It is not a guarded secret that Switzerland is an expensive place to visit. There are many tales of visitors to Switzerland describing how much they spent each day – describing “unbelievable” prices for meals and drinks and other everyday items. But what are price levels like when you actually live in Switzerland?
Compared to its neighbours in Europe, the cost of a standard basket of goods, such as food, clothing, accommodation, healthcare, transport and education for example, is still far higher in Switzerland than in the rest of Europe.
In fact, in 2021, consumer prices in Switzerland were 54.4 percent higher in Switzerland than the European Union average. This makes Switzerland the most expensive country in the European room ahead of Iceland (50.4 percent higher), Norway (41.2 percent higher) and Denmark (33.7 percent higher).
Cross Border Shopping
As Switzerland is not a big country geographically and each language area is bordered by an EU country, it is no surprise that many people who live in Switzerland, go cross border shopping – even for day-to-day items such as groceries.
Popular cross-border shopping countries for Swiss residents are: Italy, Germany, France and Austria and these are only marginally above the EU average in terms of pricing and far cheaper than Switzerland.
- Countries further afield such as Portugal and Spain are substantially cheaper than the EU average at -19% and -8% respectively.
- Despite a weak GBP currency, the UK is well above the EU average price index at +22%. This is mainly due to the high cost of housing which is 68% above the EU average.
Working remotely in Switzerland?
Those from EU countries now looking to base themselves out of Switzerland, should definitely do their homework first before considering a move. Some examples of people working in EU countries and who are “breaking even” each month, show that when moving to Switzerland, they would be dramatically worse off. For example:
- A worker from Portugal looking to move to Switzerland and work remotely, would need to earn more than twice as much after taxes and social charges to live in the same manner as they are accustomed to at home in Portugal.
- For someone from Spain considering the same, the calculation would be, they would need to earn 82% more than they currently do to be able to live comfortably in Switzerland.
- For British based workers looking to move to Switzerland to work remotely (permit permitting), they would need to earn nearly 40% more than their current earnings.
- For the Italians, French and Germans the percentage increase is even higher.
- Italians would need to earn 66% more than their current earnings to be able to live at the same standard as in Italy.
- For the Germans this figure is 63% more.
- Finally for the French, the additional pay required would be 58%.
Prices and Expensive items
Some of the items that are very expensive in Switzerland include:
- Food – which is 1.8 times higher than the EU average.
- The most expensive category under food was meat at 2.5 times that of the EU.
- Health care, which is on average 2.1 times higher than in the EU.
- Under health – hospital services are 2.7 times higher in Switzerland than the EU average.
- Accommodation is also 1.8 times higher than in the EU.
With many people based in Switzerland cross border shopping for food, it should be no surprise that food prices are far lower in neighbouring countries.
- Italy is 35% cheaper
- Germany 38% cheaper
- France 35% cheaper
- and Austria 28% cheaper
- Meat is Switzerland’s most expensive food item. And this ranged from being 53% cheaper in Italy to 44% cheaper in Austria.
Why are the prices so high in Switzerland?
Prices in Switzerland have increased significantly in the last 10 years compared to the EU in part because of the rapid rise of the Swiss franc. In 2006 Switzerland was 28% more expensive than the EU average. This figure changed to 68% by 2016. More than one third of this rise occurred in 2011 when the Swiss National Bank (SNB) ceased to support the value of the Swiss franc.
According to the Federal Statistical Office (FSO) Switzerland’s gross mean household income in Switzerland was CHF 114,984 (US$ 125,000) in 2019. This is for a household of 2.17 people and includes discretionary items. Breakeven depends on spending patterns and where one lives in Switzerland. And, with 61% of Swiss household incomes being lower than the mean – most have to get by on less. From afar, higher Swiss pay might look attractive but it can easily get gobbled up by higher bills.
- Some price differences are driven by trade tariffs – such as those for beef. Others are caused by “technical” trade barriers. These are requirements to change a product in some specific way for the Swiss market. The Swiss government started to remove these barriers in 1990 with new laws passed in 2010. The impact of has been disappointing and Switzerland has remained comparatively expensive.
- Another known reason for some price differences is geographically discriminatory wholesale pricing – where product owners charge Swiss retailers higher wholesale prices than those they charge retailers in other markets. Sometimes this is done via local wholesalers that are given exclusivity to sell in Switzerland. This is especially prevalent with fashion brands for example.
- Another theory for higher prices in Switzerland is that prices are set in line with Swiss consumers’ higher spending power. Interestingly, price competition which appears absent from food, clothing, magazines, cosmetics and toy products (which are all very expensive in Switzerland compared to the EU) is alive and well for electronic products, which are generally cheaper in Switzerland, due to far lower VAT in Switzerland versus the EU.
- To provoke price cuts, Swiss consumer organisations have suggested strengthening laws relating to cartels and more parallel importing.
In summary, visitors to Switzerland will continue to experience high prices, which are largely down to a high Swiss franc, a lack of competition, one sided, sometimes exclusive, territorial wholesale agreements on some imports, and import restrictions on products in protected industries, farm products in particular. Unfortunately, these are hard to fix. The first example is structural, the second is legally challenging and the last one is political.
Those living in Switzerland will unfortunately, continue to pay high prices. And those looking to move to Switzerland to work remotely for a current employer from their home country, would be well advised to do their homework first. What might be a good wage in their current country of residence, could ultimately mean not having enough funds to breakeven with in Switzerland.
But things may not be all that bad – as Nikta Krushchev famously said: “When all the world is socialist, Switzerland will have to remain capitalist, so it can tell us the price of everything”
Accurity GmbH is a professional employer organisation (PEO) based in Zurich. We lease contractors under the Collective Labour Agreement for temporary work with the Association of Recruitment Agencies, or Swissstaffing and thereby contribute toward the Temptraining fund.
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