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WORKING IN SWITZERLAND

Do wages in Switzerland make up for the high cost of living?

Cities in Switzerland have once again been ranked among the most expensive in the world, but do salaries of workers there make up for the high cost of living?

Do wages in Switzerland make up for the high cost of living?
Do salaries in Switzerland make up for high cost of living? Photo by Henrique Ferreira on Unsplash

It will not come as a surprise to anyone living in Switzerland that, globally, Geneva and Zurich were ranked in the third and seventh place, respectively in a new survey of 20 most expensive cities for international residents.

The Swiss capital of Bern was ranked 16th in the study was carried by a global mobility organisation, ECA International.
 
However, on the European scale, Geneva was placed in top spot, Zurich in third and Bern in fourth.
 
RCA’s cost of Living index is calculated using a basket of common goods and services, including food, clothing, housing, electronics, utilities and public transport.
 
“In its latest report, petrol and cooking oil prices have undergone some of the biggest increases of any items in the basket”, ECA said. 

This is not the first time Swiss cities rank among the most expensive in the world; in fact, it is a long-term and predictable pattern:

READ MORE: Why Zurich ranks as the world’s most expensive city once again
 
There is a number of reasons to explain the high cost of living; among the most often cited ones are protectionism and lack of competition, which are inter-related, as the former invariably leads to the latter.

This is done mostly to privilege domestic products and economy over imported goods.

However, there are other factors 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. 

READ MORE : EXPLAINED: Why is Switzerland so expensive?

But a more relevant question is whether the (high) Swiss salaries make up for the (high) living costs — not only in Geneva, Zurich and Bern, but in other notoriously expensive areas around urban centres, including the Lake Geneva region, Basel and Zug.

The average gross income in Switzerland right now is of 6,555 francs per month, which means 50 percent of the working population earns less, and 50 percent earn more. 

The answer to this question depends, logically, on how high your wages are versus your fixed costs (rent / mortgage, health insurance premiums, food, transport, clothing, taxes, etc.), and also your overall spending habits on “non-essentials” such as entertainment, restaurants, travel, and leisure activities in general.

That, of course, applies to all countries, not just Switzerland.

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

One way to look at the salaries versus the cost of living is through the purchasing power parity (PPP) — the financial ability of a person or a household to buy products and services with their wages.
 
An in depth analysis by a digital employment platform Glassdoor provides some interesting and no doubt surprising insights into Switzerland’s PPP in comparison with other nations.

“Taking not only income and cost of living into account, but also the effects of differences in taxation, it is possible to derive an indication of after-tax, local purchasing-power-based, standard of living”, the study reported.

“On this basis, the highest overall standard of living is found in the cities of Switzerland, Denmark, and Germany. Although the cost of living can be relatively high in these countries, so are average wages and purchasing power”.

The study concluded that “in Switzerland, Denmark, and Germany the average city-based worker can afford to buy 60 percent or more goods and services with his or her salary than residents of New York. »

Also, if you look at the ‘big picture’ — taking various factors into account — the cost-of-living situation is not as bad as many people believe.

“Various factors” in this context means the low inflation rate (in comparison with other countries), high employment, and a strong economy — all of which mean that Switzerland is outperforming other European nations on many fronts.

All this goes to say that if you analyse things from a different angle, Switzerland’s cost of living doesn’t look so bad.
 
READ MORE: EXPLAINED: Why Switzerland’s cost of living isn’t as high as you think 
 
 

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FACT CHECK: How accurate are the ‘five reasons not to move to Switzerland’?

Under the tagline ‘money isn’t everything’, a southern German newspaper recently caused a stir by publishing ‘five reasons you shouldn’t move to Switzerland’ for work. What are the five points - and are they accurate?

FACT CHECK: How accurate are the ‘five reasons not to move to Switzerland’?

With one in four Swiss residents foreign, the country clearly has some pulling power. Most of this is based around Switzerland’s strong job market, which has high salaries in a variety of sectors. 

Switzerland boasts some of the highest salaries of anywhere in the world. 

Those in management positions or in sought after professions such as IT and medicine can earn considerable amounts, while other professions which may not be as traditionally high paid like teachers and cleaners also benefit from comparatively high wages. 

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

However, not everything is rosy for foreigners who come to Switzerland to work. 

In mid-July, German newspaper Südkurier ran a report targeted at Germans who may want to work in Switzerland – along with those who have already done so. 

