Distribution of income in Switzerland

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The distribution of income in Switzerland considers the personal and functional distribution of income in Switzerland. When analyzing the distribution of income, a distinction is generally made between the functional and the personal income distribution discussed here. Personal income distribution looks at how the income of an economy is distributed among individuals or groups (e.g. private households ), regardless of the source of income from which it originates. The distribution of personnel is mostly measured by Eurostat on the basis of available equivalised income. In 2016, the Gini coefficient for Switzerland was 29.4. The inequality indicators listed come from Eurostat. The data are collected as part of the EU-SILC survey and are available from 2007 to 2016.

Distribution indicators

Distribution indicators of equivalised disposable income over time 2007–2016
average Median Gini coefficient S80 / S20 ratio At risk of poverty
unit SFR EUR SFR EUR % Multiples %
2007 50,689 32,226 43,414 27.601 30.4 4.7 15th
2008 52.064 31,694 44,258 26,942 31.1 4.9 15.7
2009 53,752 33,862 46.009 28,984 30.7 4.8 15.6
2010 53,215 35,242 46,308 30,668 29.6 4.5 15th
2011 54,018 39,135 46,653 33,799 29.7 4.5 15th
2012 54,932 44,566 48,450 39,307 28.8 4.4 15.9
2013 56,131 46,570 49,044 40,690 28.5 4.2 14.5
2014 [b] 54,791 44.506 46,957 38.143 29.5 4.4 13.8
2015 55.173 45,425 47,999 39,518 29.6 4.5 15.6
2016 54,421 50,961 47.131 44.134 29.4 4.4 14.7
[b] Break in time series (revision 2014)

Average and median income

The median income is the income at which there are just as many people with higher income as lower ones. In other words, if the population were divided into two groups of equal size according to the level of their income, the person who is exactly in the middle of this distribution would receive the median income. The median income can therefore also be understood as the mean income and is explicitly different from the average income indicator , which represents the arithmetic mean of an income type based on the number of income earners. In the distribution analysis, the median income is preferred to the indicator average income because it is viewed as more robust against outliers in a sample:

“In most countries, the distribution of income is characterized by many people with low or middle incomes and a few people with very high incomes; The situation is similar with the distribution of wealth. The arithmetic mean is clearly pulled up by the relatively few cases of very rich households, and the vast majority of households have income or wealth below this average. In order to better identify the middle of the distribution, the median is used in distribution analyzes - at least in addition to the arithmetic mean. "

Figure 1. Development of nominal and real average and median incomes in Switzerland

The real income expressed as an indicator of purchasing power, the amount of consumer goods, which can acquire a consumer with a specific nominal income. The real values ​​are calculated by adjusting / dividing the nominal income or the nominal purchasing power by a price index (e.g. the price level for consumer goods prices). If the prices of consumer goods rise, then real income falls because fewer goods can be purchased with a certain income. The median of the real disposable equivalised income measures how much a person in the middle of the income distribution can afford annually and is therefore an important parameter for assessing material wealth.

Between 2007 and 2013, the average nominal equivalent income rose from 50,689 Swiss francs to 56,131 or by 10.7%. The decrease between 2013 and 2014 is due to the changed sample, which is why the interpretation over the entire period is difficult. While the average income measured in Swiss francs fell slightly between 2014 and 2016, it rose consistently when measured in euros . This is mainly due to the change in the exchange rate . The Swiss franc exchange rate has risen sharply since 2007, from 1.64 SFR for one euro in 2007 to 1.09 SFR in 2016. To determine the median income , all persons whose disposable income is examined are ranked according to their respective income levels . The median income is the income that is exactly in the middle of the series. The median income in Switzerland showed a consistently increasing trend from 2007 to 2013 . The break in the 2013/14 time series must also be taken into account for the median. The most recent value is from 2016 and at 47,131 Swiss francs was slightly below 2015. The strong appreciation of the Swiss franc can also be observed in the median income. While the median income in Swiss francs fell in 2016, measured in euros it rose sharply. Real and nominal values ​​are identical for the period shown.

