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ValueS Prosperity and quality of life

An information magazine of the Federal Statistical Office – Number 1 / 2011


74.6% of the Swiss population say they are very happy with their life in general. 2

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Editorial

Measuring quality of life. But how? Jürg Marti Director General, Federal Statistical Office Neuchâtel/Switzerland

The felling of the tropical rainforest in Borneo leads to the irretrievable loss of natural capital. But gross domestic product (GDP) is on the increase there. This is a consequence of the current definition of GDP. A national economy’s economic performance is measured within a specific timeframe. The sale and processing of tropical timber therefore has a positive effect on the GDP. But for some time now, doubts have been increasing as to whether we can be satisfied with a measuring tool that tells us little or nothing about the quality of life or the state of the environment. All over the world and at diverse levels, ideas are being hatched to either get rid of GDP or to add further measurement indicators to it. All of these initiatives have an effect on official statistics and directly upon the Federal Statistical Office (FSO), Switzerland’s centre of competence for statistics. The FSO has been intensely interested in this subject matter for a long time. That is why we are focusing on the subject of “Prosperity and Quality of Life” as seen from various angles in the first edition of our new publication “ValueS”. It fills a gap by enabling the creation of focal points – in addition to the usual statistical output. A subject is expounded upon from the viewpoint of various authors and seen as part of a larger picture. The new publication will appear twice a year. Since the 1990s, the FSO can draw upon great experience and expertise in the measurement of non-monetary values and the corresponding indicators for quality of life and prosperity. What we understand by these terms is explained by our experts in this new FSO publication. We are very pleased to feature an exclusive article article from Eurostat Director General Walter Radermacher, the EU’s Chief Statistician with first-hand explanations of trends in European statistics. In another guest article, Professor Aymo Brunetti, Head of the Economic Policy Directorate at SECO, gives his views on the current GDP debate. I would like to anticipate somewhat the conclusion of the GDP discussion. For the FSO, the “time-honoured” GDP still has many good years ahead of it. But we are ready to face the challenge and are developing additional indicators. The FSO is specifically working on indicators linking social, economic and ecological areas. For Switzerland to walk the statistical path alone would not be productive. We consistently support all attempts at international level to achieve an expanded GDP. We don’t believe in a single mega-indicator, we are thinking more of a universally recognised and easy to use “dashboard” that would unequivocally satisfy the needs of politics and society.

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Focus: Prosperity and quality of life

Prosperity, well-being and quality of life – challenges for public statistics For many years gross domestic product (GDP) was the most important measure of well-being and initially well-being and material prosperity had the same meaning. The concept of quality of life, which was developed in the 1960s as an alternative to the one-sided idea of well-being, resulted in a new but also much more complex target formula that covers all important dimensions of life. Jürg Marti, Jürg Furrer and Tom Priester

The limits of GDP

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he ideas of quality of life and sustainability have recently been revived, for example in the EU’s “GDP and beyond” initiative, in the Commission on the Measurement of Economic Performance and Social Progress (Stiglitz-Sen-Fitoussi Commission), launched in 2008 by French President Nicolas Sarkozy, and in the OECD’s project on “Measuring the Progress of Societies/Better Life Initiative”. Despite their differences, these initiatives have a great deal in common. They are all based on the three pillars of the economy, the society and the environment. The starting point in all cases is a critical evaluation of GDP. One of the objectives of the initiatives is to identify the limits of GDP as an indicator of economic and social development. The aim is not to replace GDP; its conceptual basis, the so-called national accounts, which provide important information about material prosperity, will be retained. However, the dominant role which GDP plays in public discussions will be put into perspective. This will give the concepts of quality of life and of sustainability a new and much greater importance. In Switzerland these ideas were highlighted in the Swiss Federal Council decision on a green economy. This involves, among other things, “complementing GDP with indicators relating to social, economic and environmental developments”. All of these initiatives have a major impact on official statistics bodies, because their job is to provide the necessary statistical information and to establish indicators of economic and social progress and quality of life. However, what do we mean by quality of life and how can it be measured?

From prosperity to quality of life

Prosperity is described using objective indicators of the supply of material goods (standard of liv4

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ing). It is evaluated using available income, GDP or national income and sometimes also consumer spending. In contrast, individual well-being or quality of life – two concepts which are closely linked with one another and very often (as here) used synonymously – enhance the material values of prosperity in two different ways. On the one hand, they take into account non-material components, such as health, freedom, safety and justice. On the other hand, the objective aspects of prosperity are complemented by subjective assessments which include cognitive evaluations and attitudes. A key component of the subjective assessment is self-reported satisfaction with life. Therefore, quality of life is a multi-dimensional concept. It reaches a high level when the objective conditions in the different dimensions of life are good and when, at the same time, they are given a positive evaluation. This assessment is based on a long-term or at least a medium-term perspective. The concept of happiness is quite separate from subjective satisfaction with life. Happiness is not cognitive and, therefore, does not concern reason and judgement. Instead it is affective, which means that it is related to feelings. Another difference between happiness and satisfaction with life is that moments of happiness tend to be brief. Challenge for public statistics bodies

For many years there has been disagreement over whether it is the job of public statistics to collect and publish information on subjective assessments. Some statistics offices are still cautious in this respect. The Swiss Federal Statistical Office has been recording subjective assessments of this kind for some years. These include the questions on satisfaction in the Statistics on Income and Living Conditions surveys and in the Health Survey which cover the subjective components of quality of life. However, the short-term, affective aspects


Focus: Prosperity and quality of life

relating to happiness are not surveyed. The FSO has no plans to develop a happiness indicator or anything similar in the foreseeable future. No definitive decision has yet been made about which indicators of quality of life should be published and in what form. These indicators will form part of the comprehensive information system to complement GDP, which was commissioned in the Swiss Federal Council decision and which will include environmental and economic indicators alongside quality of life and the social aspects. It is clear that the indicators must be internationally comparable. The dimensions of life on which statistical information is published are also clear. These are primarily financial situation, health, education, employment status, housing, social integration and subjective well-being. On the one hand, these dimensions are the social objectives of the Swiss Federal Constitution (article 41). On the other hand, they are the “classic” dimensions of quality of life and social indicators research which also appear in the publications of national and international statistics institutions. It will be important to take into consideration the interdependence of the different dimensions of life. For example, a high level of income is very often accompanied by good education, good health and good housing. However, a person may have adequate resources in some dimensions and, at the same time, be underprovisioned in others. Deficiencies may go along with other deprivations or in some cases even cause them. One particular problem is the accumulation of deprivations, which is often linked to a lack of income, but is not necessarily a result of this. A purely descriptive overview of the objective and subjective circumstances in the different dimensions of life does not provide the

information required. In order to gain a better understanding of individual quality of life and the factors which influence it, it is therefore necessary to carry out more in-depth analyses of the relationships between the individual dimensions of life.

