Pessimistic Swiss fear economic decline and rising inequality

The Swiss are pessimistic about the future of the Swiss economy, according to the SRG survey "How's Switzerland doing? The public is wary of big business and worried about growing inequality. Yet liberal recipes are still in vogue.

The Swiss economy is doing rather well, and unemployment is at an all-time low. And yet, dark clouds loom on the horizon, fueled by geopolitical uncertainties, rising interest rates and slowing global growth. As a result, optimists are few and far between. Only one in ten Swiss people believe that the Swiss economy will develop favorably over the next few years, according to the SRG survey "How's Switzerland doing?", a new set of results of which was published on Thursday.

When it comes to the economy, pessimism is widespread among the population, according to a major survey of tens of thousands of Swiss people carried out by the gfs.bern institute last spring. Nearly four out of ten respondents expect the Swiss economy to deteriorate over the next few years. Only slightly more (44.5%) believe that the economic situation will remain unchanged.

The Ticino are the least confident about the future: 57.1% of Italian-speakers think the economic situation will worsen, compared with 47% of French-speakers and 36.5% of German-speakers. Concern is also particularly pronounced among the self-employed. Half of them (49.8%) are pessimistic about Switzerland's economic future, compared to less than 40% of employees and some 37% of retirees.

As a sign of their lack of faith in the future, a clear majority of the population considers it unlikely that Switzerland will be able to maintain its wealth in the future. When we turn our attention from the general situation to the fate of the country's inhabitants, our fears become even more acute. More than two-thirds of those surveyed predict that young Swiss people will live less well than their parents. A quarter think the opposite. In Ticino, the feeling of generational decline affects almost 80% of the population.

The public is concerned about economic inequality

This feeling of impoverishment is accompanied by concern about growing economic inequality. Some 80% of the population believes that the gap between rich and poor is widening all the time. And more than half of Swiss people don't believe that hard work is enough to lift them out of poverty. Moreover, the extreme wealth of billionaires is never justified, asserts the majority of those questioned. Even so, over 70% of Swiss people are not counting on the state to improve the situation, insisting instead on individual responsibility.

People don't rely on the economy any more than they do on the state. Almost all those questioned (90%) believe that big business is more interested in profits than in general well-being. Almost two-thirds of Swiss people reject the liberal credo that everyone, including the poorest, benefits from corporate earnings. A majority support capitalism, but no less than 35% of those surveyed believe that this economic regime is not working and should be abolished.

Despite mistrust of the economy, liberal recipes are still the best for the majority of the population. A very large majority of the country's inhabitants agree with the statement that "today's youth have forgotten that you have to work hard to live well". Nearly 60% of those questioned want Switzerland to do more to create the right conditions for business, and more than two-thirds would like to see a drastic reduction in bureaucracy.

Future of the Swiss economy

Economic divide: how equal is Switzerland’s wealth distribution?

While the gap between rich and poor has been steadily widening in many countries, the situation in Switzerland has remained stable over the past decades. Yet while income distribution in the Alpine nation is relatively egalitarian, wealth is more concentrated in the hands of the rich.

What level of social inequality is acceptable? When does this become a risk for society? For years politicians, economists and sociologists around the world have been asking these same questions – without any clear answers.

In Switzerland, the political left has repeatedly attempted to impose higher taxes on the rich, which have always been rejected at the ballot box. Like in September 2021, when voters turned down the "99% initiative", which called for the introduction of a tax on gains from dividends, shares and rents.

To provide some data to help the ongoing debate, in 2022, the Swiss Institute for Economic Policy (IWP) at the University of Lucerne published a database on distribution of income – both from work or capital – in Switzerland over the past century. The figures only represent part of overall wealth, as they do not include owned assets (more on this point later), but they do provide certain useful insights.

Data based on the model of Thomas Piketty

Published online in April 2022, the Swiss Inequality Database (SID) is based on data provided by the federal, cantonal and local tax administrations. This interactive database allows researchers to review income distribution from 1917 to 2018.

The SID is Switzerland’s response to the World Inequality Database (WID), set up by a team co-led by French economist Thomas Piketty, a well-known specialist on inequality. The “World Inequality Report” is published every year, based on the WID.

