Income and cost of living
Swiss households consist on average of 2.2 persons and have a monthly earned income of CHF 6,298. Together with income from other sources and transfer income, gross income totals CHF 8,492. After deduction of social security contributions and taxes, approximately 70% remains as disposable income for consumption. There are considerable regional differences in real disposable income (after deduction of all fixed costs). Real disposable income is below the Swiss average (low RDI value) not only in the business centres but also in a small number of mountain communities. These are popular tourism areas with very high real estate prices. The canton of Appenzell Innerrhoden has the highest real disposable income (high RDI value) ahead of Obwalden and Glarus, while the urban cantons Basel-Stadt and Geneva are at the other end of the scale (see following graphic).
Example (Credit Suisse Economic Research):
A couple with two children has a single-family residence of medium standard (80% mortgage). They have CHF 300,000 in savings, and their joint earnings total CHF 150,000. After figuring in the government family allowance and income from investments, the household has a gross income of about CHF 157,000. After deducting all the mandatory contributions (taxes, retirement and social security contributions, and premiums for compulsory health insurance) as well as living costs, ancillary costs and utilities, the family has the following real disposable income:
- in Rheinfelden (Aargau), a community with a high RDI value: CHF 61,400
- in Bettingen (Basel Stadt), a community with a low RDI value: CHF 36,800
Real disposable income in Swiss municipalities, 2008
Source: Credit Suisse Economic Research, Geostat
According to a UBS study (see graphic International comparison of purchasing power), Switzerland has the highest purchasing power in the world, i.e. the highest real disposable income when compared with prices. The price level in Zurich is the fifth-highest in the world. Only Oslo, London, Copenhagen and Dublin are more expensive. Geneva is in eighth place. Nonetheless, salaries (earned incomes) in Zurich and Geneva can keep pace in an international comparison and are in third and fourth place behind Copenhagen and Oslo.
International comparison of purchasing power (excluding rents), 2009
Source: UBS, Prices and Earnings 2009