World's highest minimum wage: Switzerland votes

A member of the Swiss UNIA workers union sets a ribbon around a petrol pump during a protest at a filling station

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Swiss voters go to the polls this weekend in a nationwide referendum on whether to introduce what would be the highest minimum wage anywhere in the world.

If approved, employers would be obliged to pay workers a monthly minimum of 4,000 Swiss francs (£2,680; $4,470) - which works out as just over £32,000 ($53,600) a year.

Trade unions say the measure is necessary because of the very high living costs in big Swiss cities such as Geneva and Zurich.

Earlier this month, tens of thousands of workers demonstrated in both cities.

Many of them are angry that while neighbouring France and Germany already have minimum pay levels, Switzerland, which is one of the richest countries in the world, does not.

'Rents are astronomical'

Florinda Pereria, who works as a housekeeper in Geneva, says her experience proves that surviving on less than 4,000 francs a month is simply not possible.

Florinda Pereria Florinda Pereria is one of those who wants a higher minimum wage

"Rents are astronomical, health insurance is incredibly expensive, food is incredibly expensive.

"I'm working 60 to 70 hours a week to reach that, and even that is barely enough," she says. "Frankly I think it's verging on slavery."

Recent studies do show that, among people claiming benefits in Switzerland, a significant number are doing so not because they have no work, but because they are not being paid enough to make ends meet.

This has been a key element in the campaign in favour of a minimum wage, with supporters arguing that the Swiss welfare system is being forced to subsidise businesses which refuse to pay a living wage.

'An own goal'

But business leaders and the Swiss government have been campaigning hard against the proposal.

Start Quote

Higher salaries would mean higher prices”

End Quote Urs Gfeller Swiss farmer

They point to Switzerland's low unemployment and high standard of living for the majority as evidence that the Swiss way of doing things is successful, and in no need of change.

"I think it's an own goal, for workers as well as for small companies in Switzerland," says Cristina Gaggini, director of the Geneva office of the Swiss business association, Economiesuisse.

"Studies show that a minimum wage can lead to much more unemployment and poverty than it helps people.

"And for very small companies it would be very problematic to afford such a high salary."

Supporters hold paper planes during a demonstration supporting a minimum wage of 4000 Swiss francs on May 7, 2014 in Geneva The latest polls suggest almost two-thirds of voters are against the proposal
'We'd go to the wall'

Small businesses, and in particular Swiss farmers, are especially worried that being forced to pay their staff 4,000 francs a month would price their products out of the market.

Organic farmer Urs Gfeller believes he and many others like him risk being put out of business.

"Higher salaries would mean higher prices. People would have to pay more for their vegetables and farm produce," he told Swiss television.

Swiss monthly living costs

  • One-bed city centre flat: 1,800 francs
  • Utilities: 100-200 francs
  • Health insurance: 300-400 francs
  • Public transport: 50-70 francs
  • Restaurant meal for two: 100-150 francs

"Then cheaper produce would be imported from other countries, Swiss farmers would be finished - we'd go to the wall."

In fact, most of Switzerland's low-paid workers operate in the service industry, in hotels and restaurants, and the majority are women.

Trade unions point out that the fear over cheaper imports does not really apply to Swiss hotels and restaurants, whose customers might be happy to pay a little bit more in order to know those serving them were being paid a living wage.

Public fury

Swiss business leaders hope their campaign will persuade a majority of voters to reject the minimum wage, but they remain very uneasy at growing public criticism of the way they do things.

A referendum last year, known as the 'fat cats initiative' limited executive bonuses and golden handshakes.

This followed public fury that some business leaders, most notably Swiss bankers, continued to earn huge salaries even as the banks themselves were losing money.

A poster against minimum wage in front of a snack bar in Zurich This poster urges voters to reject the minimum wage proposal

Another vote, which was designed to ensure that bosses could earn no more than 12 times the salary of the lowest paid in their company, was narrowly defeated last November.

However, the campaign served to focus attention yet again on the high salaries paid to some chief executives.

So before this Sunday's votes have even been counted, some Swiss businesses are already quietly introducing higher salaries, among them supermarket chain Lidl, with fashion retailer H&M set to follow.

Continuing debate

Meanwhile Switzerland's electrical and mechanical engineering industry has shown it understands that some areas of Switzerland, most notably Geneva and Zurich, have exceptionally high costs of living, and has agreed to regional minimum wages.

The latest opinion polls indicate the 4,000 SFr-a-month proposal may be rejected.

But even if the minimum wage is defeated this time, the debate about fair pay in wealthy Switzerland will not be going away.

Coming soon, there will be a referendum on a guaranteed basic income for all Swiss, whether they work or not.

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