The secret reason Switzerland is the world’s top destination for skilled professionals

City life, nature and high salaries: top talent from all over the world is drawn to Zurich. Keystone / Anthony Anex

In many wealthy countries, immigrants earn less than locals despite being qualified. But in Switzerland, this wage gap is non-existent. Why?

By international standards, workers coming to Switzerland from abroad can generally expect high salaries. What is less widely recognised is that their foreign citizenship seems to have little effect on their pay.

In many wealthy countries, immigrants earn less than local workers. Even when age, education, work experience, industry and location are comparable, a substantial difference remains. In Switzerland, that gap all but disappears, particularly for immigrants from the European Union and the European Free Trade Association (EFTA).

The finding is all the more striking given Switzerland’s success in attracting highly skilled workers. It has topped the IMD World Talent Ranking for years and ranks second in the Global Talent Competitiveness Index. It is also among the most appealing destinations for highly skilled workers, according to the Indicators of Talent Attractiveness published by the Organisation for Economic Co-operation and Development (OECD).

Equal qualifications do not mean equal pay

A report by the International Labour Organization (ILO) shows how sharply Switzerland differs from its international competitors. It finds that a systematic pay gap exists between local workers and immigrants in many advanced economies.

Even after adjusting for explainable differences, a 10% wage gap remains on average in most of these countries. The disparity is particularly notable in occupations facing staff shortages, with women disproportionately affected. In high-income countries, immigrant nursing staff earn an average of 19.6% less than their non-migrant colleagues, according to the ILO.

Switzerland, however, stands as a clear exception to this international trend. Immigrants in Switzerland face relatively little disadvantage when it comes to pay, even when compared to other countries competing for highly skilled workers such as Denmark, the Netherlands, Ireland, and Sweden.

There is an important caveat: the ILO data cover 2015 to 2020. The organisation says it has no newer figures that allow comparisons between countries.

What the latest Swiss figures show

A more up-to-date picture comes from Switzerland, where the State Secretariat for Economic Affairs (SECO) has compared the pay of Swiss and foreign workers.

Immigrants from EU/EFTA countries earn just 1.1% less than Swiss workers after adjustment, a difference within the range of statistical uncertainty. “These findings suggest that immigrants arriving under the free movement agreement generally ask for, and secure, similar pay to Swiss nationals,” SECO said in a written response.

Workers from outside the EU/EFTA earn 4.5% less than Swiss workers after adjustment. SECO mainly attributes this larger gap to structural factors. Their qualifications may be harder to compare with Swiss credentials or be less readily applicable in the Swiss labour market. Language barriers probably also play a part.

The central finding remains that there is almost no systematic pay gap between immigrants from EU/EFTA countries and their Swiss counterparts.

Why Switzerland is different

Switzerland’s narrow wage gap is not the product of unusually strong legal safeguards against pay discrimination. Its Gender Equality Act protects against unequal pay on grounds of gender, but Swiss employment law has no equivalent act specifically covering origin or nationality.

The explanation lies instead in who comes to Switzerland. Around 77% of long-term immigration over the past 15 years has been under the free movement agreement with the EU/EFTA. Many of these workers are highly educated, with qualifications that are relatively easy to compare to Swiss credentials. Some already speak one of Switzerland’s national languages. Others are employed by international companies that mainly work in English.

The unusually small gap in salaries thus reflects a combination of factors. It is a result of highly skilled, mostly European immigration, and a Swiss labour market in which these skills can be relatively well utilised. The exceedingly high salaries of highly specialised professionals and executives likely also play a role in raising the average.

Switzerland’s little-known advantage

In choosing where to move, job candidates rarely consider this statistic, says Christian Atkinson, country director of recruitment firm Robert Walters in Zurich, which specialises in executives and highly skilled professionals.

Most candidates from abroad do not even know this narrow wage gap exists, he says. What matters to them is how much they will earn. Yet Switzerland’s appeal has a flipside. Wages are high, but so is the cost of living.

“High salaries play a role, but they are often tempered by the extremely high cost of living,” says Atkinson. “In the end, people usually still have more disposable income to invest or save for retirement, but those who come only for the money are often disappointed.”

For Atkinson, a candidate wanting to move to Switzerland purely for the money is “a red flag”. The “overall package” has to be right, he says. This includes safety, natural surroundings, lakes, mountains and the quality of life for children.

The narrow wage gap between Swiss workers and immigrants from EU/EFTA countries may not be the factor that attracts droves of highly skilled professionals. But for those who do come, this little-known advantage helps ensure that high-paying Swiss salaries live up to their reputation.

Adapted from German by David Kelso Kaufher/ds