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PENSIONS

OPINION: Switzerland can no longer justify a lower retirement age for women

Having a lower retirement age for women is a throwback to more patronising times, yet the Swiss government has struggled to introduce parity in this area for decades. As the latest reform attempt comes to a popular vote, Clare O’Dea asks what’s behind female resistance to this change.

OPINION: Switzerland can no longer justify a lower retirement age for women
Swiss pensionista have been hit by rising inflation. (Photo by VALERY HACHE / AFP)

The retirement age in Switzerland is 64 for women and 65 for men. For generations of Swiss people, this differential treatment is standard. The gap used to be bigger. From 1962 to 1997, women retired at 62.
On September 25, Swiss voters will have their say on a reform of the state pension system (AHV / AVS), which would raise the retirement age for women to 65 and use a VAT hike to help finance pensions. The Old Age and Survivors’ Insurance has been running a deficit since 2014 and this reform is billed as a crucial package to keep it viable.

Is earlier retirement for women a historical benefit worth defending or should it be abandoned in the interests of fairness and financial good sense? If women voters alone could decide, the proposal would be rejected.

READ ALSO: Reader question: How long must I work in Switzerland to qualify for a pension?

According to the most recent poll, 64 per cent of women intend to vote against the reform, while 71 of male voters approve of the law. This is a much higher gender difference than is usually seen, even in sex-specific voting issues. These numbers, if sustained, would ultimately deliver a yes vote but leave a bitter taste for women.

As a woman who will be directly affected by this decision in the not-too-distant future – well, 15 years from now – and someone who made all the classic gender-based “mistakes” when it comes to my own pension provision, I don’t see this potential change as a threat. If anything, it is an opportunity, a wake-up call.
Swiss women earn less than men over their lifetimes for several well-documented yet seemingly unshakable reasons. Mostly these relate directly or indirectly to time spent caring for children or other family members.

Caring responsibilities, even the hypothetical possibility of such responsibilities, influence women’s career choices, the number of hours they work, and their income. This burden also influences how women are perceived and rewarded as employees.

READ ALSO: EXPLAINED: How does the Swiss pension system work – and how much will I receive?

But there is also a kind of fatalism on the part of women in long-term partnerships who know they can’t sustain a career as the “main earner” without a “wife-like” partner to rely on, so they do not try. Divorced women usually find it’s too late to catch up.

Three things that are bad for pension provision are career interruptions, part-time hours and lower pay. Yet this is the norm for most working women over the long term, mothers in particular.

As I see it, there are three ways to improve matters. Either women change to behave more like male workers, the system changes to accommodate existing patterns better, or we change the existing family patterns altogether.

(Photo by ROMAIN LAFABREGUE / AFP)

The problem is that mother workers can only become more like father workers when men pick up the slack (choosing family-friendly jobs, reducing their hours, taking family-centred career breaks, leaning in at home). Where else will the spare capacity come from?

READ ALSO: EXPLAINED: Everything you need to know about retiring in Switzerland

I think all three changes need to happen in parallel. Some progress has already been made. There is no point in hanging around with the retirement age reform. It’s one of the few changes that can be achieved with the stroke of a pen.

Those campaigning against harmonising the retirement age say that all the other things dragging down women’s lifetime earnings – the structure of the labour market, lack of affordable childcare, gender pay gap, the persistence of traditional gender roles – need to be fixed first before we demand an extra year of work from women. That seems defeatist and totally impractical to me.

The priority for all is to avoid women having a much greater risk of poverty in old age as they do now, especially divorced women and widows.

Swiss women currently receive 37 percent less than men through all three types of pension provision combined – the state pension, occupational schemes and private pension. The picture in Switzerland is worse than in most industrialised countries because of the prevalence of part-time work for women – a double-edged sword.

Swiss voters turned down two previous proposals to level up the retirement age for women – in 2004 and 2017. However, taking into account the compensatory measures included in the current reform, that potential extra working year should not be viewed as a penalty.

READ ALSO: Reader question: Can I take my pension money with me when I leave Switzerland?

If that year is spent working, not only will the women have their salary, but they will also have the opportunity to contribute a bit more to the two other streams of pension funding – occupational pensions and voluntary private pensions.

Working also means being physically active, having more social interactions and stimulating your brain. These are all pillars of brain health that help protect against the onset of dementia, a disease that women are twice as likely to suffer from.

The absolute refusal to acknowledge that an ageing population and increasing life expectancy require changes to long-standing pension norms is one of the blind spots of the Left in Switzerland. According to the UBS International Pension Gap Index, the proportion of active (working) to retired people will decrease from the current level of 3 to 1 down to 2 to 1 by 2050.

The reasons why Swiss women should retire one year earlier than men are lost of the mists of time. Well, not quite, there was some talk of “physiological disadvantage” and wives keeping their older retired husbands company. It seems rather silly now.

The final justification left for an early exit from the workforce is that it offers some compensation for all the other financial injustices. That’s a passive rather than an active approach to our problems. I see this reform as part of the solution. Let’s get on with it.

