Expensive or not? Switzerland under investigation

The big mac index (BMI) was created by The Economist publication back in 1986, and  designed as a light-hearted guide to compare currencies and purchasing power of various countries. Today, it is seen as a fairly accurate way to measure purchasing power – as logically, countries with higher wages and labour costs are more likely to have higher prices.

Anyone reviewing the BMI from January 2024, will quickly note that Switzerland is in top spot as the most expensive country to buy a Big Mac. Only Norway and surprisingly, Uruguay come close to the Swiss price of US$8.17.

But is Switzerland really that expensive compared to other countries? According to the world population review, Switzerland is ranked 3^rd as the most expensive place to live. Economist’s counter argument is that higher incomes increase purchasing power. What does that mean for visitors to Switzerland, who perhaps don’t enjoy the same purchasing power as the Swiss?

In this post we take a closer look at some living costs in Switzerland and compare these to other well-known cities around the globe. We also give some tips for those planning to visit Switzerland on vacation.

Living Accommodation

Here we compare the cost of rental for a  standard 2-bedroomed apartment in the cities of Los Angeles, USA, London UK,  Milan Italy and Zurich Switzerland.

FIG. 1  In Zurich – the price difference for living accommodation in the city centre versus a 10 min metro ride varies quite significantly. We have assumed not city centre.

From the above table it is clear to see that Zurich Switzerland does not have the most expensive accommodation when we take into account the purchasing power of workers. And with around 60% of the population of Switzerland living in rented accommodation, the golden rule has always been, that rent for living accommodation should cost approximately 30% of gross earnings, which in our example is correct.

But what about other costs in Switzerland for living such as food, transport, leisure activities? For a great overview, please click on the link: https://www.numbeo.com/cost-of-living/in/Zurich

Eating out

One of the challenges with the BMI is that it only measures one type of food and service and that is, “fast food”. For people looking for an affordable snack, there are many options available in Switzerland. And with a higher percentage of workers now not returning home for lunch, as well as an increasing number of visitors with a robust tourism sector, the selection of international food options keeps growing. Some interesting points for those working in Switzerland:

• Many of the mid to larger sized companies in Switzerland have subsidised canteens, where staff can eat good meals for around CHF10.
• There are also other subsidised schemes for companies and their staff such as the Swibeco lunch card where employers contribute to the cost of meals, or the well-known Swiss Lunch-Check where employers receive a non-taxable benefit to enable them to eat cheaper in restaurants that participate in the scheme.
• Today’s vending machines positioned in company break areas, have moved on from the classic spartan offer of a few years back. Today catering supply partners such as FelFel (“Switzerland’s favourite office food”), sell a wide range of fresh and locally produced meals at favourable prices.
• If that is not enough, the well-known convenience stores such as Migros, Co-op, Aldi and Lidl (there are more) offer a range of ready-made snacks, sandwiches, salads, drinks and more – all at very competitive prices. What better way to enjoy the lunch break by sitting on the banks of one of the many lakes in Switzerland, with your own picnic!

While many of the above options are relevant to workers in Switzerland only, the last example is obviously available for everyone. Another good tip is to look for daily menu options or specials that many restaurants and snack bars offer. These usually start at around CHF15 and often offer 3 courses for the price (without drinks).

Tipping

• When comparing restaurant prices with other countries, the good news is that tipping in Switzerland does not apply for fast food restaurants or take away food stores!
• Also, tipping is only customary in a restaurant or setting with service personal, but even then, not obligatory. The normal custom is to “round the total up”. For example, something that costs CHF18.20, would be rounded up to CHF19 or in some cases CHF20. So, while some prices may initially look a little steep, they do not come with a 15-30% service charge.

Comparison with Other Countries

• The U.S. state of California U.S. has nearly four times the population of Switzerland. Los Angeles alone has 3.8 million inhabitants to Switzerland’s country total of 9 million. High prices and average salaries in Los Angeles of around USD38-45’000 in the hospitality sector, mean that tipping is seen as a vital source of income for hospitality services employees.
• Tipping in the USA is an established practice and starts at around 15%, whereby 20-30% tips are not uncommon. Even fast-food service personnel expect a tip, and this is usually added to the customer invoice during the payment process. Once recent customer experience documented at a famous fast-food hamburger outlet, complained of the total cost of the hamburger with service charge being US$24!

