Having lived in several countries and having spent half of my life in Switzerland. I have noted 10 surprising peculiarities of the Swiss economy. In this article, I mention 5 positive points and 5 negative points.
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Before giving my opinion on the 10 surprising peculiarities of the Swiss economy, let's examine how Switzerland is perceived internationally?
How is Switzerland known abroad?
- Swiss Culture & Geography
Switzerland is a well-known country in Europe. Outside of Europe, it is not a very well-known country.
Culturally, Switzerland is known for its lakes, mountains and chocolate.
Switzerland has the particularity of having 4 official languages.
- German
- French
- Italian (in the canton of Ticino)
- Romansh (a language still spoken in the Grisons region)
English, although not an official language, is very commonly used in Swiss administration.
The most famous cities in Switzerland are Zurich, Basel, Bern, Lausanne and Geneva.
The French and Belgians mainly know French-speaking Switzerland. That is to say, the Swiss part where French and Italian are spoken. Mainly the canton of Geneva, the canton of Vaud, the canton of Neuchâtel and the canton of Valais. As well as Lake Geneva which is a Franco-Swiss lake.
- The Swiss economy
From an economic point of view, Switzerland is mainly known for its high salaries.
This is why border towns in France have a large number of cross-border workers. Indeed, many French cross-border commuters come to French-speaking Switzerland to find work (or, depending on your perspective, to take jobs away from Swiss residents). This is particularly true in the Geneva, Nyon, and Lausanne area.
Note that Swiss salaries, which are high (compared to European salaries), attract many European nationals to come and live in Switzerland. This was the case for my Portuguese parents, for example.
On the other hand, do high salaries allow for a good quality of life when living in Switzerland?
👉 With this article I decided to share, in my opinion, the 5 incredibly positive financial aspects and the 5 sadly negative financial aspects in Switzerland. 😃
10 Surprising Peculiarities of the Swiss Economy
5 Positive Points 👍
Let's analyze the main positive points regarding the economy. There are several interesting financial points. But here are my top 5!
1👍 – Very low unemployment rate 🧑🌾
In Switzerland, the unemployment rate is low. According to the newspaper Le Temps1, it is 4.2%.
Additionally, according to AI, Some Swiss cantons have incredibly low unemployment rates, below 2.5%.
👉 This feature promotes job stability as well as salary negotiation.
As a result, finding a job in Switzerland is relatively easy overall. However, some sectors of activity can be saturated.
Note that this is a crucial aspect regarding personal finances and frugality. In order to maintain a good standard of living 😁
2👍 – Account 3a 🏦
Account 3a is a savings account intended for retirement.
👉 From a financial point of view. A 3a account is advantageous for 2 reasons:
- Taxpayer's tax deductions
- Possibility to invest your savings (up to 99%)
It is very positive to build financial wealth through a tax-deductible savings account. In my situation, I save thousands of CHF per year in taxes thanks to the 3a account ☺
In addition, there is the possibility of investing 99% of your savings 😊
👉 In reality, with some strategies of some pension accounts. The profitability is 7% annualized on average. With management fees lower than 0.45%.
Not bad at all!
3👍 – Good Taxation Regarding Growth ETFse📈
👉 Another interesting feature of Swiss taxation is the low taxation of a growth ETF.
In Switzerland, regarding the performance of shares or ETFs. Taxation only concerns the total value of the share on December 31 of each year.
Note that taxation will depend on the taxpayer's canton of residence.
On the other hand, the taxed value is generally very low. Generally, less than 3% of the total value of the share.
In my case for example, it's pretty crazy. In fact, I pay more taxes on the salary I receive compared to my SP500 growth ETF.
This peculiarity comes from the fact that in Switzerland, A growth ETF is considered a fortune. And for the Swiss Confederation, Wealth tax is very lightly taxed compared to income tax.
Note that in some European countries, the taxpayer is taxed up to 30% on the value of the growth. Which makes a growth stock or ETF less attractive from a tax perspective.
4👍 – Healthy public finances 🏢
According to an article from Swiss television RTS2. The finances of Swiss public administrations, such as the cantons, municipalities or the confederation. Between 2006 and 2018, they achieved a surplus of CHF 79 billion.
Other than the fact that the Swiss administration is financially stable, the Swiss public debt was 29.3% in 2018.
This public debt is very low compared to some European countries considered “rich”. For example, the public debt in 2018 was:
- France – 99%
- Italy – 130%
- Germany – 62%
It is important to understand that the more indebted a country is, the more difficult it is to develop and provide for the needs of its population.
