High-price island Switzerland

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The term high-price island Switzerland is used to characterize Switzerland as a country in which numerous products and services are sometimes significantly more expensive than in the surrounding countries. The term has been established at least since 2003 and is also used by the official Swiss price watchdog .

Situation in Switzerland compared to other countries

Locally produced goods and services are comparatively expensive. In relation to the European Union (EU), the price level in 2015 was 87% higher in housing. For gas and fuels, so-called tradable goods, Switzerland is only 2% more expensive. This also applies to other categories of goods if there are no trade barriers, such as electronic devices, some of which are even cheaper in Switzerland. Food is 72% more expensive, also because protective tariffs prevent the imported products from being leveled. Health care is 114% more expensive, restaurants and hotels are 68% more expensive. The price level is also higher for goods that are mostly provided by the state: Education and instruction are 167% and inpatient health services 173% more expensive than in the EU.

The consumer magazine Kassensturz stated in January 2017 that prices in Switzerland had fallen by 7% since the minimum exchange rate was abolished in 2015. Nevertheless, the price difference to foreign countries increased again, which was determined on the basis of a shopping cart of 150 products. In 2015, every tenth franc consumed in Switzerland flowed into the coffers of foreign retailers. The influence is great, since the economic centers of Switzerland are close to the border (Geneva, Basel, but also Zurich, Lausanne, St. Gallen and the city triangle in Ticino).

The demand from Europe for hotel accommodation fell in 2015 by 9.3 percent compared to the previous year. More than half of all overnight stays in 2012 were due to foreign guests, most of whom came from the European Union and especially from Germany. Hotel stays have only become more expensive due to the appreciation of the franc, and the Swiss are also consuming more tourism services abroad.

Causes and consequences of high prices

The causes seem diverse. The high purchasing power and lower price sensitivity of Swiss consumers, special domestic rules that hinder cross-border trade and high local costs (wages, rents, advertising costs, small domestic market) are mentioned. In contrast, higher productivity compared to other countries, longer working hours, lower taxes and social security contributions and lower interest rates have a dampening effect on price differences. The significant appreciation of the Swiss franc (exchange rate to the euro in 2014 1.22, 2016 1.07) also drove the Swiss price level indicators higher. Education and teaching as well as inpatient health services are also non-tradable services - or the state could also be a bad price negotiator here.

Negative consequences of the high-price island for the Swiss economy are, in addition to shopping tourism by the Swiss to nearby countries (and a corresponding lack of sales in their own country), the absence of foreign guests in tourism. The export-intensive industry is also coming under pressure from the currency situation. Higher wages and production costs in Switzerland have a stronger impact on competitiveness and force a restoration of price competitiveness, which can have an impact on the unemployment rate. The propensity to consume can lead to a decline in per capita consumption due to concerns about job security and could only be offset by immigration.

Engeli ( Retail Switzerland ), Henze ( Economiesuisse ) and Jenni ( Swiss Retail Federation ) name a few reasons for the high prices in Switzerland. A differentiation is made according to the supply side (e.g. high wages, small market, multilingualism, high rental and land costs, dense branch network), the demand side (high demands, high purchasing power, little willingness to evade) and government regulations and framework conditions (Swiss regulations, foreclosure, Customs costs, increasing duties and fees). Higher prices also exist without currency differences. According to a study by the BAK Basel, the cost blocks in the retail trade are: domestic procurement (44% share as a cost factor and 25% more expensive than in the EU), goods procurement abroad (17% share as a cost factor), personnel costs (14% cost factor) and wholesale costs (11%).

Obstacles to competition are also mentioned as a cause. The President of the Foundation for Consumer Protection Prisca Birrer-Heimo said in 2016:

“Swiss companies are being forced to purchase products from foreign manufacturers at excessive prices from the sole Swiss importer or from the Swiss branch. If you want to purchase the products directly from abroad, you are prevented with various tricks. "

Imported products should actually be able to be offered in Switzerland (with the surrounding countries) at competitive prices. According to a study by BAKBASEL, higher wages in the retail trade would not be to blame, as this would be more than offset by higher productivity and lower value added tax. Vera Bueller describes some of the hurdles against direct or parallel imports in more detail: Patent protection and “bogus innovations” as well as special standards (trilingual labeling in Switzerland).

