SWISS MINIMUM WAGE: Voters likely to reject world’s highest minimum pay package

Swiss voters are likely to reject a motion by the country’s government to begin paying workers what would have been the world’s highest rate of minimum wage pay, according to an online report by Irish current affairs public service RTE News. The vote, being held nationally today, will decide if employers are to be made to pay their staff a minimum wage of €18 (21.98 Swiss francs, £14.65) per hour worked. If the motion survives the vote, this means that no Swiss national can be paid less than an annual salary of £32,000.

The latest opinion poll on the minimum wage package, which is double that paid to workers in the United Kingdom, suggests that sixty-four per cent of voters are opposed, citing its potential negative impact on the buoyant Swiss economy. Local businesses are also fiercely opposed to the measure, which may leave smaller firms out of pocket.

The initiative was originally put forward by the SGB union and backed politically by the Socialist and Green parties. It is part of a raft of initiatives being put in front of the country’s voters to address pay inequality and the widening income gap in a country famed for its egalitarian policies, culture and low taxes, which have made this part of Europe a popular domicile for both local and foreign organisations. The liberal economy means that Switzerland does not currently have a national statutory minimum wage.

A Swiss employee’s pay rate is usually agreed via employment contracts. Companies in certain industries often arrange an industry-wide minimum wage via ‘collective bargaining agreements’ between competitors.

12 Francs
12 Francs (Photo credit: [Jim])

As in many other European countries, public anger has increased at the widening gulf in pay between top CEOs and other executives and workers at the opposite end of the pay spectrum. Those on the lower wage scales have seen take-home pay lag in real terms, while bonuses and pay cheques for executives have expanded continuously even six years after the 2008 credit crunch.

Supporters of the minimum wage package say it will put an end to the wage disparity between the richest Swiss and the poorest, and will see an average worker take home at least 4,000 francs (£2,666) per month, enabling those working in industries like retail, lower-grade office work and hospitality to live a far better standard of living. Many also cite the high costs of living in cities such as Geneva and Zurich, which attract many investors and financial high-fliers. This has led to more expensive outlets and higher property prices that disadvantage the less well off. According to the BBC, an average one-bedroom city centre flat in Zurich, Berne or Lausanne can cost 1,800 francs (£1,199.70) per month. This does not include further costs such as utility bills and health insurance, which totals around 400-600 francs (£267-400) monthly. A restaurant meal for two in a popular five-star eaterie can set diners back 100-150 francs (£66-£100). The higher cost of living also means lower-paid workers are forced to claim government benefits to top up pay, meaning in effect the government subsidises employers who refuse to pay a livable wage, supporters say. Opponents however say that the measure will damage competitiveness among Swiss businesses. Companies unable to pay the higher salaries would be forced to shed their minimum wage workforce, meaning that the policy may increase unemployment, particularly among the young and newly employed, and do more harm than good to the lower-paid.

SOURCES:
“HEM News Agency” – The Half-Eaten Mind, Twitter LINK
RTÉ News, Twitter LINK
“Swiss set to reject world’s highest minimum wage proposal” – RTÉ News/RTÉ Commercial Enterprises Ltd (18 May 2014) LINK
XE.com LINK
“Switzerland votes on world’s highest minimum wage” – BBC News Business, BBC (18 May 2014) LINK
IMAGE CREDIT:
“12 Francs” – [Jim], Flickr (27 October 2008) LINK

 

 

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