Struggling to make a living in the land of milk and money

Patrick Belser

By Patrick Belser, ILO Senior Economist

Like many people, I like talking to my hairdresser while getting a haircut. Sometimes these conversations can be quite trivial, but what Yvan told me the other day really got me thinking.

Yvan works 43 hours a week but he can barely make ends meet. Mind you, he works as a hairdresser in a salon in Switzerland, a country not usually associated with any form of poverty.

But even in the wealthiest countries, there are those who struggle to get by on their wages.

Yvan told me he makes CHF 3,400 (US$ 3,600) gross per month. Three quarters of the income he generates goes to his employer.

He lives alone, with a small dog, and once he’s paid rent and other bills, he says he’s left with about CHF 1,000 (US$ 1,060). That’s just a little over CHF 30 (US$ 32) a day, which won’t get you very far in Geneva, one of the world’s most expensive cities.

He has asked for a raise, only to be told there are plenty of others who’d love to get his job, particularly residents of neighbouring  France – only a 15-minute bus ride away – where the cost of living is quite a bit lower.

Yvan’s case might sound rare, but it is not.

In Switzerland, 7.7 per cent of workers are considered “at risk of poverty; in the European Union, the figure is 8 per cent. And in the United States, the crisis has increased the share of “working poor” from almost 6 per cent in 2007 to over 7 per cent in 2011. In all, there are close to 30 million workers who struggle to make it to the end of the month in the rich world.

What can be done?

One important way to prevent low wages from translating into poverty is through social security and other transfers which support low-paid workers and also create an incentive for people like Yvan to keep working instead of going on welfare.

These benefits can take the form of tax credits or income support measures which kick in only if people work: total benefits first increase as people work more hours and then they decrease progressively as people get higher wages. France, the United Kingdom and the United States are among the countries that have such programmes.

But these types of benefits put a massive burden onto the state and the taxpayer. There is also a risk that companies look at the measures as a form of wage subsidy which allows them to shift their responsibility to pay decent living wages onto the public.

I was discussing the issue with a colleague. His take was: “Why should I pay the haircut from my wallet and the hairdresser’s salary from my taxes?” He has a point. In-work benefits should be seen as a complement and not a substitute for the living wages that enterprises should pay.

Decent living wages can be enforced through statutory minimum wages, whose levels take into account workers’ needs as well as economic factors, including the need to maintain a high level of employment.

Collective bargaining is even better but unfortunately the number of workers covered by collective agreements is diminishing. I did not ask him, but I’m pretty sure that Yvan is not one of them.

Global Wage Report 2012/2012

6 thoughts on “Struggling to make a living in the land of milk and money

  1. How very true. If this is bad enough in Switzerland, image how many times more terrible it is for us in Malaysia a country where the Government is out rightly supporting the capitalist.

    • Il était temps de voir la question de la pauvreté ou de la précarité (choisir le plus politiquement correcte) en Suisse être enfin abordée (je précise que je ne suis ni suisse, ni ne réside en Helvétie). C’est même un soulagement de voir un article y être consacré. Car pour peu qu’on l’on ait des amis suisses – et non pas des amis « en » Suisse (le plus souvent fonctionnaires internationaux), on ne peut plus sérieusement voir la Suisse comme un pays de cocagne.

      Car pour leur malheur, les Suisses en difficulté sont invisibles, statistiquement noyés sous les salaires des directeurs de banques et autres transnationales. Calamité que ce salaire médian qui permet de taire jusqu’à leur existence. Le revenu moyen par habitant fait rêver le reste du monde. Je ne sais pas à combien il se monte, d’ailleurs peu importe, mais je sais en revanche que les Suisses sont de plus en plus nombreux à vivre sur la corde raide. Il leur est avant tout conseillé d’être en bonne santé et surtout d’avoir de bonnes dents. Les assurances dentaires se prennent quand on est enfant ; une fois adulte, c’est trop tard. Certes, pour tous les autres soins, ils ont des assurances santé …. privées – dont la déontologie n’est pas sans rappeler celle des assureurs automobiles. Les prises en charge maladie, c’est un peu comme le tirage du loto.

      En résumé, être un bon citoyen suisse, c’est s’arranger pour ne pas être frappé par plusieurs « accidents de la vie » en même temps, soit chômage, soit divorce, soit maladie, soit accident. Les mailles du filet social semblent de plus en plus lâches. Mais personne ne comprendrait qu’ils osent se plaindre alors que leur pays est l’un des plus riches du monde. Ils sont donc priés de souffrir en silence, ce silence que l’on dit être d’or….

  2. Excellent post Patrick! Indeed, hair dressers and cab drivers tend to give us very useful insight on the current state of the local economy.

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