With both houses of parliament voting in favour of overriding cantonal minimum wage rules in 2022, and the recent news that the government is set to propose legislation to make the plan a reality, many workers in Switzerland may be wondering whether the country's minimum salary rules are not long for this world. Here’s what we know so far:
In 2022, the National Council (lower house) and Council of States (upper house) voted in favour of, in practice, scrapping minimum wage rules in Switzerland. While the alpine nation does not have a national minimum wage, several Swiss cantons (Neuchâtel, Jura, Ticino, Geneva and Basel-Stadt) and cities (Winterthur and Zurich) have enacted or are set to implement the policy thanks to cantonal and local referendums.
Minimum wages in Switzerland vary between 19 or 19,50 francs an hour in Ticino, right up to 24 francs an hour in Geneva - one of the highest minimum wages in the world. What’s more, several other Swiss regions are likely to have votes on minimum wages in the future, namely the cities of Lucerne, Biel, Schaffhausen and Bern, and cantons Solothurn, Basel-Land, Fribourg, Vaud and Valais.
However, under the approved plans submitted by Obwalden Councillor of State Erich Ettlin (Centre), collective employment agreements (CEA) agreed between employers’s associations and unions would take precedence over cantonal minimum wage laws. This would apply even if the salary agreed through the CEA is lower than the minimum wage, in practice scrapping minimum wage rules for those working under a CEA - estimated to be half the Swiss workforce.
In arguing for the law, Ettlin told the Tages-Anzeiger that it would be problematic for a CEA, agreed nationally, to be overridden by minimum wage rules implemented by a single canton. He argued that collective employment agreements have been instrumental in preventing strike action in Switzerland and that “the entire successful social partnership model will be damaged” if minimum wages take precedence.
With the bill passed by both chambers of parliament, the Federal Council is now required to draft legislation to make the policy a reality. Federal officials sent a proposal for consultation at the beginning of January 2024.
So does this mean that minimum wages in Switzerland are not long for this world? While the plan has support within parliament, the decision has been heavily criticised by local officials and Swiss unions. On May 5, 2024, the Tages-Anzeiger revealed that of the 21 different cantons asked for comment, 20 rejected the plans - the only canton to approve of the plan was Obwalden, Ettlin’s own canton.
The Cantonal Conference of Social Directors told the newspaper that the plans “contradicted federalism” as it would invalidate legislation passed by a majority at referendum. They added that minimum wages help in “combating poverty and in particular the phenomenon of the ‘working poor’”.
In a statement, the government of Canton Zurich noted that while minimum wages and CEAs can come into conflict, the decisions made at the cantonal level should be given precedence over federal rules. Even the Federal Council has advised parliament to reject the plan it itself created.
Now, both chambers will analyse and approve or reject the plan put forward by the Federal Council. Given the opposition to the change outside of parliament, Ettlin himself admitted that the final decision would be “a difficult balancing of interests between the proven, privately organised social partnership and the cantons.”
Whether parliament will stick to its guns and approve the law, remains to be seen.