Sunday, May 18, 2014

Swiss voters reject minimum wage proposal fearing it will cause spike in country's low unemployment rate and damage Switzerland’s strong economy

Switzerland currently has no minimum wage; it also has a robust economy and one the lowest unemployment rates in the world [3.2 percent]. Hence the AP reported on Sunday:
Worried about upsetting Switzerland’s strong economy..., more than three-quarters of Swiss voters rejected a plan Sunday to create the world’s highest minimum wage...

The Swiss trade union’s idea of making the minimum wage 22 Swiss francs ($24.70) per hour fell flat by a vote of 76.3 percent opposed... Swit­zer­land has no minimum wage. [The proposal would have created Switzerland’s first minimum wage.]
From Reuters:
About 76 percent of voters... dismissed the proposal made by Swiss union SGB and backed by the Socialist and Green parties for a minimum wage of 22 Swiss francs ($25) per hour, final results showed.

The clear rejection of the proposed minimum wage... brings relief to business leaders worried the measure would have hurt competitiveness and damaged the Swiss workplace.

"If the initiative had been accepted, without doubt that would have led to job cuts, particularly in remote and structurally weaker regions," Swiss Economy Minister Johann Schneider-Ammann said at a news conference...

Swiss voters historically have vetoed what they feel are threats to the country's economic success
From the USA Today:
The Swiss Business Federation, Economiesuisse, said the results show that the Swiss people would not tolerate government intervention in a free-market economy.

“We were able to show that the initiative hurts low-paid workers in particular,” the group's president, Heinz Karrer said.

Forcing employers to hike wages can mean other cuts — including jobs. At 3.2 percent, Switzerland's unemployment rate is among the lowest globally.

Swiss Economics Minister Johann Schneider-Ammann warned that “if jobs are being cut, the weakest suffer most.”
From the AP:
Opinion polls had indicated that most voters... argued [the minimum wage proposal] would cost jobs and erode economic competitiveness...

Economy Minister Johann Schneider-Ammann said: "If the initiative had been accepted, it would have led to workplace losses, especially in rural areas where less qualified people have a harder time finding jobs."
Likewise, here in the US, the Congressional Budget Office reported in February that President Obama's proposed minimum wage increase would lead to more joblessness and put hundreds of thousands of Americans out of work. [And while it's true that President Obama is not seeking a $24.70 an hour minimum wage as was proposed in Switzerland, it is important to note that due to Switzerland's highly robust and competitive economy, the cost of living there is significantly higher, hence the proposed $24.70 an hour wage in Switzerland would be akin to a much smaller hourly wage here in the US (- about $14 an hour). (Bottom line, as the CBO confirmed in February, Obama's proposed wage increase would lead to even more joblessness. The Swiss people understand that concept, which is why they overwhelmingly rejected the minimum wage proposal in their country.)]

See February post:  CBO: Obama's proposed minimum wage increase would lead to even more joblessness

Additionally, small business owners in Switzerland also voiced concern that the Socialist Party's proposed minimum wage would price their products out of the market.