Swiss politics are often unnoticed, receiving minimal attention in the media. However, the recent discussion regarding the implementation of a federal minimum monthly salary for all Swiss citizens has not only sparked debate from within the country, but from other western democracies as well. Since no minimum wage currently exists, the younger generation believes this is a matter worth putting to a vote. On the other hand, opposition sees potential economic issues arising in terms of social insurance costs and tax burdens. While calls for a monthly minimum are being made by a number of Swiss citizens, the Young Socialists have pushed their “1:12“ salary initiative– one which mandates a private sector CEO to have no greater than 12 times the salary of the lowest paid member of the company- to a vote which will take place at the end of this month. Both these economic policies have been called to referendum through the process of direct democracy, exemplary of this central European state. Although it is difficult for a non-Swiss citizen to grasp the proposed policies, they not only put our federal and provincial economy into perspective, but also demonstrate the capabilities of direct democracy, which could be favourable for Canada.
Switzerland’s direct democracy allows for any initiative brought forth by a citizen to go to referendum when it reaches a threshold of 100,000 signatories (one eightieth of the population). In the case of the appeal for a nation wide minimum wage, 120,000 signatures were collected. Groups orchestrating this initiative are seeking the instalment of a 2,500 CHF ($2,900 CAD) monthly minimum salary for all working adults. With a health care system that is already universal, the burden would presumably fall on the social insurance expenditures. Stating income equality as their goal, the proposal is along the same lines as the 1:12 initiative.
While many are calling a federal minimum wage a model in all democracies, the opposition states the proposition is anti-capitalist, and would damage the social insurance system. Fear that power will be taken out of corporate hands and placed into that of the federal government fuel the notion that citizens will attempt to pursue other anti-corporate initiatives. At the same time, the aging Swiss demographic fears for their pensions and the inevitable rise in taxes that will fund these proposed minimum salaries.
The Young Socialists of Switzerland’s 1:12 initiative is a policy that would restrict the highest salary within a company to twelve times that of the lowest earner. This group is calling the initiative an imperative top-down redistribution of Swiss wealth. Presently, the highest salaried employee earns fifty-six times that of the lowest salaried employee; this figure is up 6 times from thirty years ago. In some of Switzerland’s largest companies, such as Roche and Nestlé, the highest salary is figured around 150-250 times that of the lowest.
The opposition does not believe that this disparity of wealth is an issue in Switzerland. They argue that billions of CHF would be lost yearly in terms of tax revenue due to the change in salaries. It would also have a predominantly adverse effect on the country’s status as a business location; top Swiss CEO’s are already discussing the potential relocation of their companies if the referendum were to pass into law. Executives are tagging this issue as a major socialist assault perpetrated by the younger generation.
Although it is too soon to determine the referendum results of the 1:12, or if the minimum wage initiative will be put to a vote in the country, a recent military referendum sheds light on the situation. Over seventy percent voted in favour of keeping mandatory conscription in place. This signals that the country may be more traditionalist and conservative than socialists are lead to believe. As it stands currently, Switzerland boasts high education standards, which in many cases lead to salaries of 4000 CHF or above per month upon graduation.
While some have been inspired by the minimum salary proposal outside of Switzerland, in Canada the proposal does not seem feasible. While minimum salaries are below the proposed $2,500 CHF, the cost of living in Switzerland is roughly double that of Canada. Additionally, the division of powers between federal and provincial governments is too strong to allow for the concept of a universal monthly minimum wage to be realized in Canada. Rather, Canadians should be inspired by the current Swiss initiatives as they demonstrate the options that a true direct democracy can provide its citizens in a similar Western society. The possibility for Canadians to put relatively small public matters to referendum is an intriguing model to consider.
– Matthew Bienz