Among its main conclusions, the Swiss study reveals that income distribution in Switzerland has been very stable over the past century. Before tax, the richest 10% earn approximately one-third of total national income, a proportion which has not changed since the early 1930s. After government redistribution, this share goes down a few points to 30%, also a very stable figure.

Melanie Häner, who heads the social policy branch of the Lucerne research institute IWP, says it is remarkable that inequalities in Switzerland are not bigger than they were 100 years ago, especially given the economic crises and wars over the past century.

In this regard, Switzerland represents an exception when compared with other countries, Häner told SWI swissinfo.ch. The 2022 edition of the World Inequality Report said that since the 1980s “inequalities have got worse in most countries”. This negative trend has been “spectacular” in countries such as the United States, Russia and India, and more gradual in Europe and China. For example, the share of before-tax income held by the top 10% of wealthiest Americans rose from 34% in 1980 to 46% in 2022.

Switzerland is one of the Western countries where the income divide is less obvious. This is especially true before redistribution, says Häner. After tax, the differences between Switzerland and its neighbours even out – redistribution is slightly less in Switzerland, but it is based on a lower level of inequality to begin with, adds Häner.

The good health of the Swiss economy contributes decisively to limiting income disparities, explains Häner. “The main factors are the flexible labour market – we have one of the lowest unemployment rates in the world – and the dual system of education and training, which enables people who don’t go to university to earn better salaries.”

The richest 10% in Switzerland pay about 51% of all income tax in Switzerland, which represents a "substantial" amount which has hardly changed over 40 years, explains Häner.

She says tax competition between the 26 cantons – each is free to set its own tax rate – does not harm redistribution, because the very progressive federal tax counterbalances the low tax rates of some of the cantons, like Schwyz and Zug. These cantons “attract high earners thanks to their low cantonal tax rate, but these same people pay federal tax at a very high level”, she explains. The federal income tax scale starts off at 0.77% andgoes up to 11.5%for the highest earners.

In addition, Switzerland has a national system of financial adjustment payments - solidarity between cantons, whereby the economically strongest help out the weakest. Zug and Schwyz contribute most to the financial solidarity system – CHF2,600 per Zug resident and just under CHF1,300 in Schwyz.

As mentioned above, income and wealth – measured by someone’s personal fortune or assets – are two different things. People with a high disposable income are not necessarily the ones with the biggest fortunes. If all of these elements of wealth are taken into account, is Switzerland really that egalitarian? 

There are some peculiarities of the Swiss system which work against social equality. This is the case for home ownership, for example, which at 40% is the lowest in Europe. The constant rise in property prices tends to concentrate wealth in the hands of real estate owners.

Furthermore, lump-sum taxation (a special tax regime applied to foreign high-net-worth individuals domiciled in Switzerland), the lack of taxation on profits arising from sales of shares, and the low inheritance tax need to be taken into account. Half of all personal wealth owned by Swiss residents comes from legacies, which are very unequally distributed.

According to the World Inequality Database, the richest 10% in Switzerland hold 63% of all capital, which has risen by almost six percentage points since 1995 when the last data became available. In Western Europe, only Ireland has a higher percentage (66%). The poorest half of the Swiss population only owns 4% of the nation's wealth.

The increase in wealth inequality is something that can be seen all over the world.

“The increase in private wealth has continued in a very unequal manner, within countries and at a global level,” says the World Inequality Report. The concentration of capital is very obvious in the US, where more than 70% of all wealth belongs to the richest 10% of the population. Between 1995 and 2020, this share rose from 41% to 68% in China, and 53% to 74% in Russia. While inequalities in Switzerland may be more pronounced than the European average, they are relatively moderate in comparison with the rest of the world.

Distribution of wealth

The decline coincides with again decreasing numbers of newly opened welfare files, while at the same time there is an increase in completed welfare benefits. According to the Federal Statistical Office (FSO), the welfare rate has only been this low once since the welfare statistics have been available, i.e. since 2005, namely in 2008.

