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Switzerland is renowned for being one of the wealthiest countries in the world. With a GDP per capita that outperforms most other major economies, it also home to some of the richest citizens of the world. And with a mean wealth of US$685’000 per adult – all would seem well for the citizens of Switzerland. But is this a realistic picture?

It was only a few years ago that Switzerland was an agrarian society, with an economic development then similar to that of Italy or Spain. Even today 36% of the land in Switzerland is still devoted to farming. And although Switzerland has virtually no natural resources, it is has now become one of the richest countries in the world.

So how did Switzerland build such a robust economy, with a leading financial sector. Well, unlike many current western democracies, Switzerland enjoys political stability, a favourable business climate, skilled workforce and has low unemployment and low inflation.

But is the wealth in Switzerland evenly distributed? A recent national poll showed that nearly 82% of the population believed the gap between rich and poor in Switzerland is increasing. But is the perception of inequality of wealth true? Data sources from two measurement criteria would seem to disagree. Here we explain:

  • The S80/S20 ratio is a data formula that measures the relative disparity in the distribution of wealth using indicators such as wages, incomes, standard of living, etc.
    • The S80/S20 compares the average income of the 20 % richest persons of a country to that of the 20% poorest persons.
  • The Gini Coefficient is a summary measure of income inequality. It measures the distribution of income across a population. A higher Gini index indicates greater inequality.
    • For 2024, the Gini Index for Switzerland is forecast to be 0.33. This means for example:
      • The number of people in Switzerland who will be earning less than US$2.15 per day is forecast as being 6’200 in 2024.
      • The number of people in Switzerland earning less than US$3.65 per day is forecast as 7’970 in 2024.

Wealth Distribution Stats Explained

From the measurement data highlighted:

  • The S80/S20 in Switzerland in 2021 (latest data) show that the S80/S20 ratio at 4.9, which is below the EU average of 5.0.
  • In other EU countries, the number ranges from (lowest) 3.2 in Slovenia to (highest) 8.8 in Turkey.
  • Time series data also shows Switzerland’s S80/S20 index fluctuating at around 4 since 2000, reaching a high of 5.3 in 2019.
  • The Gini Coefficent in 2021 was 31 in Switzerland.
    • Between 2006 and 2018 it fluctuated between 36 and 33, so 31 is at the lower end historically.

So the wealth gap has decreased in Switzerland whereas the recent poll data shows the population believes the opposite – why the difference? 

One major reason for the poll results, could be the recent rise in prices. Although inflation officially only ran at 2.19% in Switzerland for 2023, the published average inflation figure for the EU was much higher at around 5.6%.

In reality, the basket of goods used for inflation measurement does not typically include prices for several obligatory services in Switzerland such as healthcare, rent, and mortgages for example. And all of these have increased way above official inflation figures. Although these prices are applicable to everyone, they  heavily affect the lower 20% of people in the S80/S20 index.

Although everyone is affected by these increased costs, it is often the lower earners who suffer most.

Summary

Switzerland is a microcosm of many things – and today represents the outcome of centuries of cooperation, alliances, exchanges and contacts between its cantons. It is also known globally as being a wealthy nation and a country that attracts wealthy individuals to live there. It is also known for its high prices and cost of living. And recent sharp price rises for obligatory services and products has meant that working class citizens are feeling the pinch, probably more so than high net worth individuals. While the official statistics may show that all is well in planet Switzerland, there are definitely rumblings from those who have to count money twice before spending. That said, Switzerland is still a pretty good place to live!

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