Cabinet dismisses nationwide minimum wages

Economics Minister Schneider-Ammann says minimum wages are not suited to combat poverty Keystone

The government has come out against a proposal by trade unions to introduce minimum salary standards across the country. Proponents have collected enough signatures to force a nationwide ballot on the issue.

Economics Minister Johann Schneider-Ammann said on Wednesday the cabinet agreed with supporters of the initiative that all jobs should pay workers a decent living wage. However, he said the proposal would undermine a tried and tested way of setting salary levels.

The proposed minimum wage of SFr22 ($23.8) per hour on a nationwide basis would harm Switzerland’s competitive edge, Schneider-Amman argued.

According to the State Secretariat for Economic Affairs it would be the highest minimum wage in any member country of the Organisation for Economic Co-operation and Development (OECD).

“Our prosperity is largely based on the institutionalised cooperation between representatives of employers and labour. Flexibility in wage setting is crucial for industrial relations,” he told a news conference.

Schneider-Ammann said salaries had to adapt to productivity levels and market mechanisms largely without interference by the state.

The salary gap between top earners and low income employees is smaller in Switzerland than in many other countries, he asserted.

Referring to Switzerland’s comparatively low unemployment figures – currently 3.3 per cent – Schneider-Ammann praised the system which leaves salary levels up to individual sectors or companies as the “trump card of the Swiss economy”.

Salary initiatives

Two other proposals aimed at regulating wages are also due to be put to a vote.

In March voters have the final say on a proposal by the chief executive of a cosmetics firm to limit top manager salaries and boost shareholder rights.

An initiative by the youth chapter of the centre-left Social Democrats seeks to cap maximum wages within a company at a 12:1 ratio with the lowest salaries.

In 2011 voters in canton Neuchâtel approved a proposal to set minimum salaries in sectors without collective labour agreements.

Similar attempts in cantons Vaud and Geneva failed to get a majority at the ballot box.

Further initiatives are pending in three other cantons, in the French and Italian speaking regions, but not in the main German-speaking region.

Jobs

He warned of possible job losses in sectors such as tourism and hospitality if the present system was made inflexible.

Certain regions, particularly those bordering other countries, risked being hit hard, he warned.

Schneider-Ammann said the system of collective labour contracts and additional measures was the one best suited to prevent unfair competition by companies trying to undercut agreed salary levels.

“Collective labour contracts and institutionalised cooperation between employers and employees are crucial for low and medium salaries,” he explained.

The secret of Switzerland’s good industrial relations is its system which allows for specific sectors, professions or regions to find their own solutions, enabling them to react with flexibility to market developments, he added.

Injustice

Enough signatures to call a nationwide vote were collected by trade unions, centre-left political parties as well as non-governmental organisations, and handed in a year ago.

The unions argue salaries have come under increasing pressure over the past few years while the cost of living in Switzerland has gone up. About 400,000 employees earn less than SFr4,000 ($4,300) a month, they say.

Trade union leaders have harshly criticised the widening gap between salaries at the top and at the bottom.

“Minimum wages are the best way to put an end to this injustice,” Paul Rechsteiner, president of the Trade Union Federation and senator for the Social Democratic Party, said when the signatures were handed over to the federal chancellery last January.

A date for the vote will be set by the cabinet once both houses of parliament have discussed the initiative.