Incentives to spend more on sales, easy credit cards, all part of the growing problem of indebtedness
GENEVA, SWITZERLAND – One in 10 people in Switzerland given notice by debt collectors is in Geneva, which has the country’s highest rate of overdue debt payments. One in five persons in Geneva is in arrears, an RTS public broadcasting report shows, with 2012 a record-breaking year: 280,000 debt collection noticed were delivered.
The figure is 30 percent higher than 10 years ago, the report shows, with an increase of 14,000 a year for the past three years, a worrisome rate of increase for Olivier Chollet of the Office des Poursuites in Geneva, interviewed by RTS.
High rents, relatively high unemployment, youth unemployment and health insurance increases are cited in as the reasons for Geneva’s high rate of individual indebtedness.
Easy to obtain credit cards and advertising that encourages special offers are part of the problem, Ivan Devenoges, social assistant social in the Service des Affaires socio-culturelles at the University of Lausanne told Etudiants, a student web site, last September. Students who come to him often have problems paying their health insurance or reimbursing student loans.
Federal statistics for 2011 (most recent) on the level of individual indebtedness in Switzerland show the percent of the population living in a household that is behind on its debt payments. Mortgage arrears are the lowest category. Foreigners, who also have a higher unemployment rate than the Swiss, are behind on debt payments to roughly double the rate of Swiss households:
- mortgage arrears: total 0.8 percent – Swiss women 0.8, foreign women 1.3, Swiss men 0.7, foreign men 0.8
- water, electricity, gas, heating bills in arrears: total 3.4 percent – Swiss women 2.8, foreign women 5.0, Swiss men 2.7, foreign men 6.5
- health insurance: total 4.1 percent – Swiss women 3.1, foreign women 7.0, Swiss men 3.1, foreign men 8
- non-real estate borrowing (credit card debt, leasing and car loans, etc.): total 9.3 – Swiss women 6.3, foreign women 11.8, Swiss men 7.4, foreign men 16.
The figures also show that a higher percentage of northern Europeans is in arrears on mortgages than southern Europeans, while those from the south have a far higher level of late payments for utilities; both are well below the rates for Swiss residents from other countries.
The growing level of debt of young people is often cited as a concern, given the ongoing debate about the value of financial education at school. The figures must be nuanced, argue researchers in Lausanne and Fribourg in a paper published in early 2012, which points out that many of the debts are to parents and other family members. The authors note that amoung young people under age 26, foreigners (25 percent) are more affected than the Swiss (14 percent), couples are more likely to be in debt than individuals (17 versus 10) and people who work fulltime (21 percent) compared to those working part-time (11 percent).
Also see: How debt collection works in Switzerland
