Why Switzerland voted against national statutory minimal wage?

In a landmark popular vote against minimal wages on 18 May 2014, Swiss voters were asked to decide on a popular initiative proposing a constitutional amendment that would have provided for a nationwide statutory minimum wage of 22 Swiss francs (US$25) per hour, or 4,000 francs per month. A majority of 76.3% of the votes cast, and all 26 Swiss cantons, turned the initiative down. Switzerland will, therefore, continue to be one of the very few countries in Europe without a national minimum wage, as 21 of 28 EU member states apply nationwide minimum wages.

Prime arguments against

Although it is difficult to analyse the reasons for the outcome of the popular vote, the prime arguments against it were: the liberal Swiss labour law as a widely recognised key success factor of the Swiss economy; the constantly record-low Swiss unemployment rate of between 2.5% and 4% (it stood at 3% in April 2014); and a network of trade-specific and often local or regional collective bargaining agreements providing for minimum wages negotiated between employer associations and unions of the relevant trade, rather than imposed by statutory law.

The Swiss way: voluntary self-regulation by collective bargaining agreements. Swiss voters recognised that the existing system of self-regulation by negotiated collective bargaining agreements is much smarter than nationwide statutory minimum wage regulation. The Swiss system allows minimum wages to be differentiated locally, regionally and sector-wise by trade, and as a result such regulation is limited to trades for which the need of enhanced employee protection is mirrored by a certain degree of unionisation.

Due to the voluntary nature of self-regulation, no employer and no employee can be forced to become or remain a member of an employer association or union privy to a collective bargaining agreement.

Felix Egli is a senior partner and the head of China Desk at Vischer; Wu Fan is a counsel on Vischer’s China Desk