Switzerland's financial centres have a reputation as costly places to live. Two new reports suggest this is not really the case.
Last month, Mercer Human Resources Consulting, the employee benefits consultant, produced a report suggesting senior managers in Switzerland have the highest real income of senior executives anywhere in Europe. At an average of 94,175 (€133,009), Swiss executives earn more than their other European counterparts, Mercer found. And after calculating their purchasing power based on tax, social security deductions and the local cost of living, it found Swiss executives could buy nearly 50% more than their counterparts in France and the UK.
The findings are substantiated by Mercer's newly released Worldwide Cost of Living Survey. Rental of a two bedroom luxury flat costs €1,487 per month in Zurich, €2,004 in Geneva, €1,900 in Paris and €2,472 in London, says Mercer. However, a hamburger and chips is cheaper in London and Paris at €6.38 and €5.90 respectively, compared to €7.05 in the Swiss cities.
Bankers lured by lifestyle
Switzerland's high standards of living and newfound cost effectiveness are prompting bankers to move there, say recruiters. Philippe Le Gallo, a director at Swiss financial services recruiter Sources Expert, says he receives 10-20 applications a week from bank employees currently based in London, Paris, Frankfurt and Milan: "It's about quality of life," he says, "It's better to live near Lake Geneva than in the London suburbs."
Isabelle Quehen, of recruiter Isabelle Quehen Conseil, reports a similar trend: "We get a lot of applications from people based in Paris and London who want to come here for the quality of life."
Christian Sulger-Buel, managing director of Sulger-Buel & Company, a private banking headhunter, says people tend to move from London to Zurich or Geneva when their children start growing up. "London's great for single people and couples with young kids," he says. "But if you have to pay for your kids to go to an English school it becomes very expensive. Europeans aren't used to paying those kinds of school fees."
Bonuses or mountains?
The average company executive may earn more in Switzerland, but the same doesn't necessarily to hold true for bankers. According to headhunters, Swiss bonuses are low.
"In the London, some banks will pay you a bonus almost without limitation," says Le Gallo, "In Switzerland it's rare for bonuses to be more than 50% of salary."
"In Switzerland the tradition is to pay higher base salaries and lower bonuses," says Sulger-Buel. The head of private banking at a UK bank could expect a base salary of 150,000, he says, plus a bonus of 200% to 300% of this. In Zurich, the salary may be 20% higher says Sulger Buel, but the bonus is typically just 50% to 100%.
Bankers contemplating a move to Switzerland need to weigh the financial disadvantages of a lower bonus against the advantages of living near Swiss mountains and lakes, say recruiters. Excitement may also be factor: "The quality of life in Switzerland is tremendously high," says Sulger Buel, "It's also very boring, but that's another thing..."