Gini coefficient

Figure 2. Switzerland's Gini coefficient compared with neighboring countries France and Germany and with the EU-27 average

The Gini coefficient is a standard statistical measure often used to measure the inequality of a distribution. It is well suited for determining income inequality and can take values ​​between 0 and 1. The higher the value, the more pronounced the measured income inequality. For example, a Gini coefficient of 0 means that all people compared have exactly the same income. A value of 1, on the other hand, means that one person receives all income and everyone else receives nothing. When interpreting the Gini coefficient as a measure of distribution, however, it must be taken into account that it has weaknesses in measuring the edges of a distribution.

Figure 3. Gini coefficient according to disposable income and market income in Switzerland


Figure 4. Share of the upper decile in total income for Switzerland and the EU-27

The Gini coefficient of disposable income in Switzerland in 2008 was just above the average for the EU 27 countries. From then on, the coefficient was reduced to the minimum in 2012. From this point on, the Gini coefficient stagnated at a level of just under 0.30. A comparison with the neighboring countries France and Germany shows a similar level in all three countries.

Figure 3. breaks down the Gini income coefficients according to market income and according to disposable income. Both graphs tend to show a similar trend, with the Gini coefficient based on market income being significantly higher. From a visual point of view, the Gini coefficient for market income appears to rise somewhat more rapidly from 2012 than the Gini coefficient for disposable income. Overall, the difference between market income and income after taxes and transfers increased during the observation period. This can be interpreted as an indication of a stronger net redistribution.

Top 10% share of national income

This indicator describes how high the share of national income is in the top 10%. Thus, this benchmark shows how concentrated income is in a society. In addition, with this size the inequality becomes more tangible. Figure 4 shows that the share of the top 10% in Switzerland is very close to the EU-27 average. In 2014, 2015 and 2016 the values ​​for Switzerland are higher than those for the EU-27. In addition, the global economic crisis of 2008 seems to have had a greater negative impact on the top 10% income in Switzerland than in the other EU countries.

Gender inequality

S80 / S20 income ratio by sex

The income quantile ratio is the ratio of the total income of 20% of the population with the highest incomes (top quintile) to the total income of the 20% of the population with the lowest incomes (bottom quintile). According to this indicator, households are ranked according to their income and divided into fifths (quintiles). The sum of the incomes from the top quintile divided by the sum of the incomes from the bottom quintile gives the value for the S80 / S20 ratio. A ratio of 3.0 indicates that the top 20% have three times as much income as the bottom 20%. The higher the factor of the income quintile ratio, the more pronounced the income inequality. As a weakness of the indicator, it must be noted that inequality tends to be underestimated, as the underlying data usually only insufficiently cover the highest income households.

Figure 5. S80 / S20 income quantile ratio by gender in Switzerland

In the period from 2008 to 2013, the S80 / S20 ratio was reduced in both men and women. In principle, it can be assumed that the inequality in income for men is more pronounced than for women during this period. From 2007 to 2013, the top 20% of households achieved an average of 4.6 times as much income as the bottom 20% of the income distribution. Between 2014 and 2016 this value was 4.4. The top 20 percent earned an average of 4.4 times as much as the bottom 20 percent during these years. The data in Switzerland on this indicator are only available from 2007 to 2016. This is a very short period of time that leaves little room for statements about developments in this relationship. But it can be said that the ratio has decreased for both sexes over the past few years. The course of the graphs for men and women is only temporarily parallel and the gender-specific distance between the coefficients is very changeable.

The gender pay gap

Figure 6. Gender pay gap in Switzerland and in the EU-27 in the industry, construction and services sectors

The gender pay gap measures the difference between the average income of women in relation to the average income of men, expressed as a percentage. The gender pay gap usually results from the average difference between the gross hourly wages of all employed men and those of all employed women and is calculated as a percentage of the earnings of the men. This indicator is used to measure equality between women and men in the labor market. The gender pay gap is seen as a product of a large number of structural disadvantages that are upstream on the labor market (education system, unpaid work, interruption due to childbirth) but also partly take place in the labor market itself (job evaluation, opportunities for advancement, income discrimination). Different values ​​for the gender pay gap result from the fact that different influencing factors are taken into account and different methods are used for adjustment.

The gender pay gap in Switzerland averages 17%, with wage losses for women in the private sector being higher than in the public sector. There is an explainable part (approx. 60%) of this wage difference that can be traced back to measurable factors and an inexplicable part (approx. 40%). The wage difference can primarily be explained by life and professional biographies. Women often do most of the household chores, which also has a negative impact on your wages; the opposite is true for men. This phenomenon affects all women in society, even those who have chosen a purely professional interpretation of their life.