Dr. Jürg Marti is Director General of the Federal Statistical Office, FSO Dr. Jürg Furrer is Senior Scientific Officer of the Economy, State and Social Issues Division, FSO Dr. Tom Priester is Head of Section, Social Analyses, FSO

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“GDP is not a measure of happiness” Interview with Aymo Brunetti Gross domestic product measures the output of an economy – but there are certain gaps in this measure. Do they distort our view of reality? Do we need alternatives? SECO economist Aymo Brunetti would not replace the GDP, but rather supplement it with other indicators. Interview: Marco Metzler1

Mr Brunetti, what are the advantages of the gross domestic product (GDP) measure?

The big advantage is that the GDP is calculated according to an internationally harmonised method, both for annual and quarterly figures. This makes it possible to monitor time series over decades and also to make direct comparisons between countries. It is based on market values – that is to say on things that can be measured directly. What are the disadvantages of the GDP measure?

One should not read too much into GDP figures. GDP is not a measure of happiness or anything of the sort. The GDP measures the production of goods and services traded in markets. Where there are no markets, the GDP has a problem. Household work is a case in point: if members of a family do their household work themselves, this is not included in GDP, but it is if they hire someone to do the household work, because in that case a market transaction is taking place. A second disadvantage is that where there are no direct competitive prices, such as in healthcare and government-related services, it is difficult to determine the value added, i.e. the GDP. Doesn’t the GDP fail to take account of many factors that are of great relevance to society?

That’s certainly the case. GDP is not a reliable indicator of happiness and satisfaction in a country. If we look at politicians across the political spectrum, for all of them, the maintenance of growth in the country 6

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is one of the most important issues. Would it be fair to say that the GDP, which as noted earlier has a number of gaps, pre-determines policy-makers goals more than is warranted?

GDP is closely correlated with many variables that are read into it: satisfaction, prosperity and well-being. Although GDP does not exactly measure these variables, it is closely correlated to them. This is not the case everywhere. For example, if the production of a certain product causes environmental damage, this damage is not measured. Therefore, the GDP does have its limits. Nevertheless, when GDP grows, so do many of the factors that are normally considered to be important, such as job security and average incomes. Switzerland is a prosperous society, which is why growth goes structurally much deeper than, for example, in developing countries. How heavily dependent are we on this growth?

In certain areas, we are certainly dependent on growth. For example, our social insurance schemes require growth for their funding. But in a market economy with a division of labour, productivity increases over time as a result of economic activity and technological breakthroughs. We become increasingly better at what we do and that’s growth. Therefore, there will always be some growth. A recession is defined on the basis of the GDP measure. A recession is defined as two quarters of negative GDP growth. As a result, an economy can be found to be in recession although people are not actually worse off. The media’s multiplier effect then turns

such a GDP recession into a self-fulfilling prophecy. In the end people are really worse off.

I tend not to attach too much importance to two negative quarters. In the end, a recession is only a recession when it hits the labour market. When the economic situation worsens, cyclical unemployment increases, which is what hurts. If the economy shrinks by 0.1% per quarter for two quarters, hardly anyone will notice that decline on its own. Economic fluctuations are primarily a problem due to unemployment. Let’s look at the components of GDP on the demand side. The first parameter is consumption. Many who want to promote growth want to boost consumer spending. Doesn’t this simply lead to over-consumption?

The demand side of the national accounts – consumption, investment, government spending, net exports – is only relevant for the economic cycle and important for short-term fluctuations in GDP. But longterm growth comes from two sources: when more work is done and when work is done more productively. Technology, capital and labour input determine the development of GDP. Consumption, investment and net exports only determine the utilisation of the economy – the demand for goods and services that have been produced. Over the long-term, it is not consumption but rather the development of productivity that is growthrelevant. Regarding over-consumption: As economists we would not say that if consumption grows steadily the country becomes richer, because in that case less would be invested, which is not good for long-term growth. Therefore, consump-


Focus: Prosperity and quality of life

tion is not per se good for long term growth. States as well as individuals often become over-indebted in order to be able to consume today and leave a mountain of debt as a result. For example, we have seen this is come countries in southern Europe. Isn’t the economy growing at the expense of long-term development in such cases?

Yes, that is not sustainable growth. Consumption alone cannot produce growth. But it can perhaps get you out of a cyclical low. You can only achieve true growth through investments and technological progress. If you become over-indebted, that is a sure recipe for smaller growth over the long-term. Let’s talk about the things which the GDP does not measure. GDP tells us nothing about how sustainable growth is, how many non-renewable resources are consumed to generate it and how much pollution it causes. Isn’t that a shortcoming?

Yes, that is certainly a shortcoming. The first and best solution economists propose to make up for this is to internalise external costs. This means setting a price to the environment by introducing incentive taxes or something like that; then you no longer have the problem. But this is not the case everywhere and therefore an exclusive focus on the GDP can lead to the problem that other important components are overlooked. That is why I would not replace the GDP but rather supplement it with other environmental and social indicators. Wouldn’t it make more sense to introduce a type of “Green GDP” for Switzerland?

