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Over half of Swiss families struggling to make ends meet

3 days ago

A survey published this week by the organisation Pro Familia shows that 52% of families across Switzerland are struggling to make ends meet.

Photo by Vika Glitter on Pexels.comFor many families in Switzerland, money is tight or insufficient to cover all living expenses. The percentage finding themselves in this position rose from 47% to 52%. The rising cost of health insurance was the biggest challenge cited by most of those surveyed.

Regarding saving, 30% said they were unable to save any money and a further 37% reported managing to save CHF 500 or less a month. When questioned on how to save the state pension system families were not enamoured with any of the suggested solutions, which included higher taxes, later retirement or lower pensions. 39% viewed none of these as an

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New weight loss drugs likely to push up premiums

3 days ago

Since the beginning of March, Swiss health insurance companies have been covering the cost of Wegovy, a weight loss product, reported SRF.

© Oleschwander | Dreamstime.comPreviously, Ozempic, a drug also used by diabetics, was being prescribed for weight loss. Going forward, it is expected that the drugs Wegovy and Saxenda will be prescribed for weight loss instead of Ozempic. This should relieve drug shortages for diabetics – people seeking Ozempic for weight loss have made it difficult for diabetics to obtain the drug.

The large number of people in Switzerland who are severely overweight could lead to a substantial increase the cost of healthcare as these drugs are rolled out. According to Switzerland’s Federal Office of Public Health (FOPH), 11% to 13% of adults in Switzerland

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Child welfare set to be cut to help pension funding

10 days ago

This week, Switzerland’s parliament voted to eliminate child support payments paid to pensioners, reported SRF.

Photo by RDNE Stock project on Pexels.comIn Switzerland, parents typically receive payments for every child that is at school or in higher education up to a maximum age of 25. For most, the payments are connected with employment and funded out of the social security taxes deducted from salaries. However, if someone becomes a parent in their 40s they could end up a pensioner before their children finish their education. To ensure pensioners receive child support, payments unrelated to employment were introduced. This week, a majority in parliament decided these payment, which cost around CHF 230 million a year and are paid to roughly 24,000 parents, should be abolished.

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Church tax – should Swiss companies be forced to pay?

11 days ago

Individuals can opt out of church tax in most cantons. But companies rarely can, despite many having no connection with a church or a religion. The topic has been a hot political subject for a long time in Switzerland and came back under the spotlight this week when the canton of Bern discussed making it optional, reported SRF.

© Nuvisage | Dreamstime.comIn 2021, the canton of Bern collected CHF 37 million in church tax from companies, so a change in rules would be felt.

A key criticism of the current system centres on choice. If individuals have the freedom to opt out of the tax then why not companies? Only five cantons have done away with the tax: Geneva, Basel-City, Aargau, Schaffhausen and Appenzell-Ausserrhoden. Another two, Ticino and Neuchâtel, have made it optional. The

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No rise in Switzerland’s rent rate this quarter

17 days ago

After two increases in a row the reference interest rate used for adjusting rents remains unchanged this quarter.

Photo by Expect Best on Pexels.comAfter two rises from 1.25% to 1.75% last year, many tenants in Switzerland will be breathing a sigh of relief. Many economists forecast no increases in the rate this year.

Every quarter the rate of interest used to set the rents in Switzerland is reviewed. If it goes down some renters have the right to request a decrease in rent. If it goes up landlords can generally raise rents.

The interest rate used to set the reference rate is the average rate on outstanding mortgage loans. This rate rose from 1.69% at 30 September 2023 to 1.72% on 31 December 2023. The average actual rate was then rounded to the nearest quarter of a percent,

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Switzerland’s marriage tax penalty back in the spotlight

23 days ago

Married couples in Switzerland are taxed together, unlike unmarried couples who are taxed individually. This often acts as a tax disincentive for one spouse to work, disproportionately affecting women.
For many years, certain political parties have been pushing to remove what is essentially discrimination on the basis of marital status.
The issue came back into the limelight this week in the run up to a 27 March 2024 deadline for the government to respond to an initiative on the subject, reported SRF.
This week, the Federal Council presented a proposal to introduce individual taxation for everyone regardless of marital status. The proposal would have broadly the same impact as the initiative. The main difference is the initiative, if successful, would change the

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Switzerland’s marriage tax penalty back in the spotlight

24 days ago

Married couples in Switzerland are taxed together, unlike unmarried couples who are taxed individually. This often acts as a tax disincentive for one spouse to work, disproportionately affecting women.

