Swiss sink deeper into debt

Many teenagers are ringing up huge mobile phone bills Keystone

The number of Swiss facing debt and bankruptcy has increased dramatically over the past few years, reflecting changes in consumer behaviour.

This content was published on November 1, 2004 minutes

According to the debt collectors’ association, ten per cent of the country’s households owe large sums of money.

Debt collection firms dealt with 1.6 million cases last year – more than double the figure for 2002.

The money owed reached a total of SFr829 million ($690 million) compared with SFr715 million the previous year.

The Swiss have traditionally had a reputation for paying their bills on time, but a survey last year showed that standards were slipping.

The study, conducted by credit management company Intrum Justitia, revealed that the Swiss now take on average 44 days to pay bills which should be settled within 30 days.

Financial worries were given as the chief reason for late payment, and debt experts say the problem is being exacerbated by changing consumer habits.

“Some people feel they must spend money to exist, to be a part of society,” said Pierre Ammann of the Bern-Jura Protestant Social Centre, a charity that also offers financial advice to those in need.

Ammann said fighting debt was becoming increasingly tricky in the face of advertising which encouraged people to buy now and pay later.

According to a recent study by Bern’s School of Social Studies, the number of compulsive shoppers or “shopaholics” has doubled in the past ten years, rising to 275,000, mostly young women.

Young consumers

Another consumer study in 2003 found that shopping was the favourite leisure activity for Swiss teenagers. They spend around SFr600 million each year, making them a lucrative target for advertisers.

Mobile-phone bills and the use of credit and debit cards are seen as two of the root causes of teenage debt.

Many youngsters also wait until the last possible moment before paying their bills – behaviour which continues when they become adults, say experts.

Four out of five heavily indebted people started spending too much before the age of 25.

A national campaign is being launched this week to make young people aware of the risks of overspending. “Max.Money” is aimed at 16- to 25-year-olds and will last for five years.

Working poor

The trend towards overspending means that individuals burdened by debt no longer pay their taxes or their health insurance premiums on time, if at all.

Taxes are the biggest problem, constituting around half of all unpaid bills. But health insurers also face a shortfall of more than SFr300 million each year, which is usually picked up by the cantons and municipal authorities.

Pierre-Alain Champod of the Geneva Protestant Social Centre said these were all signs that more and more people were struggling to keep their heads above water.

“There are many people with low incomes who are vulnerable to the slightest hiccup in their lives,” he said.

These so-called “working poor” represent about 6.5 per cent of the population, or 220,000 people, according to national statistics.

However, Caritas, Switzerland’s biggest charity, says around 850,000 Swiss residents live on the poverty line.

If somebody fails to pay their bills in Switzerland, their income can be seized to pay back creditors.

This has led to many people getting by on the so-called “basic minimum”, the amount considered necessary to live on that varies from canton to canton.

swissinfo with agencies

Key facts

Ten per cent of Swiss households are seriously in debt.
In 2003, debt collectors dealt with 1.6 million million claims, versus 588,000 the previous year.
The sums owed last year were worth SFr829 million.
Unpaid health premiums are worth between SFr300 million and SFr400 million each year.

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