Slow income growth

Middle class outdone by rich and poor

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Daycare is a major financial burden for the middle classImage Caption:

Daycare is a major financial burden for the middle class (Keystone)

Switzerland’s middle class has never enjoyed as much income as it does today, but the richest and poorest groups of the population have seen theirs grow more substantially, according to a study released by the liberal think tank Avenir Suisse.

Sixty to 80 per cent of the population are considered middle class, and while they are not particularly wealthy, they do not face major financial problems either.
 
A couple without children with a revenue between SFr67,000 ($70,800) and SFr150,000 belongs to this category, as does a couple with children and income between SFr94,000 and SFr210,000.
 
Over the past 20 years, real income for the Swiss middle class has increased six to eight per cent, better than in most other countries, including Switzerland’s neighbours. Despite this, a feeling that the middle class has not benefited from economic growth as much as other categories is widespread, and according to the think tank this is backed up by figures.
 
Real income for the middle class has not increased as much as it has for the upper and lower classes. For the top category, revenue growth has been up to 15 per cent, while for the bottom one it is around ten per cent.
 
Over the past 20 years, higher education has become more valued on the job market. A degree is worth 45 per cent more salary for men over an apprenticeship, and more than a third more for women.
 
For those who have completed vocational training, the salary with unqualified workers has also shrunk. Avenir Suisse says this is largely due to technological progress and outsourcing that put jobs that rely on vocational training under pressure.
 
On the other hand, high-value jobs such as research and development or consulting that are more creative, or simpler positions such as sales, cannot be automated or outsourced.

State to blame?

True to its traditional line, the think tank also points the finger at the state, blaming taxes and the redistribution of revenue for the unease of the middle class. While lower-income categories benefit from state intervention, much of the middle class is hardly doing better financially than lower-class households.
 
Families where both parents work suffer enormously from means-tested fees for crèches, for example. Once all costs including taxes are paid, up to 90 per cent of the second family income is gone, reason enough for many women to stay out the job market and hinder upward mobility, according to Avenir Suisse.
 
Pointing at other issues such as subsidies for health insurance premiums and housing, the think tank suggests replacing means-tested social policies with a “user pays” system, lifting the financial burden from the community.  
 
However, taxing the rich more is not an option for Avenir Suisse, which says they would just leave the country if the tax environment was no longer favourable.

 
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