Redistribution of income through government transfers
The extent of the redistribution in Switzerland is examined in the following analysis by comparing the change in income distribution and inequality before and after government transfers. The primary income is considered as income before government transfers, the disposable income as income after government redistribution. In addition, the gross income represents an intermediate stage in this redistribution process in which part of the government transfers is already considered with the social benefits. The analyses are based on data from the Household Budget Survey (HBS).
Please consult our publications (see "further information" in the French and German pages) for more detailed analyses.
In 2018, the median disposable equivalised income in the total population was CHF 4198 per month, i.e. half of the Swiss resident population have an income above, while the other half have an income below this amount. It has increased by 19% since 2000. After a notable increase from 2008 to 2013, disposable income has stagnated since then. The median primary equivalised income has increased by 25% since 2000 and is CHF 4988 in 2018. As the largely parallel course of both curves shows, the redistribution from primary to disposable equivalised income has remained constant.
Quintile share ratio S80/S20
The quintile share ratio S80/S20 compares in a given population the share of the income of the richest 20% with that of the income of the poorest 20%. The further the quotient deviates from 1, the greater the inequality of the spread of income between these population groups.
The quintile share ratio shows a far more equal distribution of income after government transfers (disposable income) compared with the income before government transfers (primary income). This is in line with social security policy which is intended to even out the unequal distribution of income gained on the (labour and capital) markets through taxes and social transfer benefits.
The development of the quintile share ratio since 1998 shows no substantial change globally considered and taking into account the somewhat wide confidence intervals. Disposable equivalised income tends to show a slight increase in inequality in the years 2003 to 2007 and 2009 to 2013. Since 2013, the trend has been slightly downward. These trends are far more marked for primary equivalised income. However, increases in inequality in this income have only a minor impact on equivalised disposable income, thanks to the government redistribution.
The evaluation of the inequality for the quintile share ratio is based on the outer 20% at both ends of the income distribution. The Gini coefficient is a complementary measure of inequality that takes into account the entire distribution. It shows the extent of inequality on a scale from 0 (perfect equality: everyone has the same income) to 1 (maximum inequality: one person has all the income).
As for the quintile share ratio, the Gini coefficient shows a clear reduction in inequality from the mainly market-dependent primary equivalised income to the disposable equivalised income. Here, too, no major variation in inequality can be observed over the period under consideration. The trends correspond with those of the quintile share ratio.