For many years, certain political parties have been pushing to remove what is essentially discrimination on the basis of marital status.

The issue came back into the limelight this week in the run up to a 27 March 2024 deadline for the government to respond to an initiative on the subject, reported SRF.

This week, the Federal Council presented a proposal to introduce individual taxation for everyone regardless of marital status. The proposal would have broadly the same impact as the initiative. The main difference is the initiative, if successful, would change the constitution,

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More than 17,000 drivers fined in a month on one Zurich street

24 days ago

At the end of September 2023, driving was banned on a 60 metre section of Langstrasse in Zurich. To enforce the ban, cameras were later set up on 8 January 2024 to catch and fine errant drivers. Since then 17,310 fines have been issued.

© Thomas-Stoiber – Dreamstime.comThe driving ban, which excludes buses, was introduced to make the area more cycling friendly and applies from 5:30 a.m. to 10 p.m.

At CHF 100 each, the recent fines have generated 1.7 million of revenue for the city. However, a city official said the authorities are unhappy about the number of fines issued and would like to see the number fall.

Part of the problem appears to be a lack of awareness. As awareness rises the city expects the number of fines to fall. In the meantime, the CHF 100 fines will add up to an

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More than 17,000 drivers fined in a month on one Zurich street

24 days ago

At the end of September 2023, driving was banned on a 60 metre section of Langstrasse in Zurich. To enforce the ban, cameras were later set up on 8 January 2024 to catch and fine errant drivers. Since then 17,310 fines have been issued.
© Thomas-Stoiber – Dreamstime.comThe driving ban, which excludes buses, was introduced to make the area more cycling friendly and applies from 5:30 a.m. to 10 p.m.
At CHF 100 each, the recent fines have generated 1.7 million of revenue for the city. However, a city official said the authorities are unhappy about the number of fines issued and would like to see the number fall.
Part of the problem appears to be a lack of awareness. As awareness rises the city expects the number of fines to fall. In the meantime, the CHF 100 fines

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Higher Swiss pensions – voter support narrows

24 days ago

Support for the popular initiative to boost state pensions by 1/13 narrowed from 61% to 53% between 14 January and 10 February, according to a poll published by RTS.

© Bigpressphoto-Dreamstime.comVoting intentions vary significantly by age. In the latest poll, people under 40 were most against it (55%), possibly because they know they will probably need to finance most of it. While only 34% of those 65 and over were against it. Those in the middle are the middle, with only 42% opposed to more money for pensioners.

Voting intentions correlate closely with income level. Those on higher incomes are more likely to be against it than those on lower incomes. 70% of those earning CHF 3000 – 4000 a month were in favour of higher pensions while only 44% of those earning over CHF 11,000 were.

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Swiss supercomputer aims to make AI open to all

February 17, 2024

Much of the progress being made in AI is captured within private companies aiming to keep it to themselves in order to profit from it. Open AI, a project started as an open-source non-profit has morphed into a largely closed-source profit-maximising project increasingly integrated into the software company Microsoft. Many see open-source as critical to the healthy development of AI. A super computer combined with the knowhow of Switzerlands world-leading federal universities could help to swing the pendulum back into the open-source court, reported SRF this week.

© CSCSThe supercomputer is based in the CSCS data center in Lugano. It will contain 10,000 superchips and will be able to perform four peta operations per second – a peta is 1,000,000,000,000,000,000,000 or 10^15.

The

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Swiss supercomputer aims to make AI open to all

February 17, 2024

Much of the progress being made in AI is captured within private companies aiming to keep in to themselves in order to profit from it. Open AI, a project started as an open-source non-profit has morphed into a largely closed-source profit-maximising project increasingly integrated into the software company Microsoft. Many see open-source as critical to the healthy development of AI. A super computer combined with the knowhow of Switzerlands world-leading federal universities could help to swing the pendulum back into the open-source court, reported SRF this week.
© CSCSThe supercomputer is based in the CSCS data center in Lugano. It will contain 10,000 superchips and will be able to perform four peta operations per second. The centre is set to be the first public

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Swiss government deficit larger than predicted

February 17, 2024

The federal government spent less in 2023 than budgeted but overestimated revenue. The net effect was an additional unexpected shortfall of CHF 1.4 billion, reported SRF.