I don’t think a Green GDP will ever replace the GDP because the latter has the advantages of universal measurability and comparability. The big problem with a Green GDP is that there is no market on which to base it. One therefore has to measure indirectly or find out people’s opinion via surveys. Evaluating environmental goods is exceedingly difficult,

which is why it is very unlikely that there will ever be a green measure comparable to the GDP. But the GDP ought to be complemented with other indicators in order to assess the sustainability of development in a given country. Studies show that the greater the differences in income are, the more dissatisfied the population is. There is therefore an argument to be made that a measure of unequal distribution needs to be introduced, such as the Gini coefficient …

… or the ratio of the poorest 10% to the richest 10% of the population. Distribution measures are an important supplementation. But as to the question of what is the best way to distribute income, that is ultimately a subjective question of perspective. Neither an absolute equal distribution nor a totally unequal distribution are good. But in between it is often very difficult to assess which form of distribution is better than another. This is ultimately a political question. I think it is important to make available such indicators, but they are not easy to interpret. This is less of a problem in the case of green indicators.

of GDP. In various countries alternatives to the GDP are being discussed. Might the GDP also be replaced in Switzerland at some point in the future?

No. It will not only not be replaced in Switzerland but probably nowhere else either. The advantage of international comparability weighs too heavily. Even though it is not a perfect measure, it is a good indicator for many aspects of wellbeing. Additional indicators for environmental quality or income distribution to supplement the GDP are likely to become increasingly important in the future.

Aymo Brunetti is a Professor of Economics and Head of the Economic Policy Directorate in the State Secretariat of Economic Affairs (SECO).

GDP ultimately says nothing about citizens’ satisfaction. Shouldn’t a measure be introduced which measures the well-being of society as a whole?

Happiness research is on the upswing in economics. It tries to find out how satisfied people are by means of surveys and experiments. But given that this cannot be determined in markets, for example, the measurement of happiness will never be completely accurate. Just as sustainability and distribution indicators to supplement GDP ought to be taken into consideration, so should happiness indicators. It has been observed, however, that these are correlated with growth. When there is high GDP growth, there is generally also an increase in satisfaction. Happiness indicators are potentially interesting to evaluate the quality of growth. In the Kingdom of Bhutan, they measure gross domestic happiness instead

1 This is an abridged authorised version of the interview which was published on 26 May 2011 in the online edition of the Neue Zürcher Zeitung; reproduced with kind permission of the Neue Zürcher Zeitung AG.

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Quality of life is also being able to take part in political and social events.

A sufficient energy supply is essential to maintaining our prosperity. 8

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In Switzerland life expectancy in good health is currently one of the highest in the world and is even continuing to rise slightly.

In 2009 the utilised agricultural area decreased by 2400 ha – roughly equal to the surface area of the Walensee. FSO ValueS

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Measuring equitability, sustainability and quality of life in the European Union (EU) Measuring overall societal development and progress in a renewed measurement and political context. Walter Radermacher

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he Beyond GDP Conference (2007)1 revealed strong support from policy-makers, economic, social and environmental experts and civil society for developing indicators that complement GDP, providing more comprehensive information to support policy decisions. In September 2009 the publication of the “Stiglitz Report” made headlines in the news media and, almost at the same time, the European Commission published its Communication on “GDP and Beyond: Measuring progress in a changing world” presenting its actions to better measure social, economic and environmental goals. These actions include complementing GDP with environmental and social indicators (including measuring quality of life and well-being), more accurate reporting on inequalities, and extending national accounts to environmental and social issues. Building on earlier work resulting from the EU sustainable development strategy, these actions take renewed importance in the context of the EU 2020 strategy – aimed at promoting a smarter, greener and socially inclusive growth – which the European Council approved in June 2010. A joint effort within the European Statistical System (ESS2)

Supporting the economic recovery and reaching the Europe 2020 headline targets does not only require political support for stronger governance, but also a sound and up-to-date statistical basis “fit for purpose”. The National Statistical Institutes’ response to this renewed policy environment was the Sofia Memorandum whereby the Directors-General of National Statistical Institutes listed – in September 2010 – priority areas of work for statistics in the EU, EFTA3 and Candidate Countries. Earlier in 2010, the ESSC4 created a Sponsorship Group “Measuring progress, well-being and sustainable development” which is actually preparing recommendations on households’ perspective and dis10

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tributional aspects of income, consumption and wealth, on environmental sustainability and on multidimensional measures of quality of life. Within the ESS, many building blocks are already available, such as indicators measuring sustainable development (SDIs), employment, social inclusion, social protection and equality. The Sponsorship Group will find new ways to better structure and analyse available statistics and to steer the implementation of the recommended indicators; it will also propose a medium-term strategy to develop new statistical data in undercovered domains. For results and indicators to be comparable between countries, high quality statistics are required which need to be collected according to a commonly agreed statistical ‘language’ that embraces concepts, methods, structures and technical standards. Eurostat and its partners have committed themselves to common ESS quality requirements as laid down in the European Statistics Code of Practice.

1 Organised by the European Commission, together with the European Parliament, the Club of Rome, the WWF and the OECD. 2 The ESS is the partnership between the Community statistical authority, which is the Commission (Eurostat), and the national statistical institutes (NSIs) and other national authorities responsible in each Member State for the development, production and dissemination of European statistics. The ESS also coordinates its work with Candidate Countries and Switzerland. 3 Iceland, Liechtenstein, Norway and Switzerland 4

Complementing averages with distributions

Household surveys provide micro-economic information on the distribution of income, consumption and wealth. Averages or medians of these statistics do not tell the whole story about living standards: they need to be accompanied by indicators that reflect their distribution across persons or households. Ideally, all three dimensions of material living standards (income, consumption and wealth) should be published, as well as their joint distributions. It would give a better picture of how well off households are. The good news is that plenty of data are already available in Eurostat’s databases – primarily in the Labour Force Survey (LFS) and in the EU Statistics on Income and Living Conditions (EU-SILC). Growth and environment

Another important topic mentioned in the reports on measuring progress is the importance

