Switzlerand: referendum may herald world's highest minimum wage

http://www.theguardian.com/world/2014/may/12/switzerland-referendum-highest-minimum-wage

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Swiss business leaders shocked by past popular votes on executive pay and immigration are wary of a referendum on 18 May that could see Switzerland adopt the world's highest minimum wage of 22 Swiss francs (£14.70) an hour.

A recent opinion poll by gfs.bern found that 64% of voters were against the proposal, made by the SGB union and supported by the Socialist and Green parties. But Switzerland's system of direct democracy, with frequent popular votes on social, political or economic matters, has brought surprises before: the Swiss unexpectedly voted in February to curb EU immigration.

"I'm feeling uneasy about the upcoming vote," said Ralph Mueller, division head at electronic components maker Schurter.

"We would have to significantly raise the salaries in our factory in Mendrisio, where about 80 of our 100 workers commute from Italy, but we would also have to raise the wages of our higher-paid staff. It would cost about 250,000 francs [£167,000] a year."

Swiss voters overwhelmingly rejected a proposal in November to cap the salaries of top executives at 12 times that of their company's lowest earner, but they did back a plan last year to give company shareholders the final say on pay and incentives.

The state secretariat for economic affairs (Seco) said the proposed minimum wage of 22 Swiss francs an hour would be the world's highest, even when adjusted for purchasing power in the notoriously expensive country.

The economically liberal country does not currently have a nationwide minimum wage. Pay is determined by individual employment contracts or via collective bargaining agreements, some of which also set industry-specific minimum wages.

The proposed minimum wage would correspond to a monthly paycheck of Sfr4,000, almost two thirds of Switzerland's median salary in 2012, and a higher ratio than in most other countries, Seco said. Germany's planned minimum wage of €8.50 (£7), for example, is about half its median salary.

The government opposes a minimum wage, warning in February that it "would threaten jobs and make it even more difficult for little qualified staff and young people to find a first job".

Supporters say it would help smooth out salary inequalities and ensure a person working full-time can live decently.

In 2012, according to the federal statistics office, 10% of full-time or equivalent Swiss jobs paid less than two thirds of the median salary, with lower-paid jobs found mainly in shops, hotels and personal services. Of 339,000 people on a low salary, two out of three were women.

"What matters is not the level of the minimum wage but the number of people concerned," SGB, Switzerland's biggest union, said in a statement, noting that the sum of all Swiss salaries would only rise by 0.4% if the initiative were to be accepted.

George Sheldon, professor of labour and industrial economics at the University of Basel, said that although the proposed minimum wage was very high, its negative impact would be small because it would apply only to a few people.

"Unemployment won't jump from 3% to 4%. The impact will be well below one percentage point," he said.

Some of Switzerland's lower-paid workers have already seen their wages rise as the debate over pay intensifies, although employers do not acknowledge a direct link to the proposal. The discounter Lidl raised minimum Swiss salaries to SFr4,000 last year and the retailer H&M has promised to follow suit next year.

The electrical and mechanical engineering industry, whose lobby group Swissmem opposes a national minimum wage of SFr22, for the first time accepted regional minimum wages in its collective bargaining agreement with unions last year.