Member comments

  1. I totally disagree. Women in Switzerland are still at a great disadvantage. There is no support for childcare, for instance. So women in Switzerland have traditionally worked 80% jobs so they could be home when their children are home from school. Men in Switzerland are not known for helping with household chores, shopping, or cooking. Indeed, a more macho place is hard to name. So women stil deserve a break on retirement age. If you notice, whenever Switzerland does something in the name of parity, it is always to the disadvantage of females.

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ECONOMY

How the strengths and weaknesses of the Swiss economy will impact you

While the economies of many countries are struggling, Switzerland’s is doing well in comparison. What exactly are its strengths and weaknesses? And how will they impact you?

How the strengths and weaknesses of the Swiss economy will impact you

In its new analysis published on Tuesday, the Swiss Economic Institute (KOF) lays out the forecast for Switzerland’s economy.

Some of it is positive, and some less so.

On the whole, however, and given the difficult situation of the past two years, the outlook is promising (read more about this below).

Things are not always what they seem

Economists, like KOF’s director Jan-Egbert Sturm, point out that though the public’s perception of the current economic situation is skewed toward the negative, it is not necessarily so.

“The increase in prices in Switzerland was significantly lower than in neighbouring countries,” he said in an interview with Blick newspaper. 

So is inflation: even at its height in 2022, when it exceeded the 3-percent mark (a very high figure for Switzerland), it was still well below the EU average.

Today, the rate stands at below 2 percent — still lower than elsewhere in Europe

READ ALSO: Why Switzerland’s inflation rate has stayed low compared to elsewhere

 Another ‘misconception’ is that consumption habits in Switzerland have been impacted by inflation.

The general view is that “there is some reluctance to buy new, larger goods like washing machines or cars. But if we look at the figures closely, we see that consumption is evolving in a relatively stable manner,” Sturm said.

“The Swiss economy is generally quite solid,” he added.

Another plus: “the labour market remains robust, especially thanks to the services sector,” Sturm pointed out.

Companies are more reluctant to let employees go not only because there are not enough qualified workers to fill job vacancies, but also because employers “learned during the pandemic that they must be careful not to lay off workers too quickly,” so as not to create shortages when the crisis passes.  

Why does Swiss economy generally fare well in crises — and in general?

There are several reasons for that: 

Low unemployment / high employment

This dynamic fuels economic prosperity because it means that as people earn income, they not only spend more (thus boosting consumption), but they also pay taxes which fill up the government’s coffers.

And when that happens, everyone in Switzerland benefits: the cantons and their finances profit from the strength of the Swiss economy, as the federal government distributes some of its profits to cantons.

The government’s role

The Swiss are financially-savvy, which bodes well for the economy.

Take the debt brake, for instance.

According to the government, it is a mechanism designed to “prevent chronic deficits and keep federal debt from soaring”.

Just as it is for private spending, the government must be careful not to exceed the set ‘expenditure ceiling.’

“With a debt ratio of around 30 percent of gross domestic product, Switzerland remains in excellent shape by international standards,” the government pointed out. “The debt brake has not only significantly helped Switzerland to overcome multiple crises relatively well; it has also allowed for a considerable reduction in federal debt.”

According to the Organisation for Economic Cooperation and Development (OECD), “Switzerland’s public finances rank amongst the best in terms of solidity.”

READ ALSO : What is Switzerland’s debt brake and how does it affect residents?

All these factors combined have kept Switzerland’s afloat (or at least from drowning) during various global downturns, including the Covid pandemic and Russia’s invasion of Ukraine which sparked spiralling inflation in many places. 

But there are weak points as well

One of them is the strong franc.

Actually, its strength vis-à-vis the euro and US dollar is a double-edged sword.

On the positive side it benefits the import industry and, ultimately, the consumer.

But it is quite the opposite for exports.

Switzerland relies heavily on trade with the EU, mainly Germany, but when the euro is weaker than the franc, Swiss goods are too expensive abroad — especially if countries concerned are in recession and simply can’t afford to buy from Switzerland.

For this reason, Swiss industries that depend on exports, usually feel the ‘crunch’ more than import-based sectors.

Also, the strong franc may very well enable Switzerland-based earners to enjoy numerous stays abroad, but it also makes holidays in Switzerland very pricy for overseas tourists. This, in turn, has a negative effect on the Swiss economy as well.

Therefore, the state of Switzerland’s economy is not entirely in its own hands, but depends on forces beyond its control.

As KOF puts it, “the sluggish global economy is slowing the growth of the Swiss economy” as well.

What can we expect ahead?

This is where the good news comes in.

“Real wage increases are expected following the declines of recent years,” KOF says. “This will boost purchasing power and, together with population growth, should support private consumption.

Therefore, “households’ spending is expected to increase in the coming year. This trend will be supported by a gradual levelling-​off of inflation and a sharper rise in disposable incomes.”

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