Minimum wage comes under the spotlight

The Trade Union Federation says there is growing awareness in Switzerland about minimum wages and salary dumping Keystone

Over three-quarters of European Union member states have a minimum wage; the issue is in the Swiss spotlight after local votes in cantons Neuchâtel and Geneva.

This content was published on December 6, 2011
Andrea Ornelas,

In January the Trade Union Federation launched a people’s initiative calling for a minimum wage of SFr4,000 ($4,350) per month – triple the European average – and is expected to hand in signatures to force a nationwide vote early next year.

On November 27, 54 per cent of Neuchâtel voters agreed to the principle of a minimum wage being written into the cantonal constitution. Meanwhile, the same percentage threw out the idea in Geneva.

Switzerland’s largest trade union, Unia, welcomed the Neuchâtel decision, which it said was a “sign of growing awareness among the population about wage dumping”. Canton Jura is the only other region which has a similar principle in its constitution, but has yet to adopt a law for its implementation.

“Unions have quite a bit of weight in canton Neuchâtel, which has industrial sectors like the watch-making industry, and which would benefit considerably from the creation of a minimum wage,” Jean-Marc Falter, an employment specialist from Geneva University, told

The researcher, who works at the university’s “Employment Observatory”, said Geneva had a totally different profile: more financial and less union-oriented.

The Neuchâtel authorities and their social partners still need to define the exact minimum wage figure, however.

According to the Federal Statistics Office, the gross median wage in Switzerland over all sectors – with an equal number of workers above and below – was SFr5,979 a month last year.

While workers in Neuchâtel earn on average SFr5,600 a month, those in Geneva take home SFr7,000. Unia says ten per cent of Neuchâtel employees earn monthly salaries of less than SFr4,000.

“We’ll have to be precise so that firms don’t leave. A company specialising in packing for the watch industry could be tempted to do so in nearby Franche-Comté in France, in canton Jura or canton Vaud,” said Thierry Grosjean, Neuchâtel’s economics director.

Test cases

The two cantonal votes represent early test cases for the Trade Union Federation, which is campaigning for a national minimum wage.

It launched a people’s initiative in January 2011 calling for a minimum salary of SFr22 ($23.20) per hour at 2011 rates, or around SFr4,000 per month. This would apply to everyone except apprentices, trainees, family businesses and voluntary workers.
Firms, however, generally argue that minimum wages are damaging for  employment. Business groups like the Swiss Building Association say countries with minimum wages have not managed to drive down unemployment rates.

And in recessions a minimum wage would cause firms to move abroad and obstruct the creation of new jobs.

Falter is less categorical: “The impact of a minimum wage on an economy depends on its level and on the economy’s competitiveness; it has less impact on a more competitive economy.”

In Switzerland six per cent of the population – or 250,000 people – are working poor employed full time, he said, but earning salaries that “prevent them from having a decent life”.

Falter said Switzerland had a commitment to these vulnerable, poorly paid workers, which was possible either via a minimum wage, or through general labour agreements. A third way was direct aid to the most vulnerable in society, he added.

General labour agreements

But a recent research paper by the Trade Union Federation, “Minimum salary and necessary measures”, claimed that collective labour agreements were no guarantee for staff welfare.

At the moment only certain branches of industry have general labour agreements, covering 50 per cent of the working population.

And only half of all workers covered by a collective agreement are guaranteed a minimum income, well below levels in other European countries like Austria (99 per cent of all workers under general labour agreements), Finland, (90 per cent), Sweden (91 per cent), Denmark (83 per cent ) and Norway (79 per cent).

The creation of a minimum wage is a legal issue, but above all political, said Falter.

“Unions try to tell employers that if they are not serious about implementing collective labour agreements they face greater state intervention via a minimum wage,” he added.

Wage dumping

On December 2 the Swiss union Unia denounced a case of wage dumping in canton Jura: six foreign construction workers employed by a Polish firm were paid €10 an hour instead of €24 per hour agreed upon under a collective bargaining agreement.

Unia is calling for stricter checks on construction sites, tighter sanctions against wage dumping as well as the introduction of a minimum wage. Unions want tougher regulations to protect workers from the negative consequences of the free movement of people accord with the European Union.

In May the Swiss Trade Union Federation called on the government to set up a national task force, which would include union representatives, to fight wage dumping.

At the beginning of May, a Seco report on 2010 said that 38 per cent of foreign companies which use foreign labour in Switzerland did not respect collective labour accords.

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The new federal film archive centre under construction in Penthaz, canton Vaud, has been singled out after reports of illegal moonlighting on the building site on French-Swiss television on December 4.

The illegal workers were allegedly employed by a sub-contractor, which had in turn been hired by the company working for the government.

Unions regularly criticise examples of moonlighting. In 2007 the government launched a campaign to crack down on the problem and a new law came into force in 2008.

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Monthly minimum wages in Europe

Switzerland: €3,261 (SFr4,000)*

Luxembourg: €1,570

Ireland: €1,403

United Kingdom: €1,361
Netherlands: €1,301

Belgium: €1,259
France: €1,365

Greece: €680
Spain: €650
Portugal: €470

Slovakia: €217

*Proposed by Swiss Trade Union Federation

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