Swiss canton introduces a minimum wage at more than 17 euros per hour

A Swiss canton will introduce for the first time an hourly minimum wage, based on a decision issued by the Swiss Federal Court. The canton of Neufchatel will implement this measure, even though it was a subject of dispute for various economic organizations and managers.

The Federal Court, which is Switzerland's superior legal authority, dismissed appeals against this economic measure, as per a decision issued on 4 August 2017. Following a petition which called the introduction of a minimum wage, the measure came into force after a vote held on cantonal level in 2011.

The establishment of a minimum wage is consistent with Constitutional Principles

Neufchatel's cantonal authorities voted for the implementation of this measure, after approval was obtained from the canton’s population. The approval was sent for revision to the Federal Court. Under the court’s decision, the minimum wage set up by the canton of Neufchatel is line with the federal law and it respects the principle of economic freedom provided by the Swiss Constitution.

In addition, the Federal Court deemed that the minimum wage is aimed to reduce the occurrence of so-called “poor workers”, those who are earning only a very low wage. The Neufchatel population claims a minimum wage of 20 CHF (17, 38 euros) per hour. By comparison, other European countries, like France, have a gross hourly wage of 9, 76 euros. Nevertheless, exceptions are possible in certain industry sectors, for example in viticulture and agriculture.

The corresponding annual minimum income is 41, 759 CHF (approximately 36, 300 euros) or 3,480 CHF per month, considering a working week of 41 hours at a minimum wage of 20 CHF per hour. This income barely covers the cost of living in Switzerland without having social assistance, which makes it difficult to have the necessary financial resources. While the measure was in work, employers from Neufchatel have estimated that the minimum wage would generate significant additional costs to the economy, up to 9 million CHF.

Swiss cantons which have proposed similar initiatives

While the canton of Neufchatel is the first of the Swiss cantons to introduce a minimum wage, similar initiatives are prepared in other cantons as well, for example in Ticino and Jura. However, the procedures are not yet completed. In some Swiss cantons, including Valais, Vaud or Geneva, the initiative is not as popular, as they refused to implement similar economic measures.

The introduction of a minimum wage was rejected by Swiss voters in the past

An introduction of a minimum wage of about 3,300 euros throughout Switzerland was rejected through referendum by the Swiss population in May 2014. If the measure had passed the vote, Switzerland would have had the highest minimum wage in the world at the time. In 2014, only 23% of the Swiss voted in favor of the increase of minimum wage, which would have been raised to 22 CHF (18 euros) per hour.

Left-wing parties and trade unions claimed in return that a minimum wage of approximately 4,000 euros was necessary to cover Switzerland’s cost of living. The World Bank published a study in April 2014 which also revealed that Switzerland along Norway were the states which had the highest cost of living.

Swiss right-wing parties, the Parliament, the Government and the agricultural sector opposed to this measure, claiming that a minimum wage that high reduce the number of available jobs and emphasized that a minimum salary was already established in certain industry sectors.

 

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