The former price watchdog (2004–2008) Rudolf Strahm specifies that it is primarily the retail companies and SME owners who pay an estimated 15 billion francs more to foreign manufacturers than comparable foreign chains. Products are only delivered to Swiss retailers at a higher price via their Swiss sales branches or sole importers. Large corporations handle their purchases through their foreign subsidiaries. The Competition Commission (Weko) is "almost ineffective". Anti-competitive association representatives also sit on the commission.

Some experts such as For example, the Freiburg scientist Reiner Eichenberger thinks the high prices are detrimental to the economy. Prices could be reduced by opening up the Swiss market for products that meet the standards and regulations of the European Union and, if possible, other OECD countries (see also the validity of the Cassis-de-Dijon decision for Switzerland).

Aymo Brunetti , then chief economist at SECO , saw high Swiss prices in 2005 as “ultimately a symptom of the most important cause of weak growth in Switzerland: the lack of competition on the domestic market”. This phenomenon is particularly pronounced in markets that are shielded from international competition. Greater opening up to import competition is therefore an effective measure in terms of competition and growth policy for Switzerland.

Initiatives against a high-price island Switzerland

The Consumer Protection Foundation has compiled a detailed overview of the measures taken since 2010.

  • In September 2016, the federal popular initiative “Stop the high-price island - for fair prices (fair price initiative)” was launched. It is backed by the Consumer Protection Foundation , Gastrosuisse and the Swissmechanic trade association , which unites 1,400 SMEs in the machine, electrical and metal industries . The collection of signatures will run until March 20, 2018 at the latest. Unjustified Swiss surcharges that impede competition, where international corporations are deliberately skimming off the high purchasing power in Switzerland and keeping prices artificially high, are to be abolished. The antitrust law is to be tightened in order to remove the factual obligation to purchase overpriced goods and to prevent price discrimination. Swiss companies should be given real freedom of procurement, which in turn is a prerequisite for fair consumer prices. In online trading, too, Swiss citizens should no longer be discriminated against by higher prices. The Federal Council is meanwhile working out an indirect counter-proposal to the popular initiative.
  • Swiss consumer protection launched the Preisbarometer.ch website , which compares product prices at home and abroad.
  • There is also the Hochpreisinsel.ch forum, a discussion platform for Swiss consumers.

The Swiss trade association Economiesuisse regards the “leveling of the high-price island” as neither realistic nor sensible. Certain cost factors either remain unchangeable (topography) or correspond to the needs for high quality or are an expression of political will (agricultural protectionism to protect one's own agriculture). Wage levels and purchasing power are high “thanks to the productivity and efficiency of the Swiss economy and a strong, value-adding export industry” (“We can afford better quality for more money”). Lowering Swiss prices to EU level would also result in wage reductions on a broad front, which is undesirable. The high-price island has to be dismantled where missing competitive barriers increase costs and make products unnecessarily expensive.

Comparability with other countries

There is also a comparable situation in Norway , where the income from oil and gas trading has increased wages and the cost of living - extensive "homeland security" and import tariffs prevent international competition. Iceland and Sweden also have high price levels and market foreclosure. Reiner Eichenberger believes, however, that the peripheral location, the lower population density and higher tax rates restrict comparability with Switzerland, which is more similar to Austria and Germany in terms of economic, geographical, political and cultural structure than the Nordic high-price countries.