European Statistical System Committee


Focus: Prosperity and quality of life

of better measuring the environmental dimensions of growth and progress. The Commission will explore the possibility of developing a sustainable development scoreboard that would be complementary to the current set of sustainable development indicators. National accounts will be extended to cover environmental issues by increasing the coverage in the already existing environmental accounts. Since countries are not obliged to provide such data, an EU law has been developed, to be adopted in 2011. Material flows, environmental taxes and air emissions are the three most ‘mature’ areas for our environmental accounts legislation. Areas such as environmental goods and services, energy productivity and environmental protection expenditure accounts could be developed at a later stage, as well as forest, water, and waste accounts.

detail into all these issues and already agreed that EU-SILC should be further developed as a core instrument for measuring quality of life. Further information

Eurostat has created special web pages on the EU2020 headline targets and on ‘GDP and Beyond’ on its website and is planning to publish a first set of well-being indicators in 2011. Information on the Commission’s ‘GDP and Beyond’ communication and actions can be found on www.beyond-gdp.eu

Walter Radermacher is Chief Statistician of the European Union and Director General of Eurostat, the EU’s statistics office

The challenge to measure quality of life and well-being

Complementing GDP with social indicators related to quality of life and well-being is particularly important according to the EC Communication and the Stiglitz Report. However, as is widely known, well-being and happiness are not exactly easy to measure. Key dimensions that are considered to determine quality of life are: material living standards; health; education; personal activities – including work; political voice and governance; social connections and relationships, environment, and security, both physical and economic security. For most of these domains basic data are already available in the ESS. In particular the EU-SILC is very helpful to monitor problems affecting a large proportion of the European population; it provides information on poverty, deprivation and social exclusion and allows to make analyses according to socioeconomic background and over-time. In other domains, such as access to green spaces, political voice, governance, there is still a need to invest in data availability and comparability. Well-being – which is the outcome of quality of life – deserves more attention. The Stiglitz Report stresses the importance of both objective and subjective indicators of well-being. Recent research shows that it is possible to collect meaningful and reliable data on subjective well-being; this involves variables such as general life satisfaction, positive and negative emotions. The Sponsorship Group is looking more in FSO ValueS

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The measurement of social progress: an international effort There is more to life than money. Experts have known this for a long time: variations in GDP reflect economic activity without taking any account of social and environmental impacts or individuals (it is not designed to!). The Stiglitz-Sen-Fitoussi report serves as an appraisal and a work plan for the statistics offices of the OECD member countries. Sébastien Morard

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ever before has the political world been so concerned with quality of life. The 2008 crisis created a strong international demand for indicators. These demands include the need for indicators that more accurately reflect people’s lives. The Stiglitz-SenFitoussi Commission’s report on the «Measurement of Economic Performance and Social Progress» commissioned by the French President, Nicolas Sarkozy has brought together various international statistical studies to establish indicators that are more directly relevant to citizens. The Commission made 12 recommendations in order to assess the standard of living in households (income, consumption, capital), quality of life (from health to economic and physical security) and sustainable development (environmental and socio-economic indicators). The aim is not to create a revolutionary indicator that summarises all the aspects that make life worth living, but to complement the rudimentary gauge that GDP constitutes. The OECD has been at the forefront of these efforts since 2004. In 2010, following the report, its Council of Ministers adopted as a strategic priority the better measurement of social progress. The statisticians set to work and the first specific result will be appearing in June 2011 in the form of a series of indicators concerning quality of life, then this autumn in the form of a publication that reviews around 10 aspects of quality of life. It is also possible to work out your own index of quality of life on the OECD site. The European Union is also active: back in 2009 it announced a desire to go «beyond GDP». The European Statistical System (in which Switzerland takes part) is devising a common plan of action. Finally, 20 years on from the Earth Summit in Rio, the UN is working on the sound measurement of sustainable development. 12

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These initiatives are necessary to quickly agree on how to provide high-quality, comparable statistics on such a complex subject. Furthermore, the political demand is great: the British, French, Japanese and South Korean governments and the German Bundestag have all asked their statistics offices to conduct studies in this purpose. The Swiss Federal Council wants to supplement GDP with indicators of social, economic and ecological trends. As an OECD member country, Switzerland contributes to the methodological work and to statistical studies. The FSO is not working in isolation: the Swiss studies will benefit from this international momentum.

Sébastien Morard is scientific collaborator “International Affairs”, FSO

1 Organisation for Economic Co-operation and Development 2 www.stiglitz-sen-fitoussi.fr 3 See www.oecd.org: Compendium of key well-being indicators; how’s life? My better life index. 4 http://www.beyond-gdp.eu/  


Focus: Prosperity and quality of life

Income and living conditions of households in Switzerland Interview with Anne Cornali Schweingruber and Stéphane Fleury SILC1 is a survey on income and living conditions which is conducted and coordinated in 25 European countries. It is also conducted in Switzerland, as a consequence of the bilateral statistical agreement signed with the European Union. Since 2009, current and comparable data have been collected every year on income, living conditions, work, education and health. This year, 17,000 people in 7000 Swiss households took part in the telephone survey. Interview: Caroline Schnellmann

What are the objectives of SILC or the SILC survey?

The SILC survey looks into household incomes and living conditions. Its purpose is to collect data on the income sources which households or their members have, on compulsory expenditures and on housing conditions (costs, housing environment and accessibility to basic needs). People are also asked how satisfied they are with different aspects, such as their life in general, housing conditions, health, work, social relations, personal safety, amount of free time, leisure activities and financial situation. The survey also looks into the material deprivation which households may face. This type of deprivation is defined as the inability, due to financial reasons, to deal with various situations or to benefit from certain advantages such as, for example, coping with an unexpected expense of CHF 2000, comfortably heating the home or having access to various consumer goods. Thus this survey allows a broad ana­lysis of living conditions to be conducted, by taking into account the concepts of well-being and income distribution, with an emphasis on the households’ per­spective. Can you confirm from the SILC results that money does not necessarily make people happy?

