Thread: Swiss to Vote on World’s Highest Minimum Wage

Swiss to Vote on World’s Highest Minimum Wage

By MELISSA EDDYMAY 16, 2014

BASEL, Switzerland — While Switzerland’s booming economy has made the country synonymous with a superlative standard of living, the government estimates that approximately one worker in 10 struggles to pay rent, despite working full time.

Just as the issue has been fiercely debated in the United States, the Swiss go to the polls on Sunday to weigh in on a proposed solution: raising the national hourly minimum wage to 22 Swiss francs ($24.65).

If successful, it would become the world’s highest minimum wage; more than double the 8.50 euros ($11.64) agreed to last month in Germany, which has the European Union’s largest economy, or the $10.10 sought by President Obama.

The referendum is the latest twist on the global debate over the causes and extent of income inequality, what if anything should be done about it, and whether higher minimum wages ultimately help or hurt workers.

“It is a scandal that in our wealthy country, people are working full time and still can’t live on their salary,” said Daniel Lampart, an economist for the SGB/USS trade unions, which introduced the initiative with support from politicians on the left.

Gionatan De Vita, who quit a salaried position at Nestlé to run his own Italian-style cafe on a winding side street down from Basel’s landmark red sandstone gothic church, said he already could not afford to hire any full-time workers, even at a much lower salary than the amount proposed.

“I have three people who I pay at an hourly rate for flexible shifts of about three hours, plus I am here all day myself,” Mr. De Vita said as he wiped down the counter of his bar. “There is no way I could afford to pay a monthly minimum wage of 4,000 francs,” roughly the equivalent of 22 francs an hour.

While poverty here is a relative thing for most people, given the generous social welfare system that ensures a basic standard of living, this is the third time the Swiss have been called upon in recent national referendums to decide the value of work. In March 2013, voters supported a move to give shareholders a stronger say in executive pay, but in November they opposed an outright cap on the amount executive can earn.

Many Swiss are clearly uncomfortable with yawning income disparities. Yet they are also uneasy with handing the government too much control over setting salaries, traditionally negotiated by companies and unions within each industry.

For a full-time worker, the proposed minimum wage would amount to nearly two-thirds of Switzerland’s median salary in 2012, according to official numbers. Of the 339,000 people the federal statistics office estimates currently earn below the median salary, two out of three are women, most of them working in retail, hotels or personal services.

Recent surveys have suggested waning support for the measure, but the government was caught off guard in February when citizens unexpectedly voted to restrict the number of European Union citizens allowed to live and work in the country. Under Switzerland’s system of direct democracy, anyone can propose an issue, and if it wins enough support, it is put to citizens for a vote.

Switzerland remains one of the most business-friendly countries in Europe, but the series of referendums focusing on economic issues in the last two years has rattled many executives. Some of the country’s largest companies, which include Nestlé and Swatch, say they fear that introducing a minimum wage could damage competitiveness.

Two-thirds of Swiss jobs are in small and midsize businesses. Owners of hotels, restaurants and retailers, especially in cities near the borders, are fearful that the proposal would force them to cut largely untrained cleaning and kitchen staff members, because they would otherwise be required to pay them salaries equivalent to that of receptionists or waiters with two to three years’ vocational training.

They also argue that a minimum wage would have the opposite effect of that desired by the unions, by forcing more people into part-time jobs that would increase the country’s unemployment rate, which stood at 3.2 percent in April, according to government figures.

“The initiative would be a boomerang for Switzerland,” said Marcel Schweizer, president of Gewerbeverband Basel-Stadt, a trade association in Basel representing small and midsize businesses.

“Many branches would be forced to cut jobs that would become too expensive. The hardest hit would be poorly qualified workers.”

The Association of Swiss Cleaning Companies, Allpura, issued a sharply worded statement in which it opposed the wage initiative because it “destroys jobs and weakens Switzerland’s competitiveness.” It said cleaners earn 18.50 to 26.50 francs an hour.
Tobias Straumann, a professor of economic history at the University of Zurich, said he did not believe that the initiative would pass, but he pointed out that the debate had already had an indirect influence on salaries in several industries in which wages were the lowest.

Lidl, a German-owned discount supermarket chain, raised its monthly base wage for workers in Switzerland to 4,000 francs at the start of the year. Last year, the electrical and mechanical engineering industry agreed to a minimum hourly wage of 22 francs in its collective bargaining agreement with unions.

“The minimum wage is an attempt by the left to try to push policy,” Mr. Straumann said. “They have no chance, but they are hoping that some of their ideas will bring about change. Already the launching of the initiative has brought about a lot of progress in the increase of wages in industries where they had been very low.

http://www.nytimes.com/2014/05/17/bu...wage.html?_r=0

Swiss reject world's highest minimum wage

Helena Bachmann, Special for USA TODAY11:30 a.m. EDT May 18, 2014


(Photo: Peter Klaunzer, AP)

Swiss voters appeared to largely reject a nationwide referendum Sunday that would have set the minimum wage at $25 an hour and made mostly immigrants in agriculture, housekeeping and catering among the world's highest paid unskilled workforce.

Swiss media reported only 23% of voters supported the Decent Salary Initiative, which would have given Switzerland the world's highest minimum wage.

The vote came days after hundreds of fast-food workers walked off their jobs in many U.S. cities and in more than 30 countries Thursday in a protest for higher wages.

According to government statistics, the average household income in Switzerland is about $6,800 a month; in the USA, where the minimum wage is currently $7.25 an hour, the average household monthly income is roughly $4,300, Census Bureau figures indicate.

Switzerland does not have a minimum wage law. Industry-specific pay scales are determined by employment contracts or collective bargaining agreements between employers and trade unions. However, 90% of Swiss workers earn well above the proposed minimum and are already among the highest paid in the world.

But in Switzerland, even some of those who make less than $25 per hour were opposed.

Luisa Almeida is an immigrant from Portugal who works in Switzerland as a housekeeper and nanny. Almeida's earnings of $3,250 a month are below the proposed minimum wage but still much more than she'd make in Portugal. Still, she did not support the referendum.

"If my employer had to pay me more money, he wouldn't be able to keep me on and I'd lose the job."

Forcing employers to hike wages means they must cut expenses to accommodate the higher labor costs. That often means less hiring, or some firing.

But Patrick Belser, Senior Economist in the Wage Group of the International Labor Office in Geneva, says the initiative had some merit.

"International experience has shown that minimum wages can prevent labor exploitation without any negative effect on the economy," he said.

Yet, Besler worries that a minimum wage of $4,500 a month "is probably a little too high.

"If it is accepted, the effects on employment would have to be carefully monitored, and a mechanism for social dialogue should be created to discuss its effects and possible future adjustments of the rate," he said.

Opponents of the initiative say a law regulating minimum wages would be detrimental to Switzerland's thriving economy because businesses might cut existing jobs or not hire new employees. At 3.2%,

Switzerland's unemployment rate is among the lowest globally.

Swiss Economics Minister Johann Schneider-Ammann warned that "if jobs are being cut, the weakest suffer most."

Last year, Switzerland passed a measure to curb "excessive" bonuses for executives, but months later in another referendum the country voted down a proposal to reduce the income gap between lowest and highest salaries even though polls predicted the measure would pass.

http://www.usatoday.com/story/news/w...-vote/9245441/