Individual evidence

  1. ↑ a b c d Reiner Eichenberger: High-price island Switzerland. Causes, consequences, effective recipes . University of Friborg - Agriculture and Agricultural Sociology, Friborg (Switzerland) May 2005 ( unifr.ch [PDF]).
  2. ↑ The term high-price island Switzerland appears in 52 business transactions in the Swiss parliamentary database Curia Vista (as of January 18, 2017), with the oldest mention being the interpellation “More jobs. Switzerland needs a growth and price reduction program » from 2003, see Curia Vista database query on high price island
  3. ↑ Federal Department of Economics, Education and Research , PUE Price Monitoring: Summary of Prices and Costs , May 28, 2014
  4. ↑ a b Jürg Müller: High-price island Switzerland - The most expensive plaster in Europe . In: NZZ . December 21, 2016 ( nzz.ch ).
  5. ↑ Two years after the euro fell: Customers are still paying too much. In: Kassensturz. January 17, 2017, accessed January 30, 2017 .
  6. ^ Mathias Ohanian: Shopping tourism . Every tenth franc is lost . In: Handelszeitung . January 5, 2016 ( handelszeitung.ch [accessed January 30, 2017]).
  7. ^ Peter Moser: Shopping tourism. Location, effects and options for action . In: The national economy . March 1, 2013 ( dievolkswirtschaft.ch [accessed January 30, 2017]).
  8. ↑ Hoteliers feel the strength of the Swiss franc . In: Neue Zürcher Zeitung . February 23, 2016 ( nzz.ch [accessed January 30, 2017]).
  9. ↑ UBS (Ed.): Alpine Tourism. Challenges and opportunities (=  UBS Outlook ). 2013 ( gr.ch [PDF; accessed on January 30, 2017]). Alpine tourism. Challenges and opportunities ( memento of the original from January 18, 2017 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.  @1@ 2Template: Webachiv / IABot / www.gr.ch
  10. ^ Hansueli Schöchli: The long search for the reasons for the high-price island of Switzerland . In: NZZ . May 29, 2014 ( nzz.ch [accessed January 30, 2017]).
  11. ↑ Shopping tourists cost retailers CHF 11 billion . In: Tagesanzeiger . October 1, 2015 ( tagesanzeiger.ch [accessed January 30, 2017]).
  12. ↑ Credit Suisse (Ed.): More than just a dip in the economy? (=  Monitor Switzerland ). March 2016 ( credit-suisse.com [PDF; accessed January 30, 2017]).
  13. ^ A b Kaspar Engeli (Retail Switzerland), Marlis Henze ( Economiesuisse ), Dagmar Jenni (Swiss Retail Federation): Competition is the best medicine . Zurich / Bern / Basel 2012 ( economiesuisse.ch ).
  14. ↑ Costs, Prices and Performance. The Swiss retail trade in international comparison. (PDF) BAKBASEL, October 2010, accessed on January 30, 2017 .
  15. ↑ Imported products are far too expensive in Switzerland. Interview with Prisca Birrer-Heimo . In: Blickpunkt . No. 2 , 2016, p. 6 ( priscabirrer-heimo.ch [PDF]).
  16. ↑ Vera Bueller: High hurdles for low prices. In: The Selezione. March 2006, accessed January 30, 2017 .
  17. ^ Rudolf Strahm: The profiteers of the high-price island Switzerland . In: Tagesanzeiger / Bund . October 25, 2016 ( rudolfstrahm.ch [accessed January 30, 2017] column).
  18. ↑ Aymo Brunetti: A Simple Story . In: Die Weltwoche . No. 18 , 2005 ( weltwoche.ch [accessed January 30, 2017]).
  19. ^ Fight against the high-priced island of Switzerland. Chronology of events. In: Konsumentenschutz.ch. Retrieved January 30, 2017 .
  20. ↑ "Fair Price Initiative" fights against the high-price island. In: tagesanzeiger.ch. Retrieved January 15, 2017 .
  21. ^ Federal popular initiative 'Stop the high price island - for fair prices (fair price initiative)'. In: www.admin.ch. Retrieved January 15, 2017 .
  22. ↑ Argumentarium. In: Fair Price Initiative. Retrieved January 30, 2017 .
  23. ↑ The Federal Council : Federal Council decides on an indirect counter-proposal to the “Fair Price Initiative”. In: admin.ch . Retrieved August 22, 2018 .
  24. ↑ Preisbarometer.ch. Retrieved January 15, 2017 .
  25. ↑ Hochpreisinsel.ch. Retrieved January 30, 2017 .
  26. ↑ Rudolf Hermann: When the King comes to the till . In: Neue Zürcher Zeitung . September 17, 2016 ( nzz.ch [accessed January 30, 2017]).