© Bartolomiej Pietrzyk | Dreamstime.comAt a media conference this week, finance Minister Karin Keller-Sutter said that the Federal Council was not aiming to raise a taxes to fund the additional shortfall. Raising taxes would require a constitutional amendment to get around the debt brake and would set a precedent for future overspending.

Instead, the federal government will look for further savings. Cuts in spending on payments to farmers, culture and international organisations have already been scheduled.

Keller-Sutter said that cleaning up the budget sustainably requires structural measures. And it is not

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Swiss government deficit larger than predicted

February 17, 2024

© Bartolomiej Pietrzyk | Dreamstime.com The federal government spent less in 2023 than budgeted but overestimated revenue. The net effect was an additional shortfall of CHF 1.4 billion, reported SRF. At a media conference this week, finance Minister Karin Keller-Sutter said that the Federal Council was not aiming to raise a taxes to fund the …

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Swiss inflation drops to 1.3%

February 16, 2024

Over the 12 months to the end of January 2024, annual inflation in Switzerland fell from 3.4% to 1.3%. The latest rate is 0.4 percentage points lower than a month earlier – it was 1.7% at the end of December 2023.

Photo by Castorly Stock on Pexels.comAt the same time, on a monthly basis, inflation rose from 0% in December 2023 to 0.2% in January 2024, an annualised rate of 2.4%. This means the fall in the annual rate from 1.7% to 1.3% was driven entirely by the base effect. When a month of particularly high inflation drops out the calculation the annual figure falls by an oversized amount. This happened in January 2024 when monthly inflation of 0.6% in January 2023 dropped out of the annual figure. The base effect means it is possible for monthly inflation to accelerate while the

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Swiss unemployment rises more than expected

February 10, 2024

The number of people unemployed in Switzerland rose by more than most economists expected in January 2024.

Photo by energepic.com on Pexels.comThe rate at the end of January rose to 2.5%, up from 2.3% at the end of 2023, reported the State Secretariat for Economic Affairs (SECO). A group of economists predicted it would be between 2.2% to 2.5%, placing the actual figure at the top end of expectations.

However, the rate remains low by historical standards. And some of the month-on-month increase can be explained by typical seasonal variations, reported SECO. There is less work in construction, agriculture and the catering industry in the winter months, pushing up unemployment during this period.

At the same time SECO sees the effects of economic slowdown and a downward trend in

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Swiss prefer to holiday close to home

February 9, 2024

Passing through a Swiss airport during peak holiday season might give an impression Swiss like holiday in far away places. However, a survey by the Swiss Bankers, a company that provides holiday related financial services, shows most like to stay close to home.

Photo by Shoeb Khan on Pexels.comIn 2023, 25.9% of total holiday spending was made in Switzerland, followed by France (7.3%), Germany (7.1%), Italy (6.2%), Great Britain (5.5%) and Spain (5.1%). These six made up 57.1% of the total.

Next, and the first non-European nation on the list, was the USA (4.7%). The final three in the top 10 were all European: Ireland (2.9%), Netherlands (2.8%) and Greece (2.3%). The top 10 made up nearly 70% (69.8%) of holiday spending.

More distant travel destinations are gaining in popularity.

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Swiss home prices up in 2023

February 3, 2024

This week, the Federal Statistical Office (FSO) published the Swiss residential property price index for 2023, which showed an annual price increase of 2.2%, with a rise of 1.1% in the fourth quarter.

Photo by PhotoMIX Company on Pexels.comThe average price of single-family homes rose by an average of 1.9% last year and the prices of apartments rose by an average of 2.4%.

In the fourth quarter of 2023, both the prices of single-family homes (+0.5%) and those of apartments (+1.7%) were up across Switzerland. Single-family home prices rose the most in large urban areas and related agglomerations (+2.0%), while prices fell in medium-sized urban areas and agglomerations (-2.0%).

Apartment prices rose the most (+4.6%) in small urban areas, while declining apartment prices (-1.5%)

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Issues concerning the Swiss most in 2023

February 2, 2024

This week, a survey was published setting out issues of greatest concern to the Swiss public.

