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High earners in Switzerland to get tax cut from 2023

Switzerland will scrap the ‘solidarity surcharge’ for those in the highest income bracket from 2023.

Swiss franc notes laid out across a table seen from up close

People in Switzerland’s richest income bracket will see an effective tax cut from 2023 onwards, after the government decided to abolish the ‘solidarity surcharge’. 

The ‘solidarity’ contribution is charged to people in the highest income bracket in Switzerland to pay for unemployment insurance 

A spokesperson for the State Secretariat for Economic Affairs (SECO) confirmed to Swiss media on Thursday, after the news was leaked earlier in the week. 

This system was introduced in 2011, when the unemployment insurance scheme was in debt and more money was needed to compensate for the deficit. 

In effect, the surcharge is split between the employer and the employee. 

While the normal deduction amounts to 2.2 percent of wages (1.1 percent paid by the employee and 1.1 percent by the employer), an additional one percent, split between the two, has been deducted from gross wages of above 12,350 francs per month. 

This is the solidarity surcharge. 

These highest earners constitute 10 percent of Switzerland’s workforce. 

Since the payment was implemented, it contributed around 340 million francs annually to Switzerland’s budget. 

The reason they will no longer need to shell out the extra money is because unemployment insurance is on track to build up an equity of 2.5 billion by 2023 — a threshold that had to be reached before solidarity contributions could be discontinued.

While the government acknowledged the economic uncertainty due to the war in Ukraine, it was confident the threshold would be reached by 2023 and the solidarity payments would no longer be needed. 

READ MORE: What is the average salary for (almost) every job in Switzerland?

The change will not impact people in other income brackets. 

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Employment: This is where Switzerland’s jobs are right now

Switzerland’s labour market bounced back quite well from the Covid pandemic, with many industries looking to hire skilled workers. A new study shows where most vacant positions are.

Employment: This is where Switzerland's jobs are right now

As The Local recently reported, “many sectors are looking for qualified workers, according to the State Secretariat for Economic Affairs (SECO), which reports that the unemployment rate was a record-low 2.3 percent in April, and the number of job seekers is currently 25 percent lower than at the same time in 2021. 

While many industries are experiencing a boom — for instance, jobs in IT, healthcare, construction and sales are plentiful — the shortage of skilled employees is a huge problem for many employers.

READ MORE: Which jobs are in demand in Switzerland right now – and how much can you earn?

Now a study by the Swiss section of Manpower recruiting agency sheds light on where in Switzerland most job vacancies are, which could be helpful to everyone looking for employment now.

The good news for job seekers is that “the market situation is very positive for employees…Skilled workers are scarce and the shortage cannot simply be filled by workers from neighbouring countries”, according to Peter Unternährer, Manpower’s regional director for central and eastern Switzerland.

Manpower’s survey for the second quarter of 2022 (April to June) shows that 38 percent of Switzerland’s employers plan to hire new workers.

Most job opportunities (32 percent of employers seeking to hire personnel) are found in the greater Zurich area, followed by 31 percent in the Mittelland, which encompasses the cantons of Bern, Fribourg, Jura, Neuchâtel and Solothurn.

Next (30 percent) are in the Lake Geneva region, which includes the city and canton of Geneva, as well as Vaud.

In central Switzerland, 24 percent of companies are looking for employees, 23 percent in the eastern part of the country, and 18 percent in the northwest.

Manpower also found that 75 percent of the companies surveyed promote gender equality and 63 percent promote diversity in the workplace — meaning they are inclusive of employees of all backgrounds and nationalities, both in terms of hiring practices and wages.

Overall, Switzerland’s unemployment rate is much lower than across the European Union — where more than 6 percent are jobless, according to latest figures from Eurostat — because the Swiss economy was already sturdier than many others before Covid struck, so was in a better position to withstand the crisis.

But Switzerland was also one of the very few countries that have been able to attract international companies to its shores even in the midst of the pandemic, which translated into more jobs for the local workforce.

Experts believe this is due to the country’s strengths, including political, economic and financial conditions.

“Even in a time of crisis, Switzerland scored thanks to its stability, predictability and security”, said Patrik Wermelinger, member of the executive board of Switzerland Global Enterprise (SGE), which promotes the country abroad on behalf of the federal government and the cantons.

READ MORE: How the Swiss job market rebounded from the Covid pandemic
 

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