The Swiss federal statistics office has published the latest data on income inequality in Switzerland. The figures look at income and show how it is spread across the population. They also show the leveling effect of government redistribution.

There is much talk about the haves and have-nots at this time of the year. Ahead of the WEF gathering in Davos, Oxfam publishes its catchy measure of global inequality: the number of people who collectively own as much as the poorest 50% of the world’s population. In 2010, the number was 388. By 2015, the number had fallen to 62. These 62 individuals own more than 800,000 times that of an average person in the poorest 50% of the globe’s population. The list of the 62 richest is based on calculations done by Forbes.
Income inequality in Switzerland
Recent figures from the Swiss federal statistics office don’t look at wealth. Instead they focus on income, the money most of us rely on to cover our living costs.
In 2013, the top 50% earned 80% of the revenue, while the bottom 50% brought home the other 20%. The government helped to even things up by shifting some of the income of the top half to the bottom via taxes and social benefits. After redistribution the top 50% were left with 70% and the bottom half with 30%. Redistribution helped the bottom 10% the most, multiplying their income 54 times. The second poorest 10% saw their income increased by around 4 times. On the other side, the top 10% had their incomes reduced by 18%.

After redistribution, income inequality in Switzerland has not changed much since 2000. There was a small increase in inequality from 2009 to 2013, however in 2013 income inequality after redistribution was only marginally higher than 2000. One commonly used measure is the S80/S20. This takes what the top 20% take home and divides it by what the bottom 20% earn. In 2000 after redistribution it was 4.3. In 2015 it was 4.9, only moderately higher.

The chart above shows the percentage of income of the top and bottom 20% before and after redistribution.
Wealth inequality in Switzerland
Here inequality is higher and continues to grow. The Oxfam wealth distribution figures show that across the world the top 1% now own 50% of the total. In Switzerland wealth is less skewed. The top 1% in Switzerland owned around 35% of the total in 2015, according the 2015 Credit Suisse wealth report.
Forget the top 1%
Dig deeper and it’s clear that only a tiny fraction of the top 1% hold most of this wealth. Fewer than 4,000 individuals with wealth over US$ 50 million, own 75% of what the top 1% own. These people, known to private bankers as ultra high net worth (UHNW), own 26% of Switzerland’s wealth*. This tiny group is only 5% of the top 1%. They make entry level 1 percenters look comparatively poor – in Europe the minimum level of wealth to get into the top 1% in 2015 was US$ 1.4 million according to Credit Suisse.
The Economist talks about this phenomenon in America. There they say it’s the 0.01% who are really getting ahead.
They cite a study by Saez and Zucman who reckon the main cause is falling middle-class net worth. Underlying this is soaring debt. In America rising home values did little to raise middle-class wealth because mortgage debt rose as at the same time. After house prices fell their equity was squeezed adding to the decline.

The bottom 10%
At the bottom of the wealth spectrum Switzerland scores quite well. Only 1.7% of Swiss have wealth under US$ 10,000. In the US by comparison 28.1% had less than this. The UK (10.0%), France (16.9%), Germany (29.7%), Italy (12.4%) and Australia (7.2%) also all had higher percentages in this bottom band.
The middle
Switzerland’s middle class is well represented. Credit Suisse defines middle class as having wealth equivalent to at least two years average annual salary. For Switzerland this number is US$ 72,900 and all those with net wealth between US$ 72,900 and US$ 729,000 are considered middle class. In Switzerland 45% of the population fell into this band in 2015, putting it ahead of the US (38%), Germany (42%), Sweden (39%) and Denmark (40%). It was behind the UK (57%), France (49%), Italy (60%) and Australia (66%) though.
Broadly, Switzerland managed to keep nearly all of its residents out of the poorest wealth category and maintain a relatively large middle class. And it did this despite having a an oversized number of high net worth – above US$ 1 million, and ultra high net worth – above US$ 50 million individuals.
Which country had the highest inequality?
Russia is the country which stands out in the Credit Suisse report. In Russia the top 1% owned over 70% while the bottom 90% owned less than 3%. Russia had 90 billionaires in 2015.

And where Switzerland succeeded Russia failed. 91.4% of Russians had less than US$ 10,000, and Russia had a puny middle class. Only 4.1% of its population made the cut, not far ahead of Africa (3.3%) and India (3%).
What could stop increasing wealth inequality?
A fall in the stock market and real estate prices would be the quickest way to reduce wealth inequality. This is where most wealth sits. One of the big drivers of stock markets and property prices recently has been central bank policy. Low interest rates have boosted home prices as people borrow more and more to buy them. Low interest rates on bonds have made equity returns comparatively more attractive, pumping up the stock prices of the companies owned by the mega rich.

The chart above shows the correlation between the stock market and the wealth of the richest 62 people.
Notes:
* This calculation is an estimate based on a composite of information from the Credit Suisse global wealth report and Bilan’s list of the 300 richest people in Switzerland in 2013. Some adjustments were made. For example Ingvar Kamprad the founder of IKEA’s fortune was taken out as he now lives in Sweden and transferred most of his wealth to entities beyond his economic control in 2011, according to Forbes.