (especially in big cities), and public transportation.

Why are Swiss cities — and Switzerland in general — so expensive by international comparison?

As The Local explained in an article published in April, there are many reasons for this phenomenon.

Among the most often cited ones are protectionism and lack of competition, which are inter-related, as the former invariably leads to the latter.

Trade protectionism is a policy that protects domestic industries from foreign competition. This means that certain Swiss products have no foreign competitors vying for the consumers’ attention, and forcing to lower the price.

However, there is another reason as well.

study by the University of Applied Sciences of Northwestern Switzerland shows that foreign producers and suppliers impose large price increases in Switzerland, exploiting high salaries and consumers’ purchasing power.

This means that Swiss buyers are overpaying for their purchases by more than three billion francs, the study found. 

This is the reason why so many people living in border regions go shopping in France, Italy, and Germany, where the same items are considerably cheaper. 

This practice is widespread in e-commerce as well.

Anyone who wants to order something online from a foreign store is often redirected to the supplier’s Swiss site, where the prices are often much higher. This is called “geo-blocking”.

READ MORE: Why is Switzerland so expensive?

What about Zurich, Geneva, and Bern? Why are they so expensive?

One explanation may be that, at least in Zurich and Geneva’s case, they are two largest cities in Switzerland, where most employment opportunities are found — not just for Swiss residents, but for foreign nationals as well.

Researchers from University of Geneva found largest concentrations of people in and around large cities, which are close to economic centres and job opportunities — such as the shores of Lake Geneva or Lake Zurich. 

Bern is a smaller city but, as the nation’s capital, also attracts arrivals from abroad, especially those working in the foreign diplomatic missions.

Another explanations why Switzerland’s major cities are more expensive to live in is that higher density of the population drives up the price of land, which means rental costs are higher. 

In all three cities, monthly rents for a four-room apartment are, on average, upwards of 2,000 francs (see details below). Outside big cities and in rural areas this price is much lower.

So how much does it cost to live in Switzerland’s most expensive cities?

To the price of rent, you need to add the cost of health insurance, which differs based on the kind of coverage you choose, as well as your age.

There is also the cost of public transportation, utilities, food, and other services you may need, like  childcare.

These links provide a good overview of what it costs to live in Zurich, Geneva, and Bern.

READ MORE: How to decide where to live in Switzerland based on affordability

But there is some good news as well.

While the cost of living is high, so are the average salaries

This chart shows that Swiss cities, including Zurich, Geneva, and Bern, rank among those with high purchasing power.

READ MORE: Cost of living: The most – and least – expensive cantons in Switzerland

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OFFBEAT

Is Switzerland’s male-only mandatory military service ‘discriminatory’?

Under Swiss law, all men must serve at least one year in compulsory national service. But is this discriminatory?

Swiss military members walk across a road carrying guns
A new lawsuit seeks to challenge Switzerland's male-only military service requirement. Is this discriminatory? FABRICE COFFRINI / AFP

All men aged between the ages of 18 and 30 are required to complete compulsory military service in Switzerland. 

A lawsuit which worked its way through the Swiss courts has now ended up in the European Court of Human Rights, where the judges will decide if Switzerland’s male-only conscription requirement violates anti-discrimination rules. 

Switzerland’s NZZ newspaper wrote on Monday the case has “explosive potential” and has “what it takes to cause a tremor” to a policy which was first laid out in Switzerland’s 1848 and 1874 Federal Constitutions. 

What is Switzerland’s compulsory military service? 

Article 59 of the Federal Constitution of Switzerland says “Every man with Swiss citizenship is liable for military service. Alternative civilian service shall be provided for by law.”

Recruits must generally do 18 weeks of boot camp (longer in some cases). 

They are then required to spend several weeks in the army every year until they have completed a minimum 245 days of service.

Military service is compulsory for Swiss men aged 18 and over. Women can chose to do military service but this is rare.

What about national rather than military service? 

Introduced in 1996, this is an alternative to the army, originally intended for those who objected to military service on moral grounds. 

READ MORE: The Swiss army’s growing problem with civilian service

Service is longer there than in the army, from the age of 20 to 40. 

This must be for 340 days in total, longer than the military service requirement. 

What about foreigners and dual nationals? 

Once you become a Swiss citizen and are between the ages of 18 and 30, you can expect to be conscripted. 

READ MORE: Do naturalised Swiss citizens have to do military service?

In general, having another citizenship in addition to the Swiss one is not going to exempt you from military service in Switzerland.

However, there is one exception: the obligation to serve will be waved, provided you can show that you have fulfilled your military duties in your other home country.

If you are a Swiss (naturalised or not) who lives abroad, you are not required to serve in the military in Switzerland, though you can voluntarily enlist. 

How do Swiss people feel about military and national service? 

Generally, the obligation is viewed relatively positively, both by the general public and by those who take part in compulsory service. 

While several other European countries have gotten rid of mandatory service, a 2013 referendum which attempted to abolish conscription was rejected by 73 percent of Swiss voters. 

What is the court case and what does it say? 

Martin D. Küng, the lawyer from the Swiss canton of Bern who has driven the case through the courts, has a personal interest in its success. 

He was found unfit for service but is still required to pay an annual bill to the Swiss government, which was 1662CHF for the last year he was required to pay it. 

While the 36-year-old no longer has to pay the amount – the obligation only lasts between the ages of 18 and 30 – Küng is bring the case on principle. 

So far, Küng has had little success in the Swiss courts, with his appeal rejected by the cantonal administrative court and later by the Swiss Federal Supreme Court. 

Previous Supreme Court cases, when hearing objections to men-only military service, said that women are less suitable for conscription due to “physiological and biological differences”.

In Küng’s case, the judges avoided this justification, saying instead that the matter was a constitutional issue. 

‘No objective reason why only men have to do military service’

He has now appealed the decision to the European level. 

While men have previously tried and failed when taking their case to the Supreme Court, no Swiss man has ever brought the matter to the European Court of Human Rights. 

Küng told the NZZ that he considered the rule to be unjust and said the Supreme Court’s decision is based on political considerations. 

“I would have expected the Federal Supreme Court to have the courage to clearly state the obvious in my case and not to decide on political grounds,” Küng said. 

“There is no objective reason why only men have to do military service or pay replacement taxes. On average, women may not be as physically productive as men, but that is not a criterion for excluding them from compulsory military service. 

There are quite a few men who cannot keep up with women in terms of stamina. Gender is simply the wrong demarcation criterion for deciding on compulsory service. If so, then one would have to focus on physical performance.”

Is it likely to pass? 

Küng is optimistic that the Strasbourg court will find in his favour, pointing to a successful appeal by a German man who complained about a fire brigade tax, which was only imposed on men. 

“This question has not yet been conclusively answered by the court” Küng said. 

The impact of a decision in his favour could be considerable, with European law technically taking precedence over Swiss law.

It would set Switzerland on a collision course with the bloc, particularly given the popularity of the conscription provision. 

Küng clarified that political outcomes and repercussions don’t concern him. 

“My only concern is for a court to determine that the current regulation is legally wrong.”

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