Fears that unemployment in particular could have a negative impact on welfare as a long-term consequence of the Covid-19 pandemic have not been confirmed. Measures taken by the federal government and the cantons, which were in force until the end of 2021, have contributed sustainably to this development, the report continued. In addition, the ongoing economic growth and the favourable situation in the labour market have had a positive effect on welfare.

The decline in the welfare rate can be observed in all risk groups. Minors, foreigners, and divorced individuals continue to have the highest welfare rates. However, the decline is generally strongest in these risk groups.

The number of people supported by welfare in the asylum sector increased in 2022 by 6.1% to 32,100, according to the FSO. In the refugee sector, the number of welfare recipients decreased by 2.8% to around 22,500 people. The number of asylum applications submitted (without protection status S) has increased overall compared to the previous year. 

According to the FSO, the general welfare rate fell in 14 cantons and increased in two cantons. In the remaining ten cantons, the rate remained unchanged. The decreases in the two most populous cantons, Zurich and Bern, each by 0.2%, as well as the even more significant decreases in the cantons of Basel-Stadt (–0.4%) and Neuchâtel (–0.3%), were primarily responsible for the falling rates.

Welfare rate falls below 3%

Is wealth distributed unfairly in Switzerland?

Swiss salary illusion: precarious cost of living sets off alarm bells

“You’re from Switzerland, you must be rich!” The ability to pay bills and enjoy life. That is how Swiss salaries are seen from the outside world. However, the relentless increases to cost of living is driving normal families to food banks. Welfare advocates and economists are sounding the alarm.

While for many countries a monthly salary of CHF4,000 ($4,364) would be seen as a good salary, in Switzerland this would push individuals and families to the brink of poverty.  

Rising rents, apartment shortages, inflation and now an increase in health insurance costs: people living in Switzerland may receive high salaries, but what is left over at the end of the month is dwindling.

Daniel Lauper, a sales manager at Caritas, an organisation which aims to prevent and alleviate poverty in Switzerland, says that since the Covid-19 pandemic the situation for many people and families has become precarious. 

The shame felt by those seeking assistance is painful. “In Switzerland, we don’t talk about money, or that we don’t have money,” Lauper says. However, almost 750,000 individuals are affected by poverty. 

“I get a lump in my throat whenever I think about the many more families who are on the brink. That number is not measurable,” he says.

Lauper finds the precarious situation in which many families find themselves “almost dangerous” and worries what will come out of the frustration from the families who are not receiving the help they need. “We’re not even talking about what will happen next year,” he says. He expects even more individuals will seek assistance, as incomes next year will become significantly more stretched with rising health insurance premiums in 2024.

In September, the outgoing health minister, Alain Berset, dropped a hammer on Switzerland. “I have bad news for households already plagued by inflation,” he said: health insurance costs are to rise by 8.7% in 2024.

This translates to an increase of CHF1,000 spent on health insurance for a family with two young children per year, reports the Neue Zürcher Zeitung (NZZ).

In Switzerland, individuals can apply for a health insurance premium reduction, allowing people struggling with costs to receive lower healthcare premium costs. The cantons then subsidies the healthcare premiums for those individuals who qualify.

However, economists say placing the financial burden on the cantons is not a viable long-term solution. Currently, Switzerland spends CHF5.5 billion on health insurance premium reductions, the equivalent of the budget of the Swiss army.

Tilman Slembeck, healthcare economist at Zurich University of Applied Sciences (ZHAW), told Swiss public radio, SRF, that without these health insurance premium reductions, Switzerland would have long had a “national uprising”. Slembeck says that the cost of health insurance premium reductions being the equivalent to that of the army budget shows that the healthcare system in Switzerland is in “desperate need of reform”.

Voices from all sides of the political spectrum are speaking out about these insurance spikes. Some are calling for a government-funded insurance system, paid for by taxes. However, Slembeck says that this is not a viable option for Switzerland as it goes against the Swiss culture.

A parliamentarian from the Green party says: “A person working in upper management pays the same healthcare insurance premiums as a construction worker. This shows a lack of solidarity.”

The left side of the political spectrum, particularly the Greens, are calling for an income-based healthcare cost system. However, Slembeck dismisses this as well, saying he sees “no benefits”. This would be putting a band aid on the problem, he says – it would relieve pressure on the government to undertake a much-needed reform of the Swiss healthcare system and, ultimately, would not solve the long-term issue.

