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UKRAINE

How Covid, Ukraine and energy costs are changing Swiss spending habits

The war in Ukraine and the subsequent trade and financial sanctions against Russia are expected to have further repercussions on the budget of many households in Switzerland. This is how.

How Covid, Ukraine and energy costs are changing Swiss spending habits
You'll need more of these in your household budget. Photo: Pixabay

Beyond the political and humanitarian effects of the war, which are the most important considerations in any armed conflict, there are also far-reaching economic consequences for nations and individuals alike.

Switzerland’s households have already felt the impact of higher costs on certain essential goods, and more price hikes are predicted.

What did the Swiss spend most of their money on in the past years?

In 2020, the last year for which official data is available, a large portion of an average household’s total disposable income — 5,296 francs — was spent for the consumption of goods and services.

Consumer spending represented 52.4 percent of gross household income. Expenses for housing and energy were the biggest burden on the budget, at around 1,456 francs, or 14.4 percent of gross income.

Taxes took out 1,182 francs per month, or 11.7 percent of income.

Also part of compulsory expenditure were social insurance and pension fund contributions (10.2 percent of gross income) as well as health insurance premiums (6.5 percent).

Transport costs amounted to 7.4 percent, followed by food and non-alcoholic beverages (6.3 percent), restaurants (5.8 percent), and leisure and cultural activities (5.4 percent).

READ MORE: What do people in Switzerland spend their money on?

In terms of food and beverage, the highest single expense in Switzerland in 2020 was on meat — 1,383 francs a month. 

The next highest single expense category (1,237 francs) were drinks, followed by dairy products (1,026 francs), while breads and cereals cost 840 francs. 

In all, meat and eggs made up 35.6 percent of food expenses, while fruits and vegetables accounted for 13.7 percent.

READ MORE: Meat, cheese or booze: What do the Swiss spend the most money on

How will the war change these spending habits?

What we know so far is that at least two categories of consumer goods are getting more expensive and will likely continue to take a bigger chunk out of an average family’s monthly budget: energy (which includes electricity, fuel, and petrol), as well as certain food items.

This is why:

Russia is a major producer of oil and gas, though exactly how much of it is imported into Switzerland is not certain.

However, the prices of petroleum products in Switzerland rose by 6.1 percent after the invasion, according to a report by SRF public broadcaster.

Petrol prices have already exceeded more than 2 francs per litre in some cantons, and other energy-related costs are soaring as well, prompting the government to consider whether financial help might be necessary for low-income households.

Petrol prices in Switzerland are climbing. Photo by Erik Mclean on Pexels

Be it as it may, energy costs are now likely to take out an even  bigger share of an average household’s expenditures.

In terms of food, budgets will take a hit as well, as Russia’s invasion of Ukraine drove up prices of raw materials, fuelling inflation and higher cost of consumer goods.

READ MORE: How Covid, inflation and the Ukraine invasion has made Switzerland more expensive

The reason is that Ukraine is commonly known as the breadbasket of Europe because 12 percent of the world’s wheat supply comes from the Eastern-European country. It is also among the largest exporters of corn.

The (relatively) good news is that only 3 percent of Switzerland’s wheat comes directly from Ukraine, with the rest sourced either locally or from the EU.

But while the reliance on these imports is not enormous, if the Ukrainian crisis continues, prices of bread and other wheat-based products are likely to climb. One problem could be availability and price of fertilisers used in agriculture, as natural gas from Russia is needed to manufacture them.

This means foods derived from agriculture are becoming more expensive as well, consuming, as it were, a bigger chunk of family budgets.

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UKRAINE

‘Limited capacity’: How the Swiss right wants to shut out western Ukrainian refugees

With about 51,000 refugees from Ukraine currently in Switzerland, right-wing politicians argue in favour of introducing geographic vetting in regards to who can qualify for Status S, saying Switzerland has "limited capacity" for refugees.

'Limited capacity': How the Swiss right wants to shut out western Ukrainian refugees

After Russia invaded Ukraine on February 24th, the Federal Council activated, for the first time ever, the ‘S status’ authorising Ukrainians and Ukraine residents fleeing the war to live temporarily in Switzerland.

The special status is initially valid for a year, but can be extended. Anyone who is still in Switzerland after five years receives a B permit.

Included is also the right to work, as well as free health care and language courses. The refugees also have the right to free public transportation, but this perk will end on May 31st, with no word yet whether it will be renewed.

READ MORE: Switzerland’s special ‘S permit’ visa program: What Ukrainians need to know

Now, however, “the great solidarity with refugees from Ukraine is cracking”, according to SonntagsZeitung, which reports that rightwing politicians in Switzerland are “beginning to question our country’s culture of hospitality”.

The right-wing Swiss People’s Party (SVP), which has consistently opposed sanctions on Russia, is calling on the government to limit the S status  only to Ukrainians who come from the eastern part of the country, which is currently most impacted by Russia’s invasion.  

This movement is spearheaded by MP Martina Bircher, who argues that Switzerland is reaching its limits in terms of the number of refugees it can accommodate and support, and it should therefore grant S status only to those fleeing the most conflict-ridden regions of Ukraine, like the eastern part.

Other right-of-centre groups are in favour of this “regionalisation” as well. Andrea Caroni, president of the centre-right Liberal Party, supports the idea of granting the special status based on the geographical evolution of the Ukrainian conflict, saying Switzerland “ultimately has limited capacity” to absorb refugees from Ukraine. 

He said, however, that such a measure “must be coordinated at the European level.”

Not everyone, however, agrees with Bircher’s proposal.

According to Gerhard Pfister, president of the Centre Party, adopting geographical limitations “would create two classes of Ukrainians. This is not right”.

It is unclear how the SVP would seek to draw barriers to distinguish between the east and west of the country. 

As for the Conference of Cantonal Directors of Social Affairs, vice-president Marianne Lienhard said the organisaton will discuss the proposal at its next meeting at the end of May.

Cantons are directly affected by the influx of Ukrainians, as they will eventually bear the cost of supporting the refugees — the cost which is currently borne mostly at a federal level.

The “NZZ am Sonntag” calculated that in 2022, the costs of housing, health insurance, and general support will amount to between 1.25 and 2.25 billion francs. In 2023, these expenses could climb to 7.5 billion.

“Fake” refugees

In an article she wrote for the SVP website, Bircher also argued that some refugees pretending to be Ukrainian actually aren’t.

As an MP from Aargau, she claims that out of 12 people who received the S status in a small town in her canton, only seven were Ukrainian nationals. The other five came from Africa.

Among them are  “Kenyan and Lebanese men who claim to have lived in Ukraine or who actually lived there before the war, but who do not have a Ukrainian passport”.

The S permit scheme does not only provide protection for Ukrainian citizens, but also citizens of other countries who live in Ukraine. 

While reserved predominantly for Ukrainians, the S status has also been occasionally granted to citizens of other countries. 

According to the State Secretariat for Migration (SEM), about 1,000 “other” refugees received this status as well, including 238 Russians, and  people from Germany, France, Italy, the United States, Canada and Australia.

In such cases, children have a different passport from their parents, but it is the parents’ nationality and place of residence that defines whether the status is granted.

So it could happen that the parents have Ukrainian passports, while their children are citizens of other nations.

READ MORE: Swiss MPs call for Russian money to be used to reconstruct Ukraine
 

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