Facet: Eating out in Switzerland can be expensive, but with a bit of research and planning, it is possible to find good quality and healthy food at an affordable price.

Our motto: Do as the locals do and enjoy a take-away lunch from one of the many international and local options available and sit out in the beautiful Swiss nature and enjoy! Bon Apetit!

Swiss Cost of Living Indicators

• According to trading economics, interest rates in Switzerland are now the second lowest in the world at 1.5%. Only Japan (0.1% is currently lower).
• The same publication ranks GDP PP in Switzerland as second best in the world at US$72’278 – only after Singapore.
• Recent figures show that 58% of people in Switzerland rent living accommodation and with a price to rent ratio of 126, Switzerland sits mid table, with the highest ration being Turkey at 276.
• The golden rule for rental accommodation in Switzerland is that living accommodation should not exceed 1/3 of gross salary. This would mean on a gross income of CHF7-10’000 per month, the living accommodation should not cost more than just over CHF3’000, which is achievable, despite recent rises in rental properties.
• Annual food inflation in Switzerland currently stands at -0.4% which is one of the lowest globally.
• Healthcare is one of the biggest cost items for Swiss residents, but the private health service offered is of a very high standard. With 4.43 hospital beds per thousand residents, Switzerland is in 10^th spot globally. Visitors to Switzerland (especially those interested in sport), should ensure that they are sufficiently insured if medical treatment or hospital stays are required.
• The median salary in Switzerland currently lies at just under CHF7’000 per month, although there are obviously higher and lower earners. Salary levels help compensate to some extent, for the prices in Switzerland compared to its neighbours.
• Tax In Switzerland: the average single worker paid an average tax rate of 18.6% in 2023. This compared with the OECD average of 24.9%. This means that in terms of disposable income, the take-home pay of an average single worker in Switzerland, after tax and benefits was 81.4% of their gross wage. This compared with the OECD average of 75.1%.

Vacation in Switzerland – Accommodation and Travel

• For those visiting Switzerland for a vacation or even and extended stay, Switzerland offers a wide range of accommodation. From camping on a local farm to living in 5-star luxury and almost everything in between.
• The main vacation seasons of Summer and Winter are obviously more expensive due to supply and demand, but for those who plan early, there are generally good deals to be had. A great place to start when planning a trip is the Swiss Tourism website: https://www.myswitzerland.com/en/
• Switzerland also has an unbeatable public transport systems and Swiss Railways offer special deals for those visiting Switzerland for an extended stay. Deals range from 3-15 days or even a half price pass purchase. See this link for details: https://www.swiss-pass.ch
• Workers (and their families) re-locating to Switzerland, will find a wide offer of corporate style accommodation available. These range from studios to full-sized apartments. Many of these providers work internationally, so the standards and to a certain extent, pricing is much the same as in other major commercial centres such as London, Milan, Frankfurt etc. Some of these providers also shorter term stays. Visit some of the leading providers of corporate accommodation such as visionapartments.com or www.athomeswitzerland.ch

In Summary

The question whether Switzerland is expensive or not, depends to a certain extent if you are a resident or a visitor. Like most countries there are bargains to be had if one knows where to look.

For visitors to Switzerland, planning in advance is always recommended. Early bird offers abound for both state and private enterprises. Avoid the traditional tourist traps and look off the beaten path. Switzerland has such a wealth of natural beauty, a simple picknick by a lake or mountain stream does not cost much and is truly great value.

For workers in Switzerland – shopping around and comparing offers is always recommended. Sites such as www.comparis.ch or toppreise.ch are there to support the consumer when comparing and purchasing any number of goods and services.

Accurity is SECO licensed to provide employment services in Switzerland for companies of all sizes from multi national corporations to SME’s. We also advise on remote work . Please contact us on switzerland@accurity.ch or on +41 (0) 400 5585 to find out more about the services we offer clients, contract staff and recruiters. Please feel free to Contact our team to see how we can help you!

Michael Boaden

Michael is a celebrated strategic Marketing and Business development expert with decades of experience and achievements under his belt. He has extensive commercial knowledge in the relocation and travel industry and has specialised in highly individual customer facing services.
As a Swiss national Michael has a broad experience of Switzerland.