To make matters worse, inflation, while lower than in most of Europe, remains high from a Swiss perspective and rent prices have been steadily increasing. 

The director of the Swiss Federal Office for Housing expects rents to rise by more than 15% between now and 2026. This as well as low vacancy rates, which fell from 1.72% in 2020 to 1.31% last year, and a growing population set to soon hit nine million are adding an additional strain.

While inflation has dropped from the 3.4% high it hit at the beginning of the year to 1.6% in August, domestic goods still cost 2.2% more than in 2022.

This drop in inflation is not felt back at welfare organisation Caritas in Bern. Caritas also helps to provide groceries and household goods at reduced prices, and Lauper says his Caritas shop in canton Bern has seen a 30% increase in families and individuals seeking assistance. “More families with children, like you and me, are coming to the shop. You wouldn’t expect it,” he says. His store is also experiencing more elderly individuals and more “working poor”.

However, Switzerland is not alone in feeling the burden of inflation. The European Union saw a peak inflation of 11.5% in October 2022. This resulted in 21.6% of the EU population being at risk of poverty.

Swiss salary illusion

Once in poverty, it's hard to get out again

Once affected by poverty in Switzerland, it is difficult to escape. People who fall into a precarious financial situation often do not seek the help they need. The non-governmental organisation ATD Fourth World conducted a study on poverty between 2019 and 2023.

Claire Micallef

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In the project called  "Poverty - Identity - Society", the international non-profit organisation ATD Fourth World researched the relationship between society, institutions, and those affected by poverty from 2019 to 2023. With the support of the Federal Office of Justice, researchers and social welfare experts examined those affected by poverty with equal participation.

The study shows: Once someone falls into poverty, it is very difficult to get out. Sometimes over several generations. "It is a systemic and structural problem. People have trouble breaking out of this downward spiral", says Perry Proellochs, editor of ATD Fourth World.

The reason is prejudice: Both the potential and the ability of a person to act are overlooked. After all, those affected do not apply for social assistance, also because many perceive social assistance more as alms than as a right. A perspective that pushes those affected by poverty into the role of supplicants. According to Proellochs, society still blames people living in poverty for their situation.

People are struggling to break out of this downward spiral.

According to the study, poverty is all too often reduced to not having an income and not being able to pay bills. In fact, poverty reaches much further. It affects a person’s social and cultural life. Discrimination and exclusion push those affected by poverty further into social isolation

The Federal Statistical Office confirms the increase in income poverty in Switzerland. In 2021, 754,000 people were affected by income poverty - that’s 8.7% of the Swiss population. 0.2 percentage points more than the previous year.

Find out where you stand

“Rich Switzerland, poor people”: living with little money

Poverty excludes and makes people sick. In his book “Rich Switzerland, Poor People”, the publicist Bruno Fuchs sheds light on eleven fates of people on the fringes of society who have to think twice about every franc they spend.

"Between 40 and 65, I would like to be able to focus on the left side of the menu for once, instead of always having to study the right side with the prices first”, says one of the people affected by poverty in Bruno Fuchs’ new book “Rich Switzerland, Poor People

Susanne Stöckl

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“Poverty in Switzerland is hardly visible when you consider that more than 700,000 people are affected”, says Fuchs. “What does it actually mean to be poor? What does poverty do to people, to families?” The number 700,000 tells nothing of this. On the contrary, the number puts the stories of those affected into the shadow.

When is one considered poor in Switzerland?




Approximately CHF 2,300 is marked as the poverty line for a person living alone. For a family of four, it’s around CHF 4,000. 

Simone Fassora

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“When a school trip or food money of CHF 5 for such a trip is due, it can happen that the mother calls the school in the morning and says the child is sick.” According to a new survey by Caritas, one in every twenty children in Switzerland lives in poverty. “That’s at least one in a class of twenty”, says Fuchs.   

The interviewees describe how poverty slowly creeps into them and scratches at their self-worth. The feeling of being worth less, of having less dignity.




