Switzerland might not lead Europe on average income (GDP), but it wins on cost, according to recent Eurostat data.
The nations leading on per capita GDP in 2020 were Luxembourg and Ireland. Average GDP per resident was 2.63 times the EU average in Luxembourg and 2.09 times in Ireland. Switzerland, came in third with GDP per head of 1.60 times the EU average.
However, on costs, Switzerland takes the lead with prices 1.59 times the EU average in 2020. Luxembourg is the fourth most expensive (1.29 times the EU average) and Ireland the seventh (1.20 times).
Switzerland’s costs stand out compared to its neighbours. Germany (1.11 times the EU average), France (1.09) and Austria (1,04), while above the EU average, are all cheaper than Switzerland. Italy (0.99) comes in a little below the EU average.
Areas where Switzerland is particularly expensive include education (2.75 times the EU average), health (2.27), housing and energy (2.06) and groceries (1.72). Grocery expenditure can be be reduced by shopping across the border or at the German supermarkets present in Switzerland. However, Switzerland’s high housing, health and education costs are difficult to avoid.
The reasons behind Switzerland’s high prices are largely structural. There is little competition in some sectors and Switzerland has seen relatively little of the online disintermediation seen in European nations such as France, Germany and Italy. Another problem is high-priced wholesale contracts thrust upon Swiss retailers, which leave little room for Swiss retailers to spare customers on price. Tariffs on the importation of some food items such as meats hit Swiss pockets too. It is sometimes thought that high Swiss wages are behind Switzerland’s high prices. However, significantly higher payroll taxes paid by employers in the surrounding nations often mean staff cost little more or even less in Switzerland than in nearby places.
It is worth noting that GDP is only one measure of income. On mean and median household income measures, Switzerland is ranked top. In 2020, the mean household income in Switzerland was EUR 50,643 (CHF 52,700), higher than in Luxembourg (EUR 43,688), Ireland (30,543), Austria (29,503), Germany (27,520), France (24,850) and Italy. Switzerland also led on median household income with EUR 42,967 (CHF 44,700). In Luxembourg (EUR 37,844), Austria (26,555), Ireland (26,250), Germany (23,460) and France (21,739) median household incomes were lower than in Switzerland.
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Markus says
The Swiss mafia control shopping, competition and prices. If you start and success with a nice business it will be bought up and crushed by the Micro and COOP kings.
Renaud says
GDP per capita does not provide money in households for spending. Fortunately you added the household income paragraph.
Chris Mykonos says
Great, thank for the info. Happy holiday!
Paul says
I lived in many places, the most greedy retailers are in Switzerland. Please stop blaming foreign companies for the greed of swiss retailers.
Anonymous says
“Another problem is high-priced wholesale contracts thrust upon Swiss retailers”
Not true at all, Swiss Retailers are the ones dictating the contracts and the conditions set out are much higher than our European Neighbours (even when comparing to Nordic) and it’s a big reason why Digitec has taken the electronics market away as their cost block (conditions) are small in comparison
Le News says
It isn’t always the case but it does exist. Foreign companies enter into exclusive agreements with Swiss importers/retailers at higher wholesale prices. This is a particular problem when the Swiss retailer has limited negotiating power, which is more likely when there is no alternative supplier or substitute product and grey market activity is difficult. Published material material is a good example of this. Electronic equipment is a great counter example where there’s enough competition, helped along by effective online disintermediation. It largely comes down to how a particular market is structured.
Anonymous says
It really isn’t, example is certain administration items like Inventory reporting Swiss retailers charge a fixed fee which is non-negotiable, No other EU country retailers do this and never at the high amount charged.
Vendors then add this cost to the COGS, so you are going to pay a higher price
Le News says
Yes. That is the point. Swiss retailers faced with higher COGS compared to EU retailers will find it difficult to offer low prices to customers. And this happens in Switzerland.
Anonymous says
Again, that’s not what happens! You are arguing with some who deals with DACH based customers across a spectrum of verticals .Most vendors have the same prices across Europe,
So base COGS is the same. Then the cost to deal with that retailer is then factored in and added. Swiss retailers charge more than any other DACH customer. Even basic things that are free from others they will charge.
So COGS x Cost to deal with retailer pushed Swiss retail prices up. The main reason Digitec Galaxus took the market is they made the price to deal with them cheaper than traditional retail. It resulted in lower prices
Le News says
It sounds like you have a lot of expertise in this area. And it is clear from what we have seen that your description fits with reality much of the time. So we agree. But from what we have seen it does not explain everything. There are many structural features of Swiss retail that keep prices inflated. The one you allude to (a lack of retail competition) is probably the biggest. As you say, Galaxus offered lower prices and took the market, forcing the prices of the goods it sells down across the market. But there are parts of the market where it is different. Automotive and published material (in French at least) are two areas where Swiss retailers and foreign brands together inflate Swiss prices. How the extra margin is split between the foreign brand and Swiss retailer is rarely clear. But the split probably largely comes down to relative negotiating power.
Michael McCann says
You cannot logically use Irelands GDP comparatively and expect a sound result. The Country’s GDP is hugely inflated by the concentration of Tech HQs, and Pharma exports. Irelands GDP figure is meaningless.
Also Swiss energy costs are not particularly high. Apartment rental is also not particularly high, particularly if a purchasing parity fklter is employed.
Le News says
Yes, you make a valid point regarding GDP. We have added a paragraph on household incomes versus GDP. Thank you for pointing this out.