A healthy economy reflected by an increasing income equality

Income inequality has not stopped increasing globally over the past years. However, it keeps decreasing in Switzerland since 2009.

According to a recent report published by the economic research and consulting firm BAKBasel and the Economical faculty of the University of Basel (WWZ), the income disparity has been declining in Switzerland since 2009.

The above may sound surprising given the gap between rich and poor has kept widening in most regions. “We have reached a tipping point. Inequality in OECD countries is at its highest since records began,” said OECD Secretary-General Angel Gurría, launching the organization’s latest report called In It Together: Why Less Inequality Benefits All. According to the OECD, a long-run increase in income inequality not only raises social and political concerns, but also economic ones. It tends to drag down GDP growth, due to the rising distance of the lower 40% from the rest of society. Lower income people have been prevented from realizing their human capital potential, which is bad for the economy as a whole. Deepening Income Inequality has been identified by the World Economic Forum as the number one challenge in its Top 10 Trends of 2015.

Switzerland ranks 12th among the OECD countries in terms of income equality with a grade of 0.285 (0 being complete equality and 1 complete inequality). A strong labor market with a low unemployment rate and a high proportion of women, a solid education system and outstanding human capital as well as a progressive taxation - these are all attributes which help Switzerland reduce the gap in incomes, ultimately a sign of prosperity for a nation’s economy.

For more information, please refer to the Handbook for Investors (chapters 2 and 8).

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