👉 As a result, French or German taxpayers, for example, will have to pay more taxes to repay their debt compared to a Swiss taxpayer.
5👍 – Good purchasing power (in general) 💰
A well-known study to measure the purchasing power of a country's population. It is measured in "SPA". That is, the Purchasing Power Standard.
Therefore, the higher the SPA, the more the country's population tends to have good purchasing power.
Note that the results vary depending on the studies. But overall, the top 3 European countries with a better SPA are generally composed of:
- Luxembourg
- Norway
- Swiss
Indeed, purchasing power in Switzerland is very high compared to the majority of European countries.
5 Negative Points 👎
Although Switzerland has very good aspects from a financial point of view. Not everything is rosy in this country. Here, in my opinion, are the top 5 negative points in Swiss finance!
1👎 – High cost of living 💳
A negative consequence of a stable country with good purchasing power is the high cost of living.
According to the website "world data3”, Switzerland is the fourth most expensive country in the world.
According to this site, note that Switzerland is:
- About 1.5 times more expensive than France
- Almost twice as expensive as Spain
- 2 times more expensive than Croatia
👉 Indeed, despite high salaries compared to European countries. It is very difficult for a Swiss resident to live reasonably with a salary lower than 4,500 CHF net in Switzerland. Mainly for a person living alone.
Therefore, earning thousands of CHF gross per month is not synonymous with fortune in Switzerland! Once the daily expenses.
Here are some examples of common expenses in Switzerland.
- A single train journey of 29 kilometres costs around 17 CHF (34 CHF return)
- A coffee in a bar costs around 4.50 CHF
- A pain au chocolat in a bakery costs around 3.50 CHF
👉 As a result, leisure and daily expenses in Switzerland are incredibly expensive.
2👎 – Expensive and compulsory health insurance 👩⚕️
If there is one subject that angers the majority of the Swiss population, it is basic health insurance!
In fact, in Switzerland, basic health insurance (lamal) is compulsory, expensive and with very limited benefits!
In reality, it is not uncommon to see families of 2 parents with one child, paying more than 1,500 CHF per month for health insurance. For 3 people only.
👉 Health insurance in Switzerland represents a considerable portion of the budget for Swiss households.
To share my experience, my first year of work as an employee with a work rate of 100%. I paid 11% of my monthly salary for my health insurance. And again, I had to pay the first … 2500 CHF in the year to activate it.
3👎 – Free movement of people 🚶♂️➡️
My goal with this article is not to create political controversy. In reality, political opinions are personal. Therefore, my opinion on this subject is simply a debatable opinion.
At the moment, the free movement of people allows people from the European Union to easily enter and leave Swiss territory. In order to reside in Switzerland for example.
Moreover, some people work in Switzerland but live in neighbouring countries. These are called cross-border workers.
👉 In my opinion, Switzerland should limit the free movement of people. I don't think banning it is the solution. But limiting it, probably. !
Indeed, in my opinion, This law on free movement does not benefit the finances of Swiss residents. Because, unlike the majority of European countries, this free competition between European people only lowers average salaries.
In my opinion, this free movement brings border problems. Because the more candidates there are for a job, the more employers can reduce salaries. Since French residents have fewer expenses in France, this automatically creates unfair competition for Swiss residents.
Moreover, this is one of the main reasons why the Swiss regularly vote against bilateral agreements with EU countries during voting.
In addition, this automatically increases the unemployment rate in Switzerland.
👉 Not to mention, with this law, it's the snake biting its own tail!
In reality, the Swiss population does not receive a fair wage because of this unfair competition. Not having the means to consume in Switzerland. She will spend her money … abroad. Because the cost of living is cheaper there.
Indeed, it is no coincidence that many Swiss residents:
- Go shopping in a supermarket in neighboring countries such as France, Germany or Italy
- Buy from Chinese sites like Temu or Aliexpress
- Prefer to buy from European sites rather than Swiss sites
- Carry out certain hobbies and activities (e.g. skiing) in neighbouring countries
👉 In conclusion, in my opinion, with limited traffic there would be a better chance that the entire Swiss population would have a decent salary in Switzerland.
therefore, If the entire Swiss population has good salaries, this automatically translates into greater purchases of Swiss products and greater consumption by Swiss companies.. Which would be an advantage for the entire population.
4👎- Real estate prices too expensive in some areas 🏠
👉 Another consequence of high and stable salaries, It's the high price of real estate.