It should be noted that GIG has been in force in Switzerland since 1996, which is intended to anchor equality between men and women at the legal level. State control is primarily found in the construction industry, where a company audit also takes place at the same time through public tenders. Within this, the same payment is checked for both genders, which in the event of a violation can lead to these companies being excluded from public tenders. With a broad catalog of measures, Switzerland has paved the way that should end in social and economic equality between men and women. This can also be seen in Figure 6, as the gender pay gap has tended to decrease over the observation period.

Regional inequality

At risk of poverty

Figure 7. Population at risk of poverty and social exclusion by NUTS 2 regions in Switzerland (2016)

The rate of people at risk of poverty results from the number of people earning less than 60% of the median income, divided by the sum of the total population. In Switzerland, the most recent value comes from 2016 with 14.7%. The rate of people at risk of poverty in Switzerland was extremely stable over the entire observation period. The long-term average (2007–2016) was 15.1%. In its synthesis report on the 2014 revision of the SILC, the Swiss Confederation points out that the revision had no significant impact on the risk of poverty in Switzerland.

"People at risk of poverty or social exclusion" corresponds to the total number of people who are at risk of poverty or who suffer from material deprivation or who live in households with very little paid work. People with an equivalised disposable income below the at-risk-of-poverty threshold, which is 60% of the national median equivalised disposable income (after social transfers), are considered to be at risk of poverty. People who are severely materially deprived have poor living conditions and are unable to pay for at least six of the following nine expenses: rent and utilities, adequate home heating, unexpected expenses, every other one Day a meal with meat, fish or the equivalent protein intake, a week-long vacation in another location, a car, a washing machine, a color TV or a telephone. The canton of Ticino is one of these regions . One possible reason for this could be the below-average level of education in a national comparison - many young people finish their training after compulsory schooling.

backgrounds

A country's income distribution is shaped by its specific institutional circumstances, macroeconomic developments and other factors. A fundamental influence on the income distribution is the social system in the respective country. Switzerland has all the essential social insurances to protect people from loss of income. The Swiss social system is divided into eight major subject areas (illness / health, disability, old age, survivors, family / children, unemployment, housing and social exclusion). In 2016, spending on social benefits amounted to CHF 170 billion. Since 1990, social spending, measured in Swiss francs, has more than doubled. There was also a sharp increase in spending on social security compared to economic output. Between 1990 and 2016, spending on social benefits rose from just under 15% of GDP to just under 26%. The high increase in social spending reflects various social changes. On the one hand, the progressive aging of the population increases social spending, as more people receive state pensions. In Switzerland, the proportion of people over 65 in the total population rose from 16% to 18% between 2005 and 2015. On the other hand, Switzerland introduced unemployment and accident insurance in the 1980s .

Above all, people of old age, young families, single parents and people in training are most affected by the risk of poverty. State transfers are the responsibility of the cantons and are not structured uniformly. The final safety net is social assistance, which is usually organized by municipalities. This was actually intended as support in acute emergencies, but is increasingly acting as a long-term support service.

Switzerland has a comparatively very stable labor market . If you look at the historically low unemployment figures (2000–2016 below 5%) you can see that there is no acute need for reform on the labor market in Switzerland. In addition to stable and low unemployment figures, the Swiss labor market also shows steady wage growth (0.7% per year). The fastest growing group on the labor market are foreigners, who make up 26% of the workforce. At the same time, this group is over-represented among the unemployed. This means that foreigners in Switzerland are on average more likely to be unemployed than nationals. The unemployment rate for Swiss people from 2000 to 2016 was around one percentage point below the overall unemployment rate. During the same period, foreigners had an unemployment rate that was around twice as high as their Swiss colleagues. This results mainly from the higher proportion of foreigners employed in the low-wage sector and poorer language skills.

