The federal cabinet is opposing an initiative to establish a minimum wage in Switzerland, arguing that the labour market is functioning well and that there is already sufficient protection against “wage dumping”.

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The seven-member government outlined its position on Wednesday with Economy Minister Johann Schneider-Ammann noting that the causes of poverty in the country are not primarily linked to wages.

The Swiss Federation of Trade Unions last year launched an initiative to set a legal minimum wage of 22 francs an hour, applying to all sectors and all parts of the country.

The labour group says it is necessary to set such pay standards because of the high costs of living in Switzerland and to guard against companies exploiting workers.

The unions said that it was unacceptable that 140,000 apprentices in the country earned less than 4,000 francs a month, along with workers in the retail sector among others.

They argued that a minimum wage was a needed response to counter wage “excesses” for highest income earners in the country.

But Schneider-Ammann told the media in Bern that a minimum wage was not “the appropriate remedy against poverty,” the Tages Anzeiger newspaper reported.

He indicated that unemployment and education levels were among the factors affecting poverty.

 Switzerland “flexible wage policy” is operating well, he said.

 The results are very good by international standards with the lowest wage differentials and the smallest proportion of employees with low wages, Schneider-Ammann said.

The federal government said a study showed the proposed minimum wage would be the highest among OECD countries.

It would be roughly twice as high as minimum wages in France, Ireland and the Netherlands, and considerably higher than Luxembourg’s 10 euros an hour minimum.

Schneider-Ammann said that there were already many ways to combat low wages and poor conditions and he noted that increasing numbers of workers benefited from collective labour agreements, Tages Anzeiger reported.

Meanwhile, if the wage initiative is approved by voters it would threaten certain regions of the country and such business sectors as retail, hospitality and tourism, the minister said.