Economy, Labour Market, Social Insurance and Taxation
What this domain tests
Expect questions on who pays which contribution, what the three-pillar system does, when benefits start and stop, and which level of government collects which tax.
The Basel economy
Life sciences dominate: Roche and Novartis are headquartered here, alongside logistics, trade-fair and financial services. The Bank for International Settlements (BIS), the central bankers' bank founded in 1930, sits in Basel. Tens of thousands of cross-border commuters from Alsace and southern Baden work in the region, and the EuroAirport on French soil with a Swiss customs route symbolises the trinational labour market.
Labour law
The Code of Obligations governs employment: maximum weekly hours of 45 or 50 depending on the sector, at least four weeks of holiday (five for employees under 20), notice periods of one month in the first year, two months from the second to the ninth, three months thereafter. The Arbeitsgesetz adds health protection. There is no federal minimum wage; a few cantons such as Neuchâtel, Jura and Geneva have introduced cantonal ones. Collective agreements (GAV) and the social partnership between unions and employers shape pay.
Social insurance
- First pillar: AHV (old age), IV (disability), EO (loss of earnings); the 13th monthly pension was approved in 2024 and the AHV contribution was raised to fund it. Reference age is 65, with women's age rising to 65 from 2025.
- Second pillar: occupational pension (BVG) for salaries above roughly CHF 22,000 a year.
- Third pillar: private saving, pillar 3a being tax-deductible.
- Health: KVG insurance is compulsory for everyone, with a deductible between CHF 300 and CHF 2,500 and premium subsidies for low incomes.
- Accident (UVG) is paid by the employer; unemployment insurance (ALV) replaces 70 or 80 percent of salary for up to 400 daily allowances.
Taxation
Three levels tax income: Confederation (direct federal tax), canton and commune of residence. VAT is 8.1 percent standard, 2.6 percent reduced. Basel-Stadt also levies wealth tax, property gains tax and church tax. Foreign employees without a permanent permit pay withholding tax at source.
Worked example
A woman lives in Riehen and works in Basel city. Reasoning: income tax on her salary is split – the canton of Basel-Stadt and her commune of residence Riehen each take a share, plus direct federal tax. Church tax applies only if she is a member of a recognised church.
Traps that cost marks
Health insurance is private and individual, not an employer benefit. AHV contributions are shared equally between employer and employee. Unemployment benefits are time-limited and end before social assistance begins.