The economic impact of the Covid-19 pandemic has hit low-income households far harder than those on high incomes, according to a study published by the KOF Swiss Economic Institute at ETH Zurich.
The study found that those with household incomes less than CHF 4,000 (US$ 4,000) a month have seen income drop by an average of 20% since the start of the pandemic. While households earning incomes of more than CHF 16,000 (US$ 17,600) have experienced an average fall of 8%.
Households on high or very high incomes have reduced their spending the most (-16%) while the average fall in spending among low-income households (-12%) was more muted.
However, the reasons for lower spending were very different. Among those with incomes below CHF 4,000, 11% cut spending because they had less to spend. 39% reported dipping into savings. Wealthier households reported spending less because there were fewer opportunities to spend. 50% of households earning more than CHF 16,000 reported spending less.
Among households earning less than CHF 4,000, 11% reported going into debt to cover current expenses. For those earning over CHF 10,000, the percentage was 2%.
Mental health and trust in politics down
The study looked beyond economics asking questions on mental health and trust in politics. Lower income households reported more significant declines in mental health and trust in politics than than wealthier ones. Unsurprisingly, people affected by unemployment reported the largest fall in mental wellbeing.
Trust in the Swiss Federal Council to manage the coronavirus crisis has dropped significantly over time. Early on in the pandemic, 20% of respondents said they had little or very little trust in the Federal Council. By October 2020, the figure had dropped to 40%, where it has remain, with a greater fall reported among low income households.
The study surveyed 202,516 people across Switzerland from March 2020 until January 2021.