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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.

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

EXPLAINED: The rules that cross-border workers shouldn’t break in Switzerland

There are a number of restrictions imposed on G-permit holders — people who are working in Switzerland but living in neighbouring countries.

EXPLAINED: The rules that cross-border workers shouldn't break in Switzerland

Who are the Swiss cross-border workers?

Cross-border commuters are, according to the State Secretariat for Migration (SEM) “foreign nationals who are resident in a foreign border zone and are gainfully employed within the neighbouring border zone of Switzerland”.

SEM defines the term “border zone” as the countries with which Switzerland shares a border — that is, France, Italy, Germany, and Austria.

The 360,000 G-permit holders who cross the border into Switzerland each day are subject to certain restrictions that the other 1.718 million foreign nationals residing permanently in Switzerland under C, B, or L permits are not.

These are some of the rules pertaining specifically to cross-border commuters.

Restrictions concern the use of vehicles

For instance, under the current rules, cross-border commuters are allowed to drive to and from jobs in their vehicles registered abroad, but they can’t use their personal cars for professional reasons.

Instead, they must use a vehicle provided by their Swiss employer.

However, a parliamentary motion, supported by the Federal Council, calls for changes to this regulation, arguing that it limits employment opportunities for certain workers.

This is the case, for instance, in the cleaning sector, where it is customary for employees to go to the place of work directly from home, bringing the necessary material with them.

However, “due to the regulations in force, this way of proceeding is not allowed for cross-border commuters,” according to MP Martin Schmid, who filed the motion now being debated in the parliament.

By the same token, if you receive a company car registered in Switzerland from your Swiss employer, you can use it only to commute to work and back, as well as for professional activities. 

However, EU customs regulations prohibit private use of the Swiss company car in your EU home country.

But that’s not all: if you live in an EU state, never borrow cars registered in Switzerland and drive them abroad. That is because EU residents are banned from driving a Swiss car in an EU country — unless the Swiss owner of the car is sitting next to you and can vouch that this is their vehicle and you are just driving it on their behalf.

Residence rules

There are other restrictions imposed on G-permit holders as well, mostly concerning residence rights.

For instance, cross-border commuters must return to their main place of residence abroad — if not each day, then at least once a week.

While a person with a G permit can’t purchase Swiss property to be used as their main residence (since they don’t have a permanent resident status), they are allowed to  buy a secondary residence, but only in the vicinity of their Swiss employer.

This means that, if, for instance, you live in the Haute-Savoie region of France and work in Geneva or Vaud, you can’t buy a house 230 km away in Zermatt.

Also, while you are allowed to own this property, you can’t rent it out.

READ MORE: EXPLAINED: Who can work in Switzerland but live in a neighbouring country

Be aware of taxes

Cross-border workers should be aware of tax rules so they don’t inadvertently break them. The specific rules all depend on which country employees are travelling from. 

For instance, there’s an agreement between Switzerland and France, Italy, and Germany authorises cantons to subtract withholding tax (also known as taxation at source) from cross-border workers’ wages.

This system is different from the one used by resident workers, who declare their income and pay taxes in monthly instalments throughout the year.

The taxes that cross-border workers pay in Switzerland are deducted from their tax liability in their country of residence.

To determine the withholding tax rate, the total gross income from all employment, including supplementary earnings such as benefits from invalidity or accident insurance, are calculated. 

Employers then forward the levied amounts to cantonal tax authorities. 

READ MORE: What cross-border workers should know about taxation in Switzerland

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