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Switzerland – Federal Council and Parliament vote to reject minimum wage initiative

26 February 2014

A government-fixed minimum wage is the wrong way to help people on a low income, according to the Federal Council and Swiss Parliament, who have recommended that the initiative be rejected. They claim that the initiative would threaten jobs and make it difficult for low-skilled and young people to enter the labour market. 

The popular minimum wage initiative needs federal and cantonal (regional) support in order to establish minimum wages in collective agreements and introduce a statutory national minimum wage of CHF 22 (€18.03) per hour. This would equate to about CHF 4,000 (€3,278) per month, which would make it the world’s highest minimum wage. 

The Federal Council has rejected the initiative for the following reasons:

  • The aim of combating poverty and wage dumping is undisputed. However, the Federal Council is of the opinion that a statutory minimum wage is not the appropriate way to achieve this goal.
  • Jobs with lower skill requirements would become expensive due to a statutory minimum wage. There is therefore a danger that these jobs would disappear. 
  • Low-skilled workers or people with little professional experience; such as teenagers or entry level professionals, would find it more difficult to get a job. 
  • In addition, it would increase their risk of becoming unemployed. Jobs in economically weaker regions and industries would be most at risk.

In Switzerland, wages are negotiated either individually or collectively. Minimum wages are basically determined by the social partners on the basis that they know the situations of their industries and businesses well, and are thus better able to determine appropriate minimum wages. A legal minimum wage, as recommended by the initiative, would limit any negotiations by the social partners. The entire well-functioning social partnership in Switzerland would be called into question.

According to the government, the flexible wage policy has significantly contributed to the positive results achieved in the areas of employment and income distribution. Wage and employment levels are high by international standards and the proportion of low-wage positions is low. They also believe there isn’t a country that manages the integration of less well-qualified and young people as well as Switzerland.

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