If we look at the average satisfaction rating based on the level of equivalised disposable income, SILC reveals that people’s satisfaction with their financial situ-

ation or state of health rises significantly with their income level. On the other hand, satisfaction with housing conditions only depends very slightly on the income level. When it comes to satisfaction with personal relationships, the level remains the same on average, regardless of the decile of equivalised disposable income the person belongs to. The conclusion we may draw from this is that money does doubtlessly contribute to personal happiness, but is only one of many factors to do so. Are the Swiss happy overall?

Yes. The level of satisfaction among the po­­ pulation living in Switzerland is high. In 2009 three out of four people (74.6%)  said they were very satisfied with their life.2 An analysis of satisfaction with respect to certain specific areas of people’s life shows that the relational aspects (living with other people, working environment, personal relationships) are the areas which have the highest rating among those who claim to be very satisfied. On the other hand, the aspects linked to personal financial situation and living alone are the areas which have the lowest rating among people from this group. The least satisfied people feature mainly among the groups which are most disadvantaged economically (people of foreign origin, except for nationals from Northern and Western Europe, people with a low level of education, unemployed persons, those living in singleparent families). The social groups most satisfied with their life are people aged

65 or over (especially if they live with a partner), Swiss nationals and those who have completed higher education. In spite of this high level of satisfaction, does poverty exist in wealthy Switzerland?

One of the key indicators provided by the SILC survey is the at-risk-of-poverty rate. Anyone living in a household whose financial resources are significantly scarcer than the average level of income in the country in question is considered as being at risk of poverty. Poverty is therefore regarded as a form of inequality, which depends on the economic situation of other people in the country under review. By convention, the European Union sets the at-risk-of-poverty threshold at 60% of the median of the equivalised disposable income. In 2009, 14.6% of the population in Switzerland, meaning almost one person in seven, was at risk of poverty. The most affected social groups are those comprised of people living in single parent (31.7%) or large (27.2%) families, people who have only completed compulsory education (25.0%), unemployed (23.8%) and other inactive people (20.5%), foreigners (20.6%), especially nationals from non-European countries (30.3%),women of all foreign nationalities combined (22.7%), and lastly children aged 0 to 17 years (18.3%). The term “material deprivation” gives an indication of the extent of social exclusion. Do people at risk of poverty in Switzerland suffer material deprivation? FSO ValueS

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As part of the SILC survey, the existence of deprivation makes it possible to measure social exclusion in more absolute terms. Material deprivation is defined as the lack of consumer durables which most people consider to be essential or the absence of minimum living conditions both of which must be attributable to a lack of financial resources. The risk of poverty expressed in financial terms obviously affects living conditions. Consequently, people who are at risk of poverty have a considerably higher level of material deprivation (18.1%) than those who are not (4.8%). Almost half (42.7%) of the former group do not have the resources to meet any unexpected expense, whereas only 18.1% of of the latter experience this problem. Almost one person in four at risk of poverty (23.5%) does not have the means to take a one week holiday every year, compared with 8.5% of people not at risk. In the case of certain social groups, the links between financial poverty and material deprivation are more complex. For example, while foreign men and young adults (aged 18–24) are not particularly at risk of poverty, their level of material deprivation is much higher than that of the population as a whole. In contrast, large families and children (aged 0–17) are prone to be exposed to risk of poverty but do not particularly suffer from material deprivation. Finally, the 65 and over age group is a very special case. They are particularly exposed to risk of poverty, but their level of material deprivation (3.2%) is considerably lower than that for the population as a whole (6.7%).

more unequal the income distribution. This ratio was calculated for Switzerland in 2009 and can be compared with that for our European neighbours during the same period. The ratio for Switzerland is 4.4, which means that the incomes of the most advantaged are 4.4 times higher than the incomes of the most disadvantaged. By comparison, the average value for this ratio in the European Union is 4.9. Compared with our neighbours, the ratio is 3.7 for Austria, 4.4 for France, 4.5 for Germany and 5.2 for Italy. We are therefore somewhere in the middle in Europe in terms of level of economic disparity.

The SILC survey is conducted across the whole of Europe. This allows an international comparison to be made. Is it true, as it is frequently heard, that Switzerland is one of the countries with the widest economic disparities in the world?

The results of the 2010 survey will be published in December 2011 and those of the 2011 survey in December 2012.

One of the SILC indicators measures the ratio between the incomes of the 20% richest and those of the 20% poorest. This is an indicator that reveals the inequality of income distribution in a particular society. The higher this ratio, the 14

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Does a person at risk of poverty living in Switzerland enjoy a higher standard of living than a similar person living in Portugal, for instance?

In an attempt to answer this question, one can compare the at-risk-of-poverty threshold in Switzerland with that of our neighbours. In order to take into account the differences in cost of living, we suggest comparing the at-risk-of-poverty thresholds in terms of purchasing power parity3 (PPP). The comparison of the at-risk-of-poverty thresholds in terms of PPP shows that Switzerland has one of the highest thresholds, with only Norway and Luxembourg scoring higher. However, we are not too far ahead of our neighbours. Switzerland’s threshold expressed in PPP is 1.2 times higher than that of Austria, 1.3 times higher than that of Germany and France and 1.5 times higher than that of Italy. By when will the 2011 results have been evaluated?

Anne Cornali Schweingruber is Head of the Income, Consumption and Living Conditions Section, FSO Stéphane Fleury is Head of the SILC survey, Income, Consumption and Living Conditions Section, FSO Caroline Schnellmann works as an independent journalist

1 SILC stands for Statistics on Income and Living Conditions 2 Score of 8, 9 or 10 on a scale ranging from 0 (totally dissatisfied) to 10 (totally satisfied). 3 Purchasing Power Parities provide information on the varying purchasing power of currencies in different countries. They enable, for example, comparison of the relative price levels of different countries.