Under the title “Because money isn’t everything: Five reasons not to work in Switzerland”, the newspaper – which is headquartered just over the German border in Konstanz – lays out five reasons why moving to Switzerland for work isn’t what it’s cracked up to be. 

The article has caused a mild stir in Switzerland, with Swiss tabloid Blick pointing out that some of the claims were inaccurate

While any such list is by its very nature subjective, we’ve listed the five claims and had a go at debunking them (or at least explaining them in more depth). 

Do you agree? Let us know in the comments. 

1: Too much overtime and too few holidays

It’s important to mention that everything is coming from a German perspective, with the paper comparing things in Switzerland to those in Germany. 

While that may not make too much of a difference for some, it will for others – particularly when it comes to the question of overtime and holidays. 

Verdict: The downsides of Zurich you should be aware of before moving

In Switzerland, workers are entitled to a statutory minimum of four weeks off per year. 

While this might seem excellent compared to other countries such as the United States, it is one week fewer than their German counterparts. 

The Südkurier also complained about overtime in Switzerland, where workers are expected to work far over their usual 40-hour work weeks. 

There does seem to be some truth to this – Germans and German employers tend to push for a stronger adherence to the 40-hour week than some Swiss businesses – but this will also depend dramatically on the company. 

Under Swiss law, those who do work overtime however will be entitled to either a 25 percent loading on that time, or to bank those hours for additional leave in future, so be sure to research the specifics of overtime in your work contract. 

Health insurance is far too expensive – particularly for deductibles 

Another major gripe was the way in which Switzerland’s healthcare system operates and how much it costs. 

While the high cost of Swiss health insurance is no secret, what got the German newspaper particularly upset was the way Switzerland handles its deductibles. 

Most German health insurance plans have no deductibles, whereas in Switzerland this can be thousands of francs depending on your plan. 

The Südkurier however implied that the lowest deductible is CHF2,000, which is patently untrue.

READ MORE: How much does health insurance cost in Switzerland?

The level of a deductible will be up to each insured person. 

The minimum deductible in Switzerland is 300 Swiss francs (around €260). The maximum amount is 2,500 francs. The higher your deductible (in other words, the more you pay out of your own pocket) the lower your monthly premium is.

Childcare is also too pricey

Another sticking point was Switzerland’s high childcare costs, which made it prohibitive for families with two working parents. 

On this point, it is hard to argue. 

The high costs of childcare are a frequent complaint of many a parent in Switzerland. 

While this of course varies dramatically from canton to canton, the average cost of a day of childcare in Switzerland is CHF130. 

The average Swiss family spends a massive 41 percent of their net income on childcare, three times the OECD average of 13 percent. 

For ways to save – and a number of alternative childcare options – check out the following link. 

READ MORE: How to save money on childcare in Switzerland

…and in fact everything is just far too expensive

OK, we knew this one was coming. 

Besides chocolate, cheese and banks full of other people’s money, Switzerland is perhaps best known for being expensive. 

The country is especially pricey when it comes to food, beverages, hotels, housing, restaurants, clothing, and health insurance – or pretty much everything you need. 

Keep in mind however that while Switzerland is expensive for its residents, for people coming from abroad, high costs here are the ultimate culture shock.

If you work in Switzerland, you will earn significantly higher wages than most other countries – which somewhat offsets the cost of living. 

Also, many of the best things about Switzerland are actually free – from clean air and high levels of safety to the wonderful scenery and the amazing network of public footpaths that allow you to explore the county at a walking pace.

READ MORE: 13 things that are actually ‘cheaper’ in Switzerland

Learning Swiss German is essential but useless elsewhere 

On the final point, the Südkurier went all in on Swiss German, saying the language was necessary to navigate some parts of Swiss society but that it was completely useless elsewhere.

“It’s a language that won’t help you anywhere else in the world. You can’t use it to communicate in East Asia or South America, and it often doesn’t even help you in other parts of Switzerland” the author wrote. 

While it is true that Swiss German is unlikely to be too helpful anywhere else in the world, the topic of Swiss German versus High German is particularly controversial, especially among Germans who have moved to Switzerland. 

The Local have been told by our German readers that the Swiss will often switch to English rather than speak High German, due to a combination of not being able to and simply not wanting to. 

While where you live will be crucial on whether you should speak Swiss German or not, learning at least some basics in the local dialect is essential for anyone regardless of where you move to. 

READ MORE: 15 ways to swear like a Swiss German

Are these accurate? Or are they not? Let us know in the comments below. 

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