How to compare job offers

by | Nov 10, 2021 | Life Planning, Personal Finance | 0 comments

Comparing job offers goes beyond comparing salaries. There are also vacation days, advantages, perks and… the hidden salary.


When hunting for a new job, a lot of parameters enter the equation. For instance, what kind of job is it? For what kind of company? How long is the commute? But I can’t really help you there. I can only say: you should work a job you don’t hate, for a company you’re not ashamed of and that is located at a distance that you’re comfortable traveling to every day.

One parameter I can help you with is the compensation package. It’s not easy to find your way into the gross and net salaries, the second pillar contributions, and the different perks that an employer offers. At the end of the day, we just want to know: Taking everything into account, does this company offer more than my current one for my time?

To compute the worth of the compensation package, we will go through five steps:

  1. Compute the annual working time
  2. Calculate the net annual salary
  3. Quantify the perks and advantages
  4. Identify the hidden salary
  5. Put it all together

The annual working time

Unbeknownst to most foreigners, there isn’t a legal weekly working time in Switzerland. There is a legal maximum though, set to either 45 or 50 hours per week depending on your position in the company and the branch.

But (thankfully) most of us work between 40 and 42 hours per week. It doesn’t seem like much of a difference between 40 and 42 but… there is!

Let me give you an personal example:

My first employer had a 41 hours week with 22 days of vacation per year. My current employer requires 42 hours weeks with 25 days of vacation per year. Which one is best?

Well, there are around 250 working days per year (that fluctuates from year to year depending on when the holidays fall). So let’s convert everything in days: 41 hours per week, that’s 8.2 hours per working day (42 makes 8.4). So a full year of work at my first employer meant: (250-22) days at 8.2 hours per day = 1870 hours per year. My current employer requires 1890 of work per year.

So that’s Step number 1: calculate how many hours of work is required per year, considering the vacation days and the weekly hours. (250- # of vacation days) x # working hours per day.

Calculate the net annual salary

One thing you should know is that all salary discussion in Switzerland are on a gross basis. The salary they offer you is not the salary you get at the end of the month on your account.

You can compute the net salary based on a few inputs: the gross salary, the second pillar contribution, and the insurance contributions (and who pays them).

The gross salary is the amount on which your social contributions and retirement contributions are calculated. So let’s do the math:

Virtually everyone is Switzerland has to pay IV/AHV contributions. These are social contributions to finance disability insurance and the first pillar of retirement. For someone employed, the contribution represents a flat 6.4% of the gross salary. We’ll call that number (1).

Then your employer is generously forcing you to save for your second retirement pillar. And here, things get complicated. See, the federal government doesn’t mandate how much your employer should set aside for you. It sets a minimum rate though. And that minimum rate is… age-dependent.

But if that wasn’t complicated enough, the rate isn’t applied on your gross salary. No, that would be too easy. The rate is applied on a weird construct called the « insured salary », which is essentially your yearly gross salary minus the coordination amount (which can also vary, but is usually around 25k). So, typically, someone earning a gross 100k per year will have a 75k « insured salary ». And the rate will be applied on this insured salary to determine how much is taken out of your pay check every month.

So how do we solve this? Well, you have to dig into the documentation provided by your future employer. Find out how much the coordination amount is. Find out how much is the second pillar contribution rate for your age (disregard the company contribution for now). Then calculate how much is (yearly gross salary – coordination amount) x contribution rate. We’ll call that number (2).

Finally, your employer may (or may not) charge you with various insurances, such as the life insurance premium of your 2nd pillar. That’s not so easy to find out but the amounts are not crazy either. If you don’t have any infos on this, be conservative and assume that an extra 1% of your gross salary disappears. We’ll call that number (3).

Step 2: Yearly gross salary – (1) – (2) – (3) is your net annual salary.

The perks and advantages

Some employers provide a cell phone, others a car, others a SBB GA. Some employers will give you REKA checks or a lunch check card. Still others will provide additional child allowances. It’s hard to be exhaustive.

But all those perks have a monetary value that is usually easily quantifiable. For instance, a 2nd class GA is worth 3850 francs per year.

Someone naive would add the monetary value to the net salary. But it’s not that simple.

See, those perks are nice, if you intended to buy them anyway. For instance, if you can replace your private phone by the company phone and you are not required to pay for a cell phone plan anymore, that’s a definite bonus.

But imagine this: your employer offers you a GA (worth 3850 francs) but you live at walking distance from your work place. Or you drive to work. Of course, a GA is nice. But you wouldn’t have bought one yourself. Because it wouldn’t be worth it in your situation. So what the company is offering you isn’t 3850 francs. It is offering you whatever you usually spend on train tickets in a year, minus the taxes that you’ll have to pay on this extra 3850 francs of salary (yes, the tax office considers the full monetary value of the perk as an additional salary).

So in theory, you would have to go through the list of perks and calculate how much you’re actually profiting from each of them. But to make things simple, I suggest using 80% of the monetary value of the perks. That way you capture the loss of flexibility compared to hard cash.

Step 3: quantify the monetary value of all the company perks and calculate 80% of this value.

The hidden salary

The hidden salary is real money that is in your name but that you can’t see nor access. You might have guessed it: the hidden salary is how much you and your employer are contributing to the second retirement pillar.

The good news is that you’ve already done most of the work in Step 2. You already know what your second pillar contribution is. Now you only have to find out what the employer contribution is. Usually it’s the same, but some employers are more generous. For instance, I’m contributing 6.35% of my insured salary but my employer is contributing 7.05%. So the total of my hidden salary is 13.4% of my insured salary.

Similar to step 3, it would be naive to simply add this number to the total. Ask yourself this: would you rather get 1000 francs now or 1000 francs 30 years from now? Obviously, everyone would rather have the money now. This goes back to the discussion on opportunity cost.

But there is an amount of money now that you would give up to get 1000 francs at retirement right? For instance, if I would offer you to give me 100 francs now in return for 1000 francs in 30 years, I hope that you would take the deal, because that’s a good deal. But the amount that is fair will depend on everyone’s preference and how long until retirement they have.

In the spirit of simplicity, I suggest using 50% of the hidden salary, to compensate for the loss of liquidity.

Step 4: calculate your hidden salary and compute 50% of the value.

The final step: putting it all together

Hey, you’re still here 🙂 Alright, there is one final thing that we need to do to bring all job offers on the same level: Add your net salary, 80% of the value of the perks, and 50% of the hidden salary together. And divide that number by the annual required working time. You now have a representative hourly salary. And that’s a number that you can compute for each job offers to make them comparable.

Obviously, as indicated in the beginning, compensation isn’t the only thing to look at when hunting for a new job. But it’s one important thing.

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