Fortunately, this is not the case in Switzerland. In some cantons, the price of a property purchase or the price of rents in relation to the average annual salary remains reasonable.
However, in many Swiss regions, for the middle-class population, the dream of buying a primary residence has become impossible.
Among other things, in order to become a simple tenant in certain Swiss regions. This is only possible with very high salaries.
To give some examples, here is the average price to pay for a rental in Switzerland. In some expensive regions such as Geneva, La Côte or Zurich.
- 25 m studio2 = 1,200 CHF
- 2 rooms of 45 m2 = 1,500 CHF
- 3 rooms of 60 m2 = 2,000 CHF
Therefore, it doesn't take a personal finance genius to understand that if the rent is high, there is less money for other important expenses 😐
Which promotes debt!
5👎 – “Unnecessary” taxes 🧾
When I started living in Switzerland, I was amazed by the amount of very expensive taxes that the Swiss population pays for... almost nothing.
I give some examples:
- Serafe
This is the tax on Swiss television and media.
Nowadays, few people watch TV regularly. In my case, I never use TV or radio.
👉 Therefore, I don't like being forced to pay 300 CHF per year for a service that I don't use (and I don't care at all).
- Garbage bags at 2 CHF per bag
👉 In Switzerland, the population is obliged to pay 2 CHF for a plastic bag. This is called a garbage bag.
This tax was invented in order to better sort waste. In my opinion, the result was reversed.
In fact, because of the high price of the bag, the Swiss population tends to fill the taxed garbage bag to the brim.
For example, for many people, if there are empty glass bottles, leftover food or plastic lying around the house, they put everything in the trash bag in order to make the high purchase price profitable.
Therefore, paying to sort does not give the expected results.
Moreover, in border communities, there are many cases where Swiss residents go to France to throw away their waste in order to save money.
Apparently, forcing people to go green doesn't work...
- Dog tax
👉 In Switzerland, owners must declare their dog and… pay taxes.
Indeed, since everything in life is taxed, why not a dog?
I am taxed on my salary, and others are taxed on their Pug.
On the other hand, the Swiss state is not going to help you when you go to the vet. On this subject, everyone has their own bills.
- Other “questionable” taxes
👉 There are some taxes that are questionable that I have not written. But in my opinion, they are ironic taxes. Not to say laughable. For example:
- Vehicle plate tax
- Entertainment tax (in certain cantons)
- Non-firefighter tax (in certain municipalities)
The most ironic thing about these taxes is that Swiss politicians consider Switzerland to be a “liberal” country.
VSConclusion
Switzerland is a country with qualities and defects.
Generally, Switzerland is a stable country, with a low unemployment rate and the Swiss state has solid finances. As a result, the population benefits from a good GDP per capita and good salaries compared to European countries.
On the other hand, living in a rich country does not necessarily mean that the local population is rich.
👉 In reality, in Switzerland, the population is subject to a lot of taxes, pays a lot for their housing, pays a lot for their health insurance and the cost of living is very high.
In my case, according to my opinion and experience in Switzerland. Analyzing the financial side. The top 5 positive in Switzerland are:
- Low unemployment rate
- Account 3a (in order to deduct taxes and benefit from approximately 7% of return)
- Attractive taxation for a growth ETF
- Healthy public finances (overall)
- Good purchasing power (in general)
On the other hand, there are also negative points. In my opinion, the top 5 negative points in Switzerland are:
- Very high cost of living
- Expensive and compulsory health insurance
- Free movement of people
- Real estate prices too expensive in some areas
- “Unnecessary” taxes to be paid
10 Surprising Peculiarities of the Swiss Economy
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About me
I decided to create this blog to develop and help readers who are looking for a simpler and more economical life.
Compared to before, I was a person who consumed a lot until the day I realized that my consumption made me sadder and poorer 😑
Now I prefer the minimum of my needs to be happy and achieve my financial freedom.
Without realizingI started to focus on saving and investing to depend on a boss for as little time as possible and to speed up my personal projects.
For several years I have felt happy and I have become richer in a way that I would never have imagined given that I have an average salary in Switzerland.
It is for this purpose that I decided to create this blog. In order to share and learn with other people who seek freedom and simplicity 😉
Are you rather minimalist or frugal Jonny?
I am as minimalist as I am frugalist. However, there are situations where I lean more towards an art of life.
To conclude, I think the most important thing is to feel comfortable in your lifestyle 😊
10 Surprising Peculiarities of the Swiss Economy
10 Surprising Peculiarities of the Swiss Economy
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