Working less can earn you more

Families in Switzerland earning two full-time incomes risk having less money in their pockets than if one of the working parents has a part-time job, says a study.

Monika Bütler, a professor at St Gallen University, published a report on Thursday showing it was not necessarily in a parent’s best interest to work more than 24 hours a week if the other parent has a full-time job.

The higher one parent’s income, the less profitable the second parent’s income can become, as childcare costs and taxes eat disproportionately into the second paycheck, the study found.

Bütler considered several scenarios. For a family of four, if one parent earns SFr100,000 ($86,580) a year and the other SFr60,000, childcare fees and taxes incurred for working a fourth or fifth day outweigh the extra earnings.

That helps explain why the majority of families in Switzerland with two children have one parent employed full-time and another at 60 per cent, or three days a week.

Two parents earning the same salary from two full-time jobs yields the highest disposable income with one child.

Single parents with one child earn the most disposable income by working more than 40 hours a week. At least 42 per cent of the income earned on the sixth day of work remains in those parents’ pockets.

Single parents with two children, however, should work only 80 per cent, or four days a week. Those families lose the most disposable income on the fifth day of work.

Officials say the study helps demonstrate why Switzerland’s tax system is no longer appropriate for the contemporary family. A revision is currently underway at the federal level.