Swiss voters reject plan to set a minimum wage

May 18, 2014 at 6:02 PM EDT
Swiss voters rejected 3-to-1 a plan to establish what would have been the world’s highest minimum wage. Supporters said the plan would reduce income inequality. Business leaders had argued against it, saying it would make Switzerland less competitive with other nations and lead to higher unemployment. The AP’s John Heilprin talks with Hari Sreenivasan via Skype from Geneva.
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HARI SREENIVASAN: In Switzerland today voters rejected a plan to establish what would have been the world’s highest minimum wage. The vote was approximately 3-to-1 against. Supporters said the plan would reduce income inequality. Business leaders had argued against it, saying it would make Switzerland less competitive with other nations and lead to higher unemployment.

For more about this we are joined now via Skype from Geneva, Switzerland by John Heilprin. He’s the chief correspondent for the Associated Press in that country.

So, the Organization of Economic Cooperation and Development calculated that the minimum wage that voted down in Switzerland would have been about twice as high as the American minimum wage. So tell us about the debate that led up to today’s vote.

JOHN HEILPRIN: Well, first of all, this was one of four referendums that voters decided on Sunday. The Swiss Trade Union Federation had gathered enough signatures to put it on the ballot. They were arguing that a nationwide floor of 22 Swiss francs an hour – which works out to about $25 an hour – was needed to keep the lowest-paid employees from falling into poverty. And that may sound like a lot outside of Switzerland but this is a country that has pretty much the highest prices and the costliest cities in the world. You can spend $7 for a Starbuck’s grande latte. You can spend more for a deluxe burger at McDonald’s.

And it’s also the country has a median pay of about $33 francs an hour – which works out to about $37. So you can imagine the price pressures people feel.

HARI SREENIVASAN: So if you’re earning $37 an hour or the equivalent thereof in Switzerland does that make you feel poor?

JOHN HEILPRIN: Surprisingly you do. I’ve been living in Switzerland for three years now and it generally feels like things cost two to three times as much as they do in the States. I’ve seen a pair of jeans that sell for $50 in the States go for about three times that much in Switzerland.

HARI SREENIVASAN:  So this is part also of a kind of a pattern we’ve started to see here over the last year or so. This is like the third different vote on income inequality. They were trying to pass one that reduced the income disparity between the people who run companies and those people that work at them. There was another one about CEO compensation. How do they have these so often?

JOHN HEILPRIN: Well this is a county that’s a direct democracy. They are a bit crazy about their referendums. It’s Switzerland’s unique take on popular rule. They have these endless citizen-inspired referendums. You need 100,000 signatures to get it on the ballot and then it takes a little time to get it to the vote. But the trade union got this approved. They got enough signatures in 2012 and here we are today.

HARI SREENIVASAN: And finally, how does the minimum wage in the neighborhood affect this minimum wage debate?

JOHN HEILPRIN: Switzerland, first of all, has no minimum wage, but what’s important to bear in mind is that the OECD, which adjust figures for spending power, says the highest current minimum wage is Luxembourg’s which is $10.66 an hour. Next is France, Australia, Belgium, and the Netherlands. By comparison the U.S. comes in tenth on the list. It’s listed at $7.11 at the adjusted rate. In reality it’s $7.25. And my understanding is that the Swiss minimum wage would have worked out to about $14 in terms of spending power, which I think puts the high costs into perspective.

HARI SREENIVASAN: All right John Heilprin, joining us from Switzerland via Skype. Thanks so much.

JOHN HEILPRIN: Thank you