According to Fuchs, this is a quintessence of his research: “It can happen to anyone”, the descent takes longer for the upper middle class, “but it is possible”. There is also an example of this in his book. This is exactly what happened to the daughter of a well-known Bernese retailer. 

Once, a mother was supposed to pay CHF 450 for her child’s teaching materials, but didn’t know how. The clerk at the social welfare office dismissed her. She asked if she should resort to prostitution, meaning it as a joke. He considered this a possibility.   

Almost everyone in Fuchs’ book has somehow managed to turn things around. Some never gave up, never lost faith in themselves to get out of poverty.

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Some were lucky to meet someone who helped them out. Like the single mother Mara Rocca, who had an understanding social worker. But such things do not happen often.

Sometimes Fuchs had the feeling that talking was good for those affected. To have someone who comes to them and asks: "How are you?" And who listens and gives them the feeling that their story is also has value. 

Normally, people in Switzerland talk little about money and little about poverty. Bruno Fuchs does. He has given a voice to eleven people.

"Rich Switzerland, poor people"

In Ticino, 20,000 people live in poverty. This is 7.4% of the entire population. Without social assistance, it would be about twice as many.

The absolute income poverty rate, i.e., the percentage of people in a household whose available income is below the social subsistence minimum, was 7.4% in 2018: a percentage that increased compared to 6.1% in 2015. This is evident from the first social report of the canton, which was compiled in collaboration with various offices from data from the years 2015 to 2018.

Poverty can affect people to a greater or lesser extent: Half of the people in absolute poverty had an available income that was 18.8% below the social subsistence minimum. 3.8% of the people in Ticino were in absolute poverty throughout the entire three-year period surveyed.

Social benefits contribute significantly to reducing the proportion of people in poverty. Without social benefits as a source of income, the absolute income poverty would have been 14.6% in 2018, which is almost twice as high as the determined figure (7.4%).

Looking at the results by household type, it is noticeable that single adults with underage children are the ones most affected by poverty. At the same time, they are also the household category for which social benefits have contributed the least percentage-wise to poverty reduction.

When considering only income, the older population has the highest rates of absolute income poverty. However, when also considering wealth (which can serve as a substitute for income), it is the younger population groups that have the highest percentage of those living in absolute income poverty and at the same time have no net assets. In addition, the youngest age groups are also those with the largest absolute income poverty gaps. When looking at the results by gender, there are no particular differences. However, women have slightly higher figures than men.

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The extent of poverty

The superyachts of the super-rich, a symbol of growing inequalities

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Superyachts, these gigantic and luxurious pleasure ships, have been multiplying over the past decade in the Mediterranean and elsewhere. The RTS show "basik" had access to one of the shipyards in Italy that builds these extraordinary vessels.

An astounding 140-meter ship, code-named ‘Scheherazade’, has been confiscated by the Italian authorities since the beginning of the war in Ukraine, in the port of Marina di Carrara, on the coast of Tuscany. With an assumed value of $700 million, it is even equipped with an anti-drone missile system to protect its real owner, who is none other than Vladimir Putin.

A recent investigation by The New York Times revealed that, behind a complex offshore structure, it is indeed the master of the Kremlin who is the final owner of this extraordinary ship.

Not far from the boat, a group of retired Italians spend a quiet afternoon on a much more modest sailboat. They have a very specific opinion about the monster that's anchored just next door. "If it’s Putin’s boat? That’s what they say! Let’s say that, given the size, it’s at least a Russian oligarch's boat. And if you compare the size to other Russian oligarchs' yachts, then it’s surely Putin’s!"

These monstrous floating palaces have been multiplying over the past decade in the Mediterranean and elsewhere. Like the Vava II, 97 metres, $150 million. It’s the yacht of Swiss billionaire Ernesto Bertarelli.

"basik" had access to the Benetti shipyards, in the large city of Livorno, on the coast of the Tyrrhenian Sea, also in Tuscany. The world-leading company in the industry employs 2,500 people at various locations in Italy and generates a turnover of € 2 billion.

