It is based on the theory of purchasing-power parity (PPP.
The Economist also uses a “gratifyingly simple” way of calculating purchasing-power parity by using the price of a Big Mac. According to the January 2019 Big Mac Index External link, the Swiss must pay $6.45 for the same burger that would cost $5.58 in the United States, meaning the franc was overvalued by 18.7%. THE BIG MAC index was invented by The Economist in 1986 as a lighthearted guide to whether currencies are at their correct level. On average, total household consumption expenditure in Switzerland is around 60 percentage points higher than the European Union average, according to Eurostat figures External link.ĭespite those expenses, some of the highest salaries in the world mean the inhabitants of Zurich and Geneva enjoy considerable purchasing power: they rank second and fourth worldwide on this indicator, sandwiched by Los Angeles and Miami, UBS found.Īs a comparison, whereas a worker in Cairo, Egypt, would have to spend some 133 working days before being able to buy the latest iPhone, a worker in Zurich only has to wait 4.7 days, UBS says. In these cities, rent on a small apartment of two bedrooms can easily exceed $2,000 per month, while compulsory health insurance (at least $335 per month), transport costs (average $468 per month) and groceries (average $458 for a single person) quickly chip away at your salary. You can find minimum wage data here and the Big Mac index. But do the people earning a Swiss wage see these sky-high costs the same way?Ī study by the UBS bank published in May 2018 found that Zurich and Geneva top the list of the world’s most costly cities, ahead of Oslo, Copenhagen, and New York. In the EU, Denmark, Italy, Cyprus, Austria, Finland and Sweden are the only countries that don’t have a minimum wage by statute. This content was published on Aug 21, 2020Switzerland is eye-wateringly pricey.