Photo by Towfiqu barbhuiya on Pexels.comThe five biggest issues cited by the Swiss population are of a monetary nature. Economic concerns haverisen, leaving issues such as climate change in sixth place.

The top concern is healthcare costs and health insurance premiums. 41.8% were worried about this. This is the leading concern across all age groups, including those under 30 who are typically less worried about the issue.

In second place, up from 5th last year, is the cost housing. This was listed by 33.4% of those surveyed. This is a greater issue than a year ago for all segments except the young and particularly is acute among the 50-65 age segment, especially in French-speaking

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Swiss pension finances – the unavoidable numerical reality

February 2, 2024

Swiss state pensions have been in the news a lot recently. VAT increased on 1 January 2024 to help fund them, and two referenda on the subject are set for voting on 3 March 2024. This week, RTS published an article setting out the mathematical reality of Switzerland’s pension finances.

© Toa555 | Dreamstime.comPensions in Switzerland, like in much of the developed world, face two significant head winds. The biggest of these is demographic shift. The ratio of people paying into the system versus those taking money out of it is set to drop dramatically. In addition, life spans have risen, although not so much recently.

Pension finances are akin to the slow boiling of a frog. If the temperature rises only slowly, the frog barely notices. In 2022, Switzerland’s state pension fund

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Rising prices – where Swiss are cutting back

January 26, 2024

Purchasing power has been hit much less in Switzerland than in other European nations. Between 2020 and 2023 food prices went up 6% in Switzerland. The same figure in Germany (+17%), UK (+40%) and Estonia (+43%) is much higher.

Photo by Pixabay on Pexels.comAt the same time, big ticket items like health insurance and rent have made a big dent in Swiss budgets. These more visible prices rises have created a perception that overall costs have risen more than they actually have. This perception has led the population to cut back on spending.

The most popular cut back has been spending on going out and eating out. 52% have cut back on this. Next are clothing (42%), holidays (41%), leisure activities (41%), food (34%), personal services (32%), furniture and household items (31%),

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High Swiss rent – little support for rent controls

January 26, 2024

Rents have risen significantly in Switzerland, something potentially affecting the 61% of the population living in rented accommodation. A survey by Deloitte places rent control at the bottom of a list of solutions.

Photo by ILOVESwitzerland on Pexels.comThe survey, which questioned 1,900 people across Switzerland, found rent controls to be the least preferred solution to dealing with rising rents – only 4% of those with an opinion chose this option. Cities such as Berlin have introduced rent controls. However, controls tend to be counterproductive, explains Deloitte. Capping rents reduces the incentive to build, which is a key way to temper rising rents.

The most popular solution among those surveyed by Deloitte was the construction of social housing, something favoured by 46%.

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Swiss government announces first spending cuts

January 26, 2024

Like many governments, Switzerland’s federal government is spending more than it collects in taxes and other revenues. However, a constitutional mechanism known as the debt brake limits how much the government can overspend. This means, in the absence of significant economic growth or higher tax rates, the government must cut spending. This week it outlined cuts that would shave off CHF 2 billion of spending, reported RTS.

Bern © Marekusz | Dreamstime.comThe debt brake is designed to prevent chronic deficits and rising debt by only allowing shortfalls in exceptional circumstances. It enjoys strong support among the population. 85% of voters approved the constitutional provision for the mechanism in 2001. Even today it enjoys strong support among the population and in parliament.

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Swiss set to vote on changes to rental laws

January 19, 2024

Changes to Swiss law on renting recently passed by parliament have met with public resistance. This week, enough signatures were collected to trigger a vote aimed at overturning the work of parliament on rental law reform, according to RTS.

Apartment Switzerland © mikechapazzo | Dreamstime.comThe two changes, which would make it easier for landlords to move into their own properties and require written approval to sublet, are viewed by some as a cynical move to weaken the hand of tenants. A representative of the group organising the referendum described the changes as a frontal attack by the real estate lobby on tenancy law.

Last year, Parliament decided tenants must have written approval to sublet. The principle reason for this change is the increasing number of sublets via

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Two very different votes on Swiss pensions set for March

January 13, 2024

This week, the referendum roster was announced for 3 March 2023. There will two votes on Switzerland’s state pension system. One aims to tackle the impending funding crisis by extending the retirement age, and the other aims to alleviate old age poverty by increasing payments without a plan to pay for it.

