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Switzerland Mulls Setting Minimum Wage at $24.73

On May 18, Swiss voters will decide if they want to introduce the world's highest minimum wage to their country where the cost of living is extremely high and the unemployment and poverty rates very low.
/ Source: Entrepreneur.com

Ah, Switzerland. That magical land of snowy Alpine peaks, chocolate and cheese. It's not just its natural beauty or culinary wizardry that sets the country apart from the rest of us; Switzerland has the highest wealth per adult in the world and enviably low unemployment and poverty rates (3.5 percent and about 7 percent of the working population, respectively). The Swiss, on average, live to be nearly 90 years old -- they're second only to the Japanese in overall life expectancy -- and Zurich is behind only Vienna in terms of quality of life.

On May 18, the country may add another superlative to its national profile when Swiss citizens decide, in a popular vote, if they want to introduce a minimum wage of 22 Swiss francs an hour (that's $24.73 in U.S. dollars). If the ballot passes, Switzerland would become the country with the highest minimum wage, far ahead of current first-place Australia ($16.88 an hour). In the U.S., the federal minimum wage is $7.25 an hour, and President Obama is on a mission to raise it to $10.10.

Related: CBO Says Raising Minimum Wage Will Lead to Job Cuts

A minimum wage of $24.73 an hour, of course, wouldn't go as far in Switzerland as it does in the U.S., ( a movie ticket in Zurich would set you back about $20 U.S., and a typical cup of coffee in Geneva rings in at $6.52 )  but it’s a high enough sum to worry the government and employers alike; the Swiss government said Tuesday that adopting the proposed minimum wage would hurt Switzerland's competitiveness and lead to job cuts, disproportionally harming low-income workers it is designed to help, Reuters reported.

"The government is convinced it would be wrong for the state to impose a nationwide wage," economy minister Johann Schneider-Ammann told a media conference.

That Switzerland's bordering countries are required to pay significantly less (8.5 euros in Germany and 9.43 euros in France) has employers nervous that they will no longer be able to compete. "It could literally chase some jobs from the country, particularly in regions close to the borders," Hans Hess, chairman of Swissmem, the country's largest industrial employer, said at a media briefing.

Related: Gap Raises Minimum Wage as Walmart Mulls a Hike of Its Own

Switzerland is unique in that it practices direct democracy: Any citizen can call for a national referendum – all they have to do is collect 100,000 signatures and a ballot is held; Results are legally binding. It's a relatively frequent practice – in November a popular vote asked Swiss citizens whether executive compensation should be capped at 12 times what the lowest-paid employee makes (it was overwhelmingly rejected) while this month, the population ignored the government's advice and narrowly voted to curb the flow of foreign workers into the country.

After the ballot on minimum wage is held in May, Swiss citizens will again be asked how far they want to push for greater income equality in a  national referendum on a guaranteed monthly stipend of 2,500 francs ($2,800) for all residents, whether they work or not.

Related: Tell Us: How Much is Too Much for a CEO to Make?