Focus: Prosperity and quality of life

Subjective assessment of quality of life, according to various socio-demographic characteristics, 2009 Share of population aged 16 years and older with high satisfaction1 in terms of

Total population Age group 16 – 17 18 – 64 18 – 24 25 – 49 50 – 64 65 and older Sex and nationality Women Swiss women Foreign women Men Swiss men Foreign men Nationality Swiss women Foreign women Northern and Western Europe Southern Europe Other countries Level of education (persons aged 18 or over) Compulsory education Upper secondary level Tertiary level Employment status (persons aged 18 or over) Employed persons Unemployed persons (based on ILO definition) Pensioners Other economically inactive persons Household type 3, 4 Childless households Single person under age 65 Single person aged 65 or over 2 adults under age 65 2 adults, 1 of whom is aged 65 or over Other Households with children 5 Single-parent family with child(ren) 2 adults with 1 child 2 adults with 2 child 2 adults with 3 or more children Other Residential status 4 Own home Rented home

1 2 3 4 5

life in general

+ / -

74.6%

1.0

51.4%

1.1

70.2%

0.9

81.2% 73.4% 72.1% 72.1% 76.4% 78.9%

4.2 1.1 3.2 1.5 1.7 1.8

55.8% 47.9% 37.4% 45.3% 58.0% 65.1%

5.1 1.2 3.1 1.6 2.0 2.2

77.6% 72.3% 76.3% 74.4% 66.4% 60.4%

4.3 1.0 3.0 1.4 1.9 2.2

75.0% 76.8% 67.4% 74.2% 78.3% 61.0%

1.2 1.2 3.8 1.3 1.2 3.8

51.8% 55.2% 38.1% 50.9% 55.2% 37.3%

1.4 1.4 3.9 1.4 1.5 3.6

68.2% 68.9% 65.5% 72.4% 74.0% 67.0%

1.3 1.3 3.8 1.3 1.3 3.5

77.5% 64.0% 73.3% 59.9% 59.3%

0.9 2.9 4.0 5.4 5.1

55.2% 37.7% 50.6% 30.6% 32.7%

1.1 2.8 4.4 4.6 4.8

71.3% 66.3% 72.2% 59.7% 67.6%

0.9 2.6 4.1 4.6 4.6

66.9% 75.3% 79.2%

2.6 1.2 1.7

44.0% 50.9% 59.3%

2.6 1.4 2.0

59.6% 71.0% 78.0%

2.5 1.2 1.6

74.8% 41.4% 78.7% 72.0%

1.2 7.6 1.8 2.4

49.4% 15.8% 66.4% 44.6%

1.3 5.4 2.1 2.5

75.1% 62.7% 59.9% 63.2%

1.2 7.2 2.1 2.6

62.7% 73.3% 76.8% 82.0% 71.0%

2.9 3.3 2.0 2.1 4.3

44.1% 60.8% 54.3% 67.6% 46.7%

3.0 3.6 2.4 2.6 3.9

66.4% 55.4% 72.2% 63.4% 69.9%

2.8 3.7 1.9 2.5 3.6

59.5% 76.2% 77.1% 77.5% 75.2%

5.4 3.4 2.6 3.7 4.0

37.4% 41.5% 50.6% 49.8% 43.8%

5.6 3.6 3.0 4.5 3.9

68.9% 74.4% 75.2% 79.6% 74.4%

4.9 3.1 2.4 3.7 3.4

81.5% 68.7%

1.2 1.5

61.0% 43.2%

1.4 1.5

72.5% 68.3%

1.2 1.4

2

their own financial situation

+ / -

2

their own state of health + / -

2

Values ​​in the 8–10 range on a scale from 0 (not at all satisfied) to 10 (completely satisfied). Boundaries of the 95% confidence interval. The group “other household types” is not included in this table, because there were too few of them in the sample. Persons in a household with these characteristics. All persons under age 18 and economically inactive persons aged 18–24 who live with their father and/or mother are considered as children.

Source: FSO, Survey on Income and Living Conditions, SILC-2009 version 25.11.10, including imputed rent. FSO ValueS

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Focus: Prosperity and quality of life

Measuring sustainable development What does sustainable development mean and how well is Switzerland performing? Are we on the right track or is there still a need for action? The MONET indicator system provides the fundamental data to answer these questions in the three dimensions of social solidarity, economic efficiency and environmental responsibility. Caroline Schnellmann and Cornelia Neubacher

T

he concept of “sustainable development” is generally associated with actions showing awareness of the environment or environmentally friendly economic growth. However, the concept involves far more than that. It consists of a system of ideas which relates both to the present and the future and which has a social dimension alongside its environmental and economic dimensions. So what is sustainable development and how can it be measured? Sustainable development is a political objective

In 1992 the United Nations Conference on Environment and Development took place in Rio de Janeiro. The focus of the conference was on relieving pressure on global ecosystems by introducing the paradigm of sustainable development. One particularly important finding was that environmental problems and social issues cannot be regarded in isolation. Switzerland signed the Rio Declaration and, since 1999, has been working to implement a policy of sustainable development involving social, economic and environmental aspects, in line with the new Federal Constitution. The political objective resulted in the need for a tool which would make it possible to measure whether Switzerland was moving in the right direction and whether the action being taken was adequate. A measurement tool, the “Monitoring Sustainable Development” indicator system, also known as MONET, was developed jointly by the Federal Statistical Office (FSO), the Federal Office for the Environment (FOEN) and the Federal Office for Spatial Development (ARE). 16

FSO ValueS

The economy, the environment and society

The definition in the Brundtland report: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs” lies at the heart of the political discussion on sustainable development and forms the starting point for the creation of MONET. This definition puts the focus on people and the fulfilment of their needs and is based on intra- and inter-generational solidarity. On the basis of this definition, a system of indicators was developed in a process involving several stages, which could be used to measure sustainable development in three areas of life: society, the economy and the environment. The terms used by the Swiss Federal Council were chosen for the MONET project to identify these so-called target dimensions: social solidarity, economic efficiency and environmental responsibility. The principle of equality of the three target dimensions also applies, which means, for example, that measures to preserve the environment must be economically efficient and that economic policy decisions must be environmentally and socially responsible. Postulates, subject areas and indicators

