EXPLAINED: Why Switzerland could scrap the minimum wage?

Helena Bachmann in Geneva
Helena Bachmann in Geneva - [email protected] • 27 Dec, 2022 Updated Tue 27 Dec 2022 11:01 CEST
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Minimum wage for some workers (like hairdressers) are on the way out. Photo: Pixabay

Only five out of Switzerland's 26 cantons have minimum wages for their workers. However, MPs have decided to nullify those laws for reasons that are specific to the workings of the country’s labour market.

On Wednesday, MPs at the National Council, the parliament’s lower house, narrowly accepted a motion from their counterparts in the upper chamber — the Council of States — to do away with the minimum wages that five cantons had introduced in the past years.

Geneva has what is often called “the world’s highest minimum wage” — 23 francs an hour — followed by Basel-City (21 francs / hour), Neuchàtel and Jura (20), as well as Ticino (19).

These salaries, negotiated by unions on behalf of workers, reflect the cost of living in each of these cantons.

However, the MPs have now decided that collective labour agreements should prevail over the cantons’ minimum wage legislation.

Why doesn’t Switzerland have minimum wage laws anyway?

Even though its salaries are among the highest in the world, Switzerland is one of only five nations in Europe — the others being Sweden, Denmark, Iceland, and Norway — that has never introduced minimum wages nationally.

In 2014, Switzerland held a referendum on whether to set the minimum wage at 22 francs, but the move was rejected, prompting individual cantons to do so if they wished.

That does not, however, mean that your employer is free to pay you as much — or as little — as he or she wants.

Instead, the minimum amount you can be paid will be determined through negotiations between the employer and a trade union.

Why was the national law rejected at the polls?

The main reason is that most Swiss employers have negotiated with trade unions to establish industry-specific collective labour agreements (CLAs).

These agreements already cover a minimum wage for each type of work, in addition to other worker-protection measures such as regulations relating to work hours; payment of wages in the event of illness or maternity; vacation and days off; and protection against dismissal.

CLAs are sector-specific; in other words, they take into account the particular aspects of each branch nationally rather than regionally. As an example, Switzerland’s largest labour union, UNIA, maintains 265 collective agreements in the areas of industry and construction.

READ MORE: What is a Swiss collective bargaining agreement — and how could it benefit you?

Why are national CLAs incompatible with cantonal wage laws?

CLAs are applied nationally per each sector, so they actually already cover what a minimum wage should be for all branches everywhere in Switzerland.

And even though Switzerland is a federalist state that gives cantons sweeping powers to enact their own laws, this has not stopped MPs from voting that national CLAs should take precedence over cantonal laws, at least in this particular matters.

“CLAs are complex and balanced. The Federal Council considers them to be binding nationally for an entire branch,” said Fabio Regazzi, one of the MPs who spearheaded the move.

What effect will this decision have on employees in the five cantons?

The minimum wages enacted in those cantons are higher than the ones outlined in CLAs for specific sectors. This means that employees who have earned a certain wage will now see their income plummet.

In Geneva, for instance, “there are potentially thousands of people who could see their wages drop,” according to state councillor from the Green Party, Fabienne Fischer.

Fischer added that “the reduction [in pay] could go up to 1000 francs per month for some workers - it is enormous".

The only employees not impacted by the change would be this whose jobs are not covered by a CLA.

What’s next?

Once the Federal Council confirms the scope of application of the CLAs — in other words, that they do indeed supersede cantonal rules — minimum wage laws would no longer be valid,

If this motion is implemented, the cantonal provisions on minimum wages will lapse. This requires that the Federal Council declares the scope of application of the CLA in the corresponding branches. The provisions of the latter will then apply. 

READ MORE: What is the average salary for (almost) every job in Switzerland?

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Helena Bachmann in Geneva 2022/12/27 11:01

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