The income of private households in Switzerland has grown by around 25 percent since 1995 – even if you take population growth and inflation into account.
The total income of Swiss private households from 1995 to 2021 increased by 27 percent.
Switzerland has experienced a lot in the past 25 years. There have been three deep economic crises: in the early 2000s after the dot-com boom burst, during the financial crisis of 2008/09, and most recently during the coronavirus pandemic.
Since the 2010s in particular, there has also been heated debate about the consequences of strong immigration: does the increase in population mean that there is only “widespread” growth in Switzerland – and that the average household is no better off?
Increased household income
However, new figures now show that the prosperity of private households in Switzerland has increased over the past 25 years – despite crises and population growth. Noisy Data from the Federal Statistical Office the real total income of private households rose by around 27 percent from 1995 to 2021.
This value applies per capita: The population growth during this period from 7 million inhabitants to 8.7 million is therefore taken into account. The value is also price-adjusted. However, inflation was quite low from 1995 to 2021 with overall inflation of around 12 percent. Consequently, monetary stability in Switzerland has contributed to the population being able to actually afford more goods and services on higher incomes.
The money goes to the people
The focus on the long term shows that prosperity in Switzerland seems to be growing unabated, even if there are occasional setbacks during periods of economic weakness.
The perspective of private households is particularly important. Normally, economic growth is reported in terms of gross domestic product – that is, the value of all services and goods produced in a year. But a good part of this added value stays with the companies (in the form of surpluses) or flows to the state (in the form of goods taxes). The BfS figures show what, from a macroeconomic point of view, benefits private households as income.
Of course, there are other factors for prosperity than the pure amount of income. Distribution issues have received a lot of attention in recent years – the overall pie can be unevenly distributed. However, income distribution in Switzerland has remained remarkably stable over the past few decades, in contrast to countries such as the USA, where inequality has increased sharply.
Wages are the largest source of income
The BfS data show that the majority of people’s income in Switzerland continues to come from wages. Earned income accounts for around 65 percent, which has hardly changed in the past 25 years.
Transfer income is also important at around 25 percent. Pension payments to the approximately 1.8 million pensioners in the state are particularly important. A good 10 percent of household income comes from investment income such as interest and dividends. However, this share has decreased slightly in recent years due to low interest rates.