Swiss to vote on $25 an hour minimum wage

GENEVA, Switzerland – A vote on Sunday to establish a minimum wage of $25 an hour would make mostly immigrants here in agriculture, housekeeping, and catering among the world's highest paid unskilled workforce.

The vote comes after hundreds of fast-food workers walked off their jobs in many U.S. cities and in more than 30 countries on Thursday in a protest for higher wages. If the Swiss proposal passes, the country would have the highest minimum wage in the world.

But some who would be eligible for the higher wage worry that it may do more harm than good.

Luisa Almeida is an immigrant from Portugal who works in Switzerland as a housekeeper and nanny. Almeida's earnings of $3,250 a month are below the proposed minimum wage but still much more than she'd make in Portugal.

Since she is not a Swiss citizen, she cannot vote but if she could, "I would vote 'no'," she says.

"If my employer had to pay me more money, he wouldn't be able to keep me on and I'd lose the job."

Almeida's concern illustrates the dilemma that faces the movement to have governments and not the market decide how much people should be paid at a minimum.

Forcing employers to hike wages means they must cut expenses to accommodate the higher labor costs. That often means less hiring, or some firing.

But Patrick Belser, Senior Economist in the Wage Group of the International Labor Office in Geneva says the initiative could work.

"International experience has shown that minimum wages can prevent labor exploitation without any negative effect on the economy," he said.

Yet, Besler worries that a minimum wage of $4,500 a month "is probably a little too high.

"If it is accepted, the effects on employment would have to be carefully monitored, and a mechanism for social dialogue should be created to discuss its effects and possible future adjustments of the rate," he said.

Currently, Switzerland does not have a minimum wage law. Industry-specific pay scales are determined by employment contracts or collective bargaining agreements between employers and trade unions. However, 90% of Swiss workers earn well above the proposed minimum and are already among the highest paid in the world.

According to government statistics, the average household income in Switzerland is about $6,800 a month; in the USA, where the minimum wage is currently $7.25 an hour, the average household monthly income is roughly $4,300, Census Bureau figures indicate.

Referendums are a unique feature of Switzerland's unique brand of social democracy, which gives citizens the power to shape policy over the government. Any individual or group can challenge existing legislation or force a vote on a new issue by collecting 100,000 signatures on a petition.

As in America, the issue of minimum income is controversial in Switzerland, too, pitting employers against trade unions and left-wing parties, which sponsored the proposal. And many of the "pro" and "con" arguments are similar as well.

Opponents of the initiative say a law regulating minimum wages would be detrimental to Switzerland's thriving economy because businesses might cut existing jobs or not hire new employees. At 3.2%, Switzerland's unemployment rate is among the lowest globally.

"This measure would eliminate a big number of low-skill jobs performed by the very workers the legislation is supposed to help," former trade union economist Beat Kappeler says. "It would be damaging in quantitative and qualitative ways."

"A minimum wage of 4,000 francs could lead to job cuts and even threaten the existence of smaller companies, notably in retail, catering, agriculture and housekeeping." Swiss Economics Minister Johann Schneider-Ammann told the local media recently. "If jobs are being cut, the weakest suffer most."

A recent poll by gfs.bern research institute shows that 64% of those surveyed are against the proposal. In past referendums on proposals from the left, the Swiss have been of two minds.

Last year Switzerland passed a measure to curb "excessive" bonuses for executive, but months later in another referendum the country voted down a proposal to reduce the income gap between lowest and highest salaries even though polls predicted the measure would pass.