So far, so good. But what exactly does MONET measure? A total of 45 postulates were identified in relation to the three target dimensions. These are concrete requirements which specify the direction in which we should develop. For example, the basic principle of social solidarity is as follows: “Each member

of society has a right to the dignity of human life and to the free development of their personality. Democracy, legal stability and cultural diversity are guaranteed. The limits of individual development are set where the human dignity of other contemporary individuals or of future generations is compromised”. Experts chose around 130 indicators on the basis of the postulates, which allowed the requirements of the postulates to be evaluated. In 2009 the number of indicators was reduced to 80. In the area of society, for example, three of the indicators relate to health, education and social cohesion. Seeing the wood for the trees

Even 80 is still a large number of indicators. “One of the major challenges of MONET is ensuring that the many measurements which we take are meaningful”, explains Anne-Marie Mayerat Demarne, head of the Environment, Sustainable Development, Territory section. For this reason, a set of 16 key indicators was identified which makes it possible to give an overview of the progress of sustainable development. Is Switzerland on the right track?

How high is our quality of life? Are our resources fairly distributed? What are we leaving behind for our children and how efficiently do we use our resources? The results from MONET show both positive and negative trends in Switzerland. For example, health is improving and the public transport share is increasing. However, on the other hand the unemployment rate (based on ILO definition) is rising and built-up areas are growing in size. In areas such as income and the


Focus: Prosperity and quality of life

Overview of key indicators, presented according to three qualitative objectives

Social solidarity Teenage reading skills Physical safety Health Unemployment Income Official Development Assistance

Environmental responsability Built-up areas Biodiversity

Equality

Passenger transport Freight transport Material consumption

Economic efficiency Investment Innovation and technology Public dept

Energy consumption

reading ability of young people the de- to their country of origin are increasing, velopment has been neutral. which can help to contribute to sustainable development abroad. Switzerland’s The global dimension of sustainable consumption of foreign fair-trade proddevelopment ucts remains at a neutral level. The Swiss lifestyle and economy are closely interwoven with those of other Dashboard of the sustainable countries as a result of global interaction. development Therefore, globally relevant sustainabil- The Dashboard of the Sustainable Deity indicators were added to the MONET velopment Strategy of the Swiss Federal system as part of a joint project involving Council offers further detailed insights the Swiss Agency for Development and into the MONET results, which are updated annually. The interactive internet Cooperation (SDC) and the FSO. The lifestyle of people in Switzerland tool can be found on www.monet.adis not currently sustainable, because we min.ch. On this site there are also pocket are using far more resources than we are statistics for MONET, a leaflet covering entitled to as a global average. On the the key indicators, the brochure Sustainother hand, spending on development able Development in Switzerland – Indiaid and the amounts of money trans- cators and Comments and other reports ferred by migrants living in Switzerland and publications on the subject.

Caroline Schnellmann works as an independent journalist Cornelia Neubacher is scientific collaborator in the Communications Section, FSO

FSO ValueS

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Commitment to a healthy environment is a service for today's and future generations. 18

FSO ValueS


Our consumer behaviour influences society, the economy and the environment. FSO ValueS

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FSO Recent: Statistical Social Report

Swiss Statistical Social Report 2011 On 18 May 2011, the Federal Council adopted the first statistical social report compiled by the Federal Statistical Office. Based on selected statistical information, the report describes Switzerland's economic and social development in recent years, as well as its impact on the social situation of the population. Thomas Ruch

T

his report aims to meet the statistical requirements set out in the Rossini postulate of 2001. Within the framework of the Federal Statistical Office's social reporting, it combines the published results of statistics on the social situation compiled over the past 10 years. The social report focuses on social risk situations and population groups that are most affected by social exclusion processes. To this end, the report identifies possible correlations between structural changes in economy and society on the one hand and the risk of social exclusion on the other. Structural changes

Changes in the economy and the structure of the labour market over the last 20 years have been characterised by growing specialisation and increasing productivity. As a result, there is increased demand for personnel with higher qualifications. Moreover, the educational level of the economically active population, both of Swiss and foreign nationality, is rising continuously. At the societal level, there is an observable trend away from the traditional family to one-parent or patchwork families. This goes hand-in-hand with a decrease in the number of children per woman and the tendency of members of social strata with higher levels of education to have fewer children. Risk of social exclusion

People who have a below-average education or who have to provide for children are at higher risk of social exclusion. This applies to single-parent families in particular. Consequently, the level of education has an important bridging function both for the development of the economy in general and for the material situation of households. In this context, a division of society into two camps can be observed: on the one hand, 20

FSO ValueS

well-educated people who have little risk of social exclusion; and on the other hand, poorly educated people who run the risk of failing to meet the demands of the labour market and to be permanently excluded from it. The latter run the risk of economic deprivation and are also exposed to higher health risks. Government expenditure

State-regulated social security is becoming increasingly important. It still functions well in the areas of traditional risks such as old-age, illness and disability. Social security helps to minimise the risk of social exclusion for these population groups. Total expenditure on social security, which currently amounts to CHF 145 billion, is more than twice what it was 20 years ago. The Statistical Social Report is a synthesis of existing information and will be published once per legislative period in the future. It is available in German and French.

