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WORKING IN SWITZERLAND

Which Swiss companies have the biggest gaps between high and low earners?

While Swiss wages are more equitable than those of most other European countries, there is still a significant disparity between the lowest and highest salaries in the country’s big companies, according to a new survey.

Published: 15 August 2022 09:55 CEST
Updated: 4 September 2022 15:36 CEST
Which Swiss companies have the biggest gaps between high and low earners?
Top-level executives earn more than lower-hierarchy employees. Photo by Marten Bjork on Unsplash

Wage inequality can either come about when income is unevenly distributed throughout a population, or, on a smaller scale within a given company.

Although Switzerland generally boasts strong pro-worker labour laws and salaries that are among the highest in the world, new research indicates that wage disparity is alive and well in many large Swiss companies.

The study, carried out by Unia labour union, shows that in 2021, executives of 43 largest Swiss firms earned an average of 141 times more than their lowest-paid employees.

The worst offender in terms of income disparity is Roche, where top executives earn 307 times more than their lowest-paid workers. The pharmaceutical giant is followed by UBS (221), Logitech (204), Nestlé (201), Alcon (197), and Novartis (195).

What is the study authors’ definition of a ‘low’ wage in this context?

In half of the 43 companies surveyed, Unia found that the lowest incomes are less than 50,712 francs per year.

“These salaries are significantly lower than the ‘low salary threshold’, which, for Switzerland, corresponds to 53,320 francs”, the study reads. 

While salaries of the lowest paid employees grew by only 0.5 percent between 2016 and 2020 (the last year for which official data is available), for the higher-ups the increase was 4 percent.

READ MORE: Swiss salaries: How much do people earn in Switzerland?

How does Switzerland compare to other countries in terms of income disparity?

Data published by the Federal Statistical Office (FSO) indicates that when it comes to salaries, Switzerland matches the EU’s median ratio of 4.9 — which means that the total income of the richest 20 percent of the population is 4.9 times greater than the total income of the poorest 20 percent.

This is the same ratio as in Germany.

By comparison, the ratio in Switzerland’s neighbour, Italy, is much higher — 5.8 percent — France’s is 4.5 percent, and Austria’s 4.1.

Generally speaking, and income inequality notwithstanding, “the standard of living in Switzerland remains one of the highest in Europe”, the FSO said.

This means that after adjustment for differences in price levels between countries, “the Swiss population’s financial situation is more comfortable than that of its neighbouring countries and countries in the European Union”.

This is the case even though the cost of living in Switzerland is higher than in most European countries, according to FSO.
 
READ MORE: EXPLAINED: Why Switzerland’s cost of living isn’t as high as you think

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WORKING IN SWITZERLAND

The pitfalls of Switzerland’s social security system you need to avoid

In most cases, Switzerland’s social benefits system functions well. But there are also some loopholes you should know about.

Published: 24 April 2024 13:37 CEST
The pitfalls of Switzerland's social security system you need to avoid

The Swiss social security system has several branches: old-age, survivors’ and disability insurance; health and accident insurance; unemployment benefits, and family allowances.

This is a pretty comprehensive package, which covers everyone who pays into the scheme for a wide variety of ‘what ifs’.

As the government explains it, “people living and working in Switzerland benefit from a tightly woven network of social insurance schemes designed to safeguard them against risks that would otherwise overwhelm them financially.” 

But while most residents of Switzerland are able to benefit, at least to some extent, from this system, others don’t.

What is happening?

If someone becomes ill or has an accident, Switzerland’s compulsory health insurance and / or accident insurance will cover the costs.

However, a prolonged absence from work can become costly.

That is especially the case of people employed by companies that don’t have a collective labour agreement (CLA), a contract negotiated between Switzerland’s trade unions and employers or employer organisations that covers a wide range of workers’ rights. 

READ ALSO: What is a Swiss collective bargaining agreement — and how could it benefit you?

It is estimated that roughly half of Switzerland’s workforce of about 5 million people are not covered by a CLA.

If you just happen to work for a company without a CLA, your employer is not required to pay your salary if your illness is long.

You will receive money for a minimum of three weeks – longer, depending on seniority — but certainly not for the long-haul.

You may think that once your wages stop, the disability insurance (DI) will kick in.

But that’s not the case.

The reason is that DI can be paid only after a year after the wages stop. In practice, however, it sometimes takes several years of investigations and verifications to make sure the person is actually eligible to collect these benefits, rather than just pretending to be sick. 

In the meantime, these people have to use their savings to live on.

What about ‘daily allowance insurance’?

Many companies (especially those covered by a CLA) take out this insurance, so they can pay wages to their sick employees for longer periods of time.

However, this insurance is optional for employers without a CLA is place.

As a result, small companies forego it because it is too much of a financial burden for them.

And people who are self-employed face a problem in this area as well: insurance carriers can (and often do) refuse to cover people they deem to be ‘too risky’ in terms of their age or health status.

Critics are calling the two situations —the length of time it takes for the disability insurance to kick in and gaps in the daily allowance insurance—”perhaps the biggest failures of the social security system.”

Is anything being done to remedy this situation?

Given numerous complaints about the unfairness of the current system, the Social Security and Public Health Commission of the Council of States (CSSS-E) will look into the “consequences of shortcomings and numerous dysfunctions in long-term illness insurance.”

But not everyone in Switzerland sees a problem in the current situation.

According to the Swiss Insurance Association (SIA), for instance, “making daily sickness allowance insurance compulsory for employers would not have the desired effect. Due to false incentives, it would only exacerbate the upward trend in costs and premiums.”

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