Nova workboard

a blog from young economists at Nova SBE

POVERTY IN ONE OF THE RICHEST COUNTRIES OF THE WORLD.

Switzerland historically used to be a poor country – especially in the alpine region. The strength of the reputation of the textile industry in St. Gallen, the word of technological development in Great Britain, the continental blockade due to Napoleon’s wars and readily available hydraulic energy possibilities nourished the early industrialisation of Switzerland and its rise as a highly technologized export country. Today Switzerland ranks as one of the richest countries in this world with a GDP per capita (PPP) only exceeded by Luxembourg, Ireland, Norway and San Marino in Europe (IMF Data 2016). Nonetheless, poverty is not to be underestimated in the heart of the European continent.

To put it bluntly, the meaning of poverty in Switzerland might differ from how poverty is experienced in many other countries. Elaborating what being poor in Switzerland means is the purpose of this post.

 

Applying the definition of absolute poverty used by the UN – i.e. living with US$ 2 or less a day – the phenomenon most probably is not very prevalent. Dealing with poverty in Switzerland one has to be aware that this rarely means fighting for bare survival – the measurement applied and of concern here is the relative poverty in comparison to the total population. Poverty in Switzerland contains two categories: Absolute and At-Risk of poverty. Given the subsidiarity principle incorporated in the Swiss system, the practical implementation and definition of poverty and corresponding social welfare varies among the 26 Cantons and their municipalities. Relative poverty or the category At Risk of poverty follows the definition of the European Union at 60% level of the available median income, which in 2015 was at approximately 30’000 CHF in a one-person household (exchange rate: €1 = 1.08 CHF). In Switzerland, 14.6% of the population are considered to belong to this category with large differences in demographic characteristics. Example given, People living alone, no kids, and younger than 65 years old are at 2.5 times higher risk than couples in the same age group without kids. For couples younger than 65 years and with kids the risk of falling into this category increase with the number of kids in the household (3.7 times less than with three kids). A special case of the people at the risk of poverty are found in the elderly: 21.8% or 27.2% if they are alone respectively. In comparison with the rest of Europe the monetary value expressed in PPP is ranked third after Norway and Luxembourg and in percentage terms is slightly below the European average.

The terms of reference published by the Swiss conference for social welfare (SKOS) acknowledges the absolute poverty level at a level, where people in a household do not own the funds required to consume and buy the necessary goods and services for a socially integrated existence. According to the SKOS 6.6% of the Swiss population (530’000 in 2014) are affected by absolute poverty with single parents, alone standing people, persons without further education than mandatory and unemployed people with especially increased risk. Similar to the numbers of at risk of poverty this category is also dominated by individuals older than 65 years and large differences whether they live alone or not. Furthermore, the highest amount of the people in this category didn’t pursue more than just the mandatory education. Furthermore, 3.3% of the Swiss labour force are part of the absolute poverty category. This is considered a special case as working in general is seen as mean to decrease poverty. Most of the individuals affected in this group work part time or in intervals.

As example for victims of Swiss poverty one may look at the children affected: 73’000 children in Switzerland are concerned, 30% living in households with no salaries and 70% in working-poor families. Consequences of this poverty are e.g. lack of money, no adequate possibilities to do their homework, noisy and humid apartments in neighbourhoods troubled by vandalism and violence. These kids are not capable of pursuing a hobby requiring monetary contributions (e.g. football clubs) or going on holidays. This is regarded as non-conforming with the requirements of what is considered a socially integrated existence.

 

Although poverty in Switzerland compared to the largest number of other countries may be perceived as a marginal problem – both nationally and internationally – it would be a mistake to trivialise this subject.

Xaver Schenker

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Author: studentnovasbe

Master student in Nova Sbe

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