The order book are filled until 2027. Beyond 40 metres in length, we speak of a superyacht. The Benetti shipyards have several models to offer but they also work to measure, in giant hangars out of sight. RTS received an exclusive tour of the construction site of a new superyacht. Dozens of people from all trades work here.

From the order to the final delivery after three months of sea trials, the work lasts up to three years. On the fourth deck, a bedroom with two bathrooms, as well as a dressing room and a fitness room, open onto a gigantic private terrace equipped with a fire pit for a campfire. The client’s name was not revealed to RTS, nor was the exact price of the boat, which would be worth around CHF fifty million.

Giovanna Vitelli is the CEO of the Azimut Benetti shipyards. She just sold a third of her group’s capital to the Saudi PIF (Public Investment Fund) for about a billion dollars. "Our client is the whole world", she explains in "basik". "We adapt our boats to all tastes, according to the desires and needs of the customers. If you are American, you will like a large bar, with a beautiful open kitchen, to see your friends and guests pass by. Whereas if you are from the Middle East, you will not want to see the kitchen and the crew at all, who will be well separated."

How to explain the "arms race" in the sector, with boats getting longer, more luxurious and expensive? "Covid-19 has taught us that life is short and we must enjoy it. The decision to buy a boat is thus much faster today than in the past. And then I would also say that life aboard a yacht is in fact the last true freedom. The freedom to go where you want with the people you have chosen", says Azimut Benetti.

Life aboard a yacht is the last true freedom. The freedom to go where you want with the people you have chosen

Every year, for four days, the Principality of Monaco welcomes the elite of the industry to its port at the end of September. The entry ticket price for the Monaco Yacht Show is CHF 560 per day, which does not deter 30,000 visitors.

"Our event attracts an exceptional quality of clientele, much higher than that of the Formula 1 Grand Prix", explains Gaëlle Tallarida, director of the Monaco Yacht Show. It’s not a mass gathering, but an event for a highly selected audience. Monaco is truly a yachting capital. The industry is very strongly represented in the country, with 200 companies and 2,000 people, so overall we can say that Monaco, including of course the Côte d’Azur, is an anchor point of this industry.

In fact, most transactions in this global superyacht market take place in Monaco. Valued at $9.1 billion in 2022, it is expected to reach $13 billion by 2030, even though it only concerns a few thousand individuals.

Brokers, a kind of real estate agents, serve as intermediaries between builders and future customers. Swiss broker Cornelius Kistler, who founded the company Breezeyachting, is showing an Italian yacht from the San Lorenzo shipyards to a very interested Canadian couple.

The latter agreed to answer on camera but on the condition of remaining anonymous. The man seems delighted with what he's just discovered: "It is very rare to find a three-level, multifunctional bedroom, and here, honestly, privacy is really very, very good."

Chinese, Russians, a Canadian, we meet all kinds of nationalities in Monaco's marina, but where are the Swiss clients? "Our clientele is international, but there are also Swiss clients", says Cornelius Kistler, CEO of Breezeyachting.swiss. "They are very discreet, not necessarily looking for the most visible, the biggest or the flashiest objects. They are rather looking for personalised experiences for adventures at sea, like a catamaran, a sailboat or very discreet yachts."

Brokers' efforts for their clients are well worth a few bows: they generally take a 3% commission on the sale price of a boat. Do the math. On a $40 million yacht, 3% represents the tidy sum of 1.2 million.

On their yachts, the super-rich separate themselves from the ordinary course of the world, including physically, by moving away from terrestrial space to sail at sea. But at the same time, if only through social media, they display this exclusivity, this separatism.

But what does this race for the longest and most expensive superyacht represent ,as people become increasingly wealthy and increasingly cut off from the real world? Grégory Salle, sociologist at the University of Lille, has looked into the phenomenon, to which he has devoted a scathing essay ("Superyachts: luxe, calme et écocide").

"Superyachts are associated with the obscenity of the richest and their paradoxical vulgarity", he says. "In comparison, one only needs to think about the state of basic public services to find this display of wealth unbearable, especially since it concerns a frivolous activity. On their yachts, the super-rich separate themselves from the ordinary course of the world, including physically, by moving away from terrestrial space to sail at sea. But at the same time, if only through social media, they display this exclusivity, this separatism."