Revision 2014

A different sample design has been used for the EU-SILC survey in Switzerland since 2014. In the previous years, the landline register was used to generate the sample. However, young people living alone and foreigners in Switzerland in particular often no longer have a landline connection. For this reason, the sample has been taken from the sample framework for person and household surveys (SRPH) since 2014. The SRPH refers to official registers of persons, in particular the registers of residents of the communes and cantons. As a result, a larger part of the Swiss population is covered. The change leads to a break in the time series, which is why the values ​​for the inequality indicators before and after the changeover cannot be compared.

The change in the sample design and the larger amount of data on the population allowed a fundamental revision of the weighting methods . This leads to a significantly higher quality of the SILC estimates collected from 2014.

Individual evidence

  1. ↑ Definition: personal income distribution. Retrieved August 19, 2019 .
  2. ↑ a b Eurostat: Income and living conditions. Retrieved January 18, 2019 .
  3. ↑ DIW Berlin: DIW Berlin: Middle Income. March 1, 2007, accessed May 16, 2019 .
  4. ↑ DIW Berlin: DIW Berlin: Middle Income. March 1, 2007, accessed May 19, 2019 .
  5. ↑ Real income, real purchasing power - Konrad-Adenauer-Stiftung eV Accessed on May 16, 2019 .
  6. ^ AK Prosperity Report: Cornerstones of a Prosperity- Oriented Economic Policy. Chamber for workers and employees for Vienna, accessed on May 19, 2019 .
  7. ↑ Exchange rate of the euro against the Swiss franc - annual development | 2018. Retrieved January 19, 2019 .
  8. ^ DIW Berlin: DIW Berlin: Gini coefficient. March 1, 2007, accessed May 16, 2019 .
  9. ↑ AK-Wohstandsbericht: Key Elements of a welfare-oriented economic policy. Chamber for Workers and Salaried Employees for Vienna, p. 20 , accessed on May 19, 2019 .
  10. ↑ Federal Agency for Civic Education: Income Inequality | bpb. Retrieved May 19, 2019 .
  11. ↑ AK Prosperity Report 2018: Cornerstones of a Prosperity- Oriented Economic Policy. Chamber for Workers and Salaried Employees for Vienna, p. 20 , accessed on May 19, 2019 .
  12. ↑ EuroStat: [1] S80 / S20 income ratio by gender
  13. ↑ AK Prosperity Report 2018: Cornerstones of a Prosperity- Oriented Economic Policy. Chamber for Workers and Salaried Employees for Vienna, p. 20 , accessed on May 19, 2019 .
  14. ↑ AK Prosperity Report 2018: Cornerstones of a Prosperity- Oriented Economic Policy. Chamber for Workers and Salaried Employees for Vienna, p. 22 , accessed on May 19, 2019 .
  15. ^ DIW Berlin: DIW Berlin: Gender Pay Gap. March 1, 2007, accessed May 19, 2019 .
  16. ↑ AK Prosperity Report 2018: Cornerstones of a Prosperity- Oriented Economic Policy. Chamber for Workers and Salaried Employees for Vienna, p. 23 , accessed on May 19, 2019 .
  17. ^ DIW Berlin: DIW Berlin: Gender Pay Gap. March 1, 2007, accessed May 19, 2019 .
  18. ^ Federal Office for Equality between Women and Men: [2] Figures and facts , accessed on May 8, 2019
  19. ↑ a b Schär Moser, Marianne; Strub, Silvia: Measures and instruments to combat gender-specific wage discrimination: Switzerland as seen in other European countries. Retrieved May 18, 2019 .
  20. ↑ People at risk of poverty or social exclusion - Eurostat. Retrieved May 8, 2019 .
  21. ^ The canton of Ticino between the challenges of competition and the leeway of the public sector | The economy - platform for economic policy. November 30, 1, accessed on May 8, 2019 (German).
  22. ↑ Federal Statistical Office: Overall accounts of social security 2016 - increase in social expenditure by 3.3% | Publication. June 21, 2018, accessed February 26, 2019 .
  23. ^ Carlo Knöpfel: Social welfare state framework in Switzerland . In: Shaping social care for the future . Springer, ISBN 978-3-658-04072-7 .
  24. ↑ Rafael Lalive, Tobias Lehmann: The labor market in Switzerland, 2000-2016 . IZA World of Labor.
  25. ↑ Federal Department of Home Affairs FDHA, Federal Statistical Office FSO Population and Education Department: Synthesis report on the 2014 revision of the SILC . April 2016.