Recent statistics released by the State Secretariat for Economic Affairs, showed that the average income of Swiss households reached CHF114’984 in 2019. From that average, 40% of households recorded income over the mean, while a whopping 60% earned less.
With income streams coming mainly from those in active work (73%), the remainder (23%) came from those drawing pensions, or on welfare, or receiving household monetary transfers such as with alimony and investment income (4%).
Purchasing Power
An individual’s purchasing power is based on their disposable household income – which in turn is defined as the gross income of all household members, less paid income transfers, social contributions and taxes. The average disposable income for Switzerland in 2021 was US$ 40,094.
The level of income per capita in Switzerland could undoubtably offer a comfortable lifestyle in many other countries, but in Switzerland with a high cost of living, it wouldn’t last long. In fact, the survey showed that from the total revenue earned in 2021:
- 37% went on taxes, and compulsory insurances, as well as household transfers such as with alimony.
- 14% went on housing and energy bills.
- 6% was spent on food.
- 7% was used for transport.
- The total consumed in fixed costs equated to 65% of total income earned.
- Further discretionary income then followed including:
- 6% dining + hotels
- 5% on leisure
- 12% on miscellaneous
- 13% was then left equating to an annual amount of CHF14’864
Disposable Income in the EU
According to Eurostat statistics, in 2021, the picture for disposable income in European member states looks very different to that of Switzerland and is spread over a wide range. The measurement used is the “PPS” or Purchasing Power Standard. The PPS is a unit that takes account of price-level differences between countries. The data for the EU are calculated as population-weighted averages of national data for the EU Member States.
- Median (equalised) annual disposable income was PPS 18’019 per inhabitant in the EU.
- This ranged from a PPS of 8’703 in Romania to a PPS of 32’132 in Luxembourg.
- In 2021, the 20 % of the population with the highest income received 38.2 % of disposable income in the EU Member States.
- In terms of real currency and disposable income in the EU:
- The average purchasing power per capita in Europe in 2021 was €15,055.
- However, disposable net income amongst the 42 countries surveyed varies significantly.
- People from Liechtenstein for example have 34 times more the amount available for spending and saving than Ukrainians.
- The amount available for spending and saving across the EU varies greatly from country to country.
Wealth Distribution
- In Switzerland, the top 10 percent of earners take home approximately one-third of the country’s total earnings.
- The wealthiest 10 percent of the Swiss population owning 63 percent of the country’s capital
- However, nearly 20% of households in Switzerland has very little money. This according to the Federal Social Insurance Office.
- A recent survey found that 15% of households of the working population and 22% of households of retired residents in Switzerland are affected by poverty. The report from the University of Geneva is based on tax data of approximately 4.5 million residents (or more than half of the Swiss population) between 2011 and 2015.
There are obvious limitations to the data collected when calculating per capita income. These include age, wealth distribution and cost of living. Simply dividing the total GDP of a country by the number of people living in that country gives a statistical average, but in many cases not an accurate picture of individual spending power ad wealth.
In summary: Switzerland ranks 20th globally in terms of GDP but in terms of GDP per capita it ranks 9th. Compared to its neighbours these numbers are higher, in some cases significantly higher than most EU countries. But wealth distribution is also a key factor when measuring household income and with around 20% of households in Switzerland with very little income to spend and 10% of the countries population owing well over 60% of the country’s capital, we can see that the wealth distribution is far from balanced.
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