Thomas Ruch is Head of the “Social Security Systems� group, SOZAN section, FSO


FSO Recent: Population growth

Demographic growth in all cantons over the next 25 years According to new scenarios for population change in the Swiss cantons produced by the Federal Statistical Office (FSO), between 2010 and 2035 all cantons will register positive demographic growth. This growth will be primarily attributable to international migration. However, it will not be uniform throughout Switzerland and will be greatest around the Zurich metropolitan area and around the Lake Geneva region. Raymond Kohli

Different population dynamics in the cantons

T

hanks to relatively favourable net migration and a sufficiently high birth rate to compensate for the increase in the rising number of deaths, the cantons of Vaud and Fribourg will register the highest demographic growth in Switzerland over this period. Their population will grow by more than 20%. At the other end of the scale, the cantons of Uri, Jura and Neuchâtel will increase by only 2 to 3%. These low increases will be mainly due to negative net migration between cantons. Key contribution of international migration

Until 2035, demographic growth will be mainly attributable to net immigration. For example, the canton of Basel-Stadt will be able to stabilise its population

size thanks to immigration from abroad. Other cantons, such as Graubünden and Ticino, should also benefit from immigration from abroad. In cantons within the sphere of influence of major urban agglomerations, such as Aargau, Fribourg and Thurgau, immigration from other cantons will be the main engine of demographic growth.

intercantonal net migration balances will be less favourable to these cantons in the future. At the same time, the number of deaths will increase due to the high number of elderly persons, with the result that natural population growth – i.e. the difference between births and death – will in effect gradually become negative in all cantons.

Slowdown of demographic growth due to population ageing

Considerable increase in people aged 65 or over in all cantons

The cantons of Fribourg, Valais, Nidwalden, Schwyz and Zug, which registered the highest demographic growth rates over the last 25 years (increases of 30% – 45%), will grow considerably less in the next 25 years. The main reason for the slow-down in demographic growth will be the ageing of the population. Because older people change their place of residence less often than young adults,

In the next 25 years, the number of people aged 65 or over is expected to double in 6 cantons: Obwalden, Fribourg, Nidwalden, Aargau, Schwyz and Thurgau. Because baby boomers will be reaching retirement age, the number of people in this age group will increase considerably in all cantons. The smallest increases should be in Basel-Stadt (+23%), Neuchâtel (+49%), Schaffhausen (+57%), Bern and Geneva (+58%).

Demographic growth rate, 2010 – 2035* Raymond Kohli is scientific collaborator “Scenarios and Methodology”, DEM section, FSO SH BS

TG BL

JU

ZH

AG

AR

SO ZG SZ

LU

NE

BE

GL

NW OW

FR

UR

VD

GR

TI GE

AI*

SG

VS

Average annual growth rate, per 1000 inhabitants ≥ 6.0 4.5 – 5.9 3.0 – 4,4 1.5 – 2.9 < 1.5 Switzerland: 4.7‰

Source: FSO, DEM section © FSO, ThemaKart, Neuchâtel 2011

* Scenario AR-00-2010 FSO ValueS

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Portrait : FSO in Neuchâtel

Federal Statistical Office: since 1998 in Neuchâtel The relocation of the Federal Statistical Office (FSO) from Bern to Neuchâtel in October 1998 marked an important turning point in the history of Swiss statistics. The FSO’s various sectors of activity were brought together under one roof for the first time. The transfer of eleven offices from Bern to a single location in Neuchâtel strengthened communications and the development of integrated statistics.

22

FSO ValueS


Portrait : FSO in Neuchâtel

T

he relocation of the Federal Statistical Office was rooted in the efforts to decentralise the Swiss federal administration which began in the early 1980s. After Bauart architects had won the contract with their “TGV” project in 1990 and Parliament had approved the building project worth CHF 130 million in 1992, work could begin on the main building in 1993. In 1998 what is now the main building was finally ready. The Federal Statistics Act which came into force in 1993 assigned the FSO additional tasks, entailing an increase in staff and office space. The tower built next to the main building between 2001 and 2004 provided space for 245 further members of staff, thus increasing total capacity to 720. This meant that the remaining FSO units in Bern could now also be transferred to Neuchâtel. The administration building, which is 50 metres and 14 stories high, serves as the flagship for the FSO and its glass façade represents maximum transparency. In terms of urban planning the FSO emphasises the importance of the train station as a strategic site for development. Pioneering achievement

The FSO buildings designed by Bauart architects and Planer AG are a pioneering achievement in the area of sustainable construction. One of the key objectives of those involved in the project was to create a healthy and high quality working environment and to lower energy consumption by increasing efficiency; at the same time, as much renewable solar energy as possible was to be used. These efforts garnered numerous awards, including the Architecture Prize from the Swiss Association for Ecological Construction (1997) and the Swiss and European Solar Prize (1998), as well a selection among the “Best 50” category for the Energy Globe Award in Vienna (2001). The construction of the main FSO building was followed by that of the tower, which was awarded the Minergie ECO label and which was also nominated for the “Architecture Award of French-speaking Switzerland” in 2006. Overall, the two new buildings were a catalyst for the urban renewal of the whole area surrounding the railway station in Neuchâtel.

Key data Height of tower: 50 m Length of tower: 29 m Height of main building: 20 m Length of main building: 240 m Workplaces: 720 (475 in main building, 245 in tower) Construction costs: CHF 157 million (130 million main building, 27 million tower) Archive area: 2800 m2 Underground car park: 104 spaces in first ­basement floor.

FSO ValueS

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Imprint Published by: Federal Statistical Office (FSO), ­Neuchâtel, www.statistics.admin.ch Project management: Cornelia Neubacher and Ulrich Sieber, FSO, Division Publication and communication Information: Communication Section , Tel. 032 713 60 13, email: kom@bfs.admin.ch Authors: Jürg Marti, Jürg Furrer, Tom Priester, Marco Metzler, Sébastien Morard, Walter Radermacher, Cornelia Neubacher, Caroline Schnellmann, Thomas Ruch and Raymond Kohli Production and Layout: Netthoevel & Gaberthüel, Biel Photos: Valérie Chételat (cover page/p. 2, 8/9, 18/19), Ruedi Walti (p. 22/ 23) Translation: FSO language services Order number: 1215-1101 (free of charge) ISBN: 978-3-303-00451-7 Obtainable from: Federal Statistical Office, CH-2010 Neuchâtel Tel. 032 713 60 60/fax 032 713 60 61 email: order@bfs.admin.ch Copyright: FSO, Neuchâtel 2011 Reproduction with mention of source authorised (except for commercial purposes)

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Prosperity and quality of life

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