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DEMOGRAPHICS

What Switzerland needs to do to accommodate 10 million residents

Forecasts say the Swiss population could swell to 10 million in the coming years. How would the country accommodate the increasing number of people?

What Switzerland needs to do to accommodate 10 million residents
More housing will be needed for increased population. Photo by Justin TALLIS / AFP

Some studies indicate that Switzerland’s population is expected to exceed 9 million people this year (from the current 8.8 million), and reach the 10- million mark a few years down the road,

This growth is due to several factors, one of which is that people in Switzerland are living longer — in fact, according to some figures, the country has the highest life expectancy in the world.

Chart: OECD

Another important factor is that the number of foreigners who have settled in Switzerland in the past few years has grown significantly.  

“Switzerland has been in a situation of uninterrupted demographic growth for several decades, and this is explained in particular by the arrival of young migrants, who also contribute to the Swiss birth rate,” according to Philippe Wanner, professor at the Institute of Demography and Social Economics at the University of Geneva. 

This prospect is prompting MPs to ask the Federal Council to develop scenarios on how the small country can make room for that many residents.

Specifically, deputy Judith Bellaiche has called on federal authorities to devise, already now, a plan on how to prepare the country’s infrastructure for the growing numbers.

In response, the Federal Council said it “will take up these concerns in the context of legislative planning from 2023 to 2027.”

What exactly does this entail?

These are the main areas where measures would have to be taken:

Housing

Housing, especially in cities where most immigrants settle, has become scarce.

In Zurich, for instance, 30,000 foreign nationals settled there in 2022.

And according to a forecast by the Zürcher Kantonalbank (ZKB), more people are likely to move to the Zurich area this year as well — only to be faced with a shortage of dwellings.

READ ALSO: Zurich hit by affordable housing shortage amid record-high immigration

In other high-demand housing markets, like Geneva, the situation is similar.

To remedy the situation — and ensure that expanded population will find accommodations — the government must attack the root of the housing problem.

One way would be to ease construction regulations to allow more dwellings to be built. Right now, dense construction is becoming increasingly problematic because of high land prices in many regions, along with noise protection regulations.

Various politicians are already proposing this, and other measures to counteract the housing shortage.

READ ALSO: How can Switzerland solve its housing shortage and curb rents?

Healthcare system

There are more than 280 hospitals throughout Switzerland, and the general level of care is excellent.

Except during the Covid pandemic, when these facilities became saturated, in normal times access to patient care is not a problem.

But is Switzerland’s system ready to handle the influx of more people?

Only time will tell whether the current number of public hospitals and private clinics suffices. A major problem, however — unless it will be resolved in the meantime — is a shortage of healthcare workers.

For instance, there are already about 15,000 too few nurses in Switzerland and, unless more are trained, there may not be enough to care not only for the current population but even more so, for newcomers.

In January 2023, the government made plans to improve working conditions of medical personnel — including fewer hours and better pay — in order to prevent essential staff from resigning, and therefore ensuring enough qualified personnel in Switzerland’s hospitals. 

Public transport

One of the arguments brought forth by anti-immigration groups like the Swiss People’s Party is that the more people there are in Switzerland, the more overcrowded public transport will become.

However, beyond stating that in the event of higher population the country will need “a robust and strong railway infrastructure,” the Swiss Federal Railways (SBB) has not yet presented a concrete plan to tackle the 10-million population. 

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For members

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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