The integration of expatriates in Switzerland

Home to many multinational companies, Switzerland is considered one of the best places in the world in which to live and work. While it ranks amongst the top 10 nations for job security and salary levels, it does not fare so well when it comes to the ease with which expatriates are able settle in. (5)

This difficulty in adapting can be explained by several factors (6), in part by the severe pressure on the property market, and amongst others the challenges associated with cultural integration. According to InterNations’ 2024 Ease of Settling In Index (7), Switzerland is among the lower rated countries in this ranking, with Zurich in 49th place, Basel in 47th and Geneva in 35th. In all three cities, a large proportion of expatriates report that their main friendships are with other expatriates (65% in Zurich and 58% in Basel, compared with 37% worldwide), reflecting the difficulty in forming ties with locals.

Back in 2021, the newspaper Le Temps highlighted the “lack of conviviality” in Switzerland and the difficulties expatriates have in feeling at home (8). The diversity of local languages is another obstacle to integration, reinforcing the feeling of being a foreigner, even after several years in the country. What’s more, the strong regional identities of the Swiss can be difficult to grasp for foreigners who have not been prepared for this diversity. (9)

Given this low ranking in terms of installation and integration, how can the situation be improved?

The challenges of living in a new culture

Living in a new environment brings with it a host of challenges, involving both work and family.

For the expatriate, this project raises several questions:

• What are the social rules in the new country?

• How can I develop a professional and personal network to help me feel included?

• What is the work-life balance like in the new country?

• Do I have to learn the country’s official language?

• Will my family and I be able to thrive in this new environment?

• Will my standard of living remain the same? What aspects are likely to change, improve or deteriorate?

• Are expectations in terms of work culture and communication clear and understandable?

Whether on a professional or personal level, expatriates must take the time to assess the gap between their own culture and social norms, and those of the host country.

Culture shock can lead to frustration and disengagement, especially if there is no support to help navigate these challenges.

Misinterpretations related to processes, and communication can lead to misunderstandings, and ultimately to complicating adaptation. Integrating into a new culture is a process of transformation which, although sometimes emotionally and logistically difficult, also offers a great opportunity for personal fulfilment, broadening of horizons and enriching discovery.

Vacancy rate

In Switzerland, the housing vacancy rate is historically low, particularly in urban areas. The further fall in this rate, as seen below, is an indicator of an increasingly tight market, since a vacancy rate below 1% means that virtually all rental properties on the market are occupied.

According to the Federal Statistical Office, this rate fell from a national average of 1.54% in June 2021 to 1.15% in June 2023. This trend is reflected in most of Switzerland’s cantons, with 3 and 4 room flats being the hardest hit by this fall.

Construction of new buildings

In 2020, the arrival of COVID in Switzerland forced construction work to stop, resulting in delays of between 6 months and 1 year, or even cancellations. As a result of this crisis, other factors are affecting the construction industry, such as rising construction costs and labour shortages.

In addition, the new law on town and country planning, introduced with the intention of regulating urban development and preserving the environment, has unintentionally slowed the construction of new homes. As the legislation made the process more complex and costly, and the number of building plots and areas available dwindled, the entire new-build industry experienced a decline in activity. As a result, planning permission for apartments has fallen to its lowest level for 20 years.

Rent increases

Due to the housing shortage, rising interest rates and the energy crisis, rental prices “will continue to rise sharply” over the next few years, according to Fredy Hasenmaile, Chief Economist at Raiffeisen bank in Switzerland.

On the one hand, rents for newly let properties have risen by an average of 4.7% over the past year.

On the other hand, existing rents, i.e. the prices of rental contracts that have been in force for some time, also rose by 2.2% in 2023 (the highest since 2008). The fact that the benchmark interest rate has twice been adjusted to 1.75% has enabled lessors to increase the rents on existing contracts.

This rise in rents has a direct impact on household budgets, which must take into account the fact that rents cannot exceed 25% of a gross annual salary (up to 30% in some cantons). According to the Swiss Federal Statistical Office, rents are highest in the cantons of Zug, Zurich, Schwyz, Nidwalden, Geneva, Basel and Vaud.

What kind of future are we heading for?

Tackling the housing shortage in Switzerland is a complex challenge: the challenge is to meet not only the country’s economic requirements but also its social and environmental needs. The federal government is currently examining measures to combat the housing shortage. Since the decline in construction is one of the main causes of this shortage, the emphasis is on increasing supply.

These measures could include reforms to urban planning and construction policies to facilitate the emergence of new housing:

• by densification,
• by further construction on current buildings, thereby raising the height of buildings,
• by converting offices and hotels into housing.