Photo by Monica Silvestre on Pexels.comThe first would raise the retirement age by one year to 66 by 2032 and then link it to life expectancy beyond that date. If life expectancy rises by one year then the retirement age would rise by 0.8 years. While the proposal is structured around dealing with rising life expectancy, the demographic shift in the population is a far more pressing financial challenge. Even with no change in life expectancy, the number of beneficiaries relative to

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Inflation and poverty in Switzerland

January 12, 2024

This week, SRF held a discussion on poverty in Switzerland. Philipp Frei, Managing Director of the Swiss Budget Consulting Association, an organisation that helps people budget, voiced concern over shrinking disposable incomes. While economic historian Tobias Straumann spoke of the progress Switzerland has made on welfare and poverty’s often transient nature.

Photo by Ahsanjaya on Pexels.comIn 2021, Switzerland’s poverty line was set at CHF 3,989 (US$ 4,650) a month for a family of four and CHF 2,289 for a someone living alone. These sums are after compulsory health insurance premiums and taxes, which could add up to around CHF 2,000 a month for a family of four.

Around 8.7% of the population lived on a monthly household income below these sums. Most are not working. However, 4.2%

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Young Swiss no longer saddled with health insurance debt when turning 18

January 6, 2024

In Switzerland, the law allowed health insurance companies to pursue young people for unpaid insurance premiums when they turned 18. From 1 January 2024, this is no longer possible. These debts remain with the parents. If insurers want to collect the money they are owed they will now have to pursue parents.

Photo by Mikhail Nilov on Pexels.comHowever, the law is not retroactive. This means it will only apply to young people turning 18 after 31 December 2023.

The change has long had the support of government. In 2019, 174 members of Switzerland’s federal parliament voted to stop this practice. Only 2 voted not to.

For some young Swiss residents the sums can be significant. Health insurance is compulsory in Switzerland. If any resident falls to obtain insurance it will be done for

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Three laws changing in Switzerland in 2024

January 6, 2024

On 1 January 2024, three new laws came into force. The first is a change to Swiss pensions. Under the new rules it will be easier to retire later or to continue working part time. Working for longer will mean a larger state pension when it is taken. The economic rationale is that more people working for longer will add to GDP and tax revenue, reduce the dependency ratio and help with the challenges of funding pensions as the population ages.

© Chris Dorney | Dreamstime.comThe second change is an increase in VAT to help fund state pensions. The main rate will rise from 7.7% to 8.1% and the lower rate for necessities will rise from 2.5% to 2.6%. A special rate applied to hotel charges will rise from 3.7% to 3.8%. This change was accepted by a majority of Swiss voters on 25 September

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Swiss inequality – a perception gap?

December 29, 2023

In a recent poll, nearly 82% completely (46%) or somewhat (36%) agreed that the gap between rich and poor in Switzerland is increasing. However, these responses are at odds with typical measures of inequality.

© Nora Tarvus | Dreamstime.comTwo key measures of inequality are the S80/S20 and the Gini Coefficient. On both measures Switzerland is fairly stable.

The S80/S20 takes the average income of the top 20% and divides it by the average income of the bottom 20%. In Switzerland in 2021 (latest data) the S80/S20 was 4.9, below the EU average of 5.0. In Europe the figure ranges from 3.2 in Slovenia to 8.8 in Turkey. Time series data shows Switzerland’s S80/S20 fluctuating around 4 since 2000, reaching a high point of 5.3 in 2019.

Another measure of income inequality is the Gini

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Percentage of Swiss on welfare dips below 3 percent

December 23, 2023

In 2022, 2.9% of the population received welfare, according to data published by the Federal Statistical Office (FSO) this week. Since 2005, when nationwide data on welfare was first collected, the rate has only dipped below 3% once before in 2008. The highest it has been was 3.3% in 2016 and 2017.

© ochu2008 | Dreamstime.comWelfare does not include basic unemployment benefits, state pension payments or standard disability payments, which are Switzerland’s largest social transfers. However, it does include supplementary payments on top of basic state pension and disability payments along with other payments aimed at alleviating poverty.

Total estimated social spending in 2022, of which welfare is one portion, is expected to be CHF 208 billion, roughly 23,000 per capita. 83% of this

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