3 popular initiatives about money and salaries in Switzerland

Switzerland has long been known as an island of wealth in Europe. In fact, the alpine republic is among the ten richest countries in the world on a GDP per capita scale, and its citizens have on average more savings than anyone else.

Widening socio-economic gaps in Switzerland

From an outside perspective, one might wonder what the Swiss have to complain about yet there is growing discontent in the heart of Europe. Executive salaries and bonuses at major banks and pharmaceutical companies have skyrocketed to what many believe to be obscene and completely disproportionate to what they actually do.

But as a select few at the top see their coffers filling up faster than ever before, many are seeing their wages rise only with inflation, leading to a widening of the socio-economic gap. This tendency is alarming to many Swiss, because they have seen what this has meant for countries like the USA and Great Britain. Not surprisingly, though, this fear is being spoken about and addressed in the political sphere.

Money and salaries 2.0

On November 24, 2013, the Swiss have voted on the so called "1:12" initiative. The principle was simple: the top earner in any company should not earn more than 12 times as much as the lowest paid employee.

The idea was put forth in 2012 by the JUSO (Young Socialists) and they quickly found 100'000 signatories to put forth the people's initiative. This initiative came hot on the heels of the "Abzocker Initiative" (scammer initiative) from March 2013, to which the Swiss voted "yes". This initiative gave shareholders the power to decide on the salaries and bonuses of upper management, including CEO's.

Money: a Swiss taboo?

Clearly, money remains a hot topic in the country of cheese and chocolate, and unlike the confederacy's international reputation, the people are anything but neutral when it comes to their opinions on the matter. They surely do not like to talk about their salaries, as this recent article highlights.

However, having an opinion and voicing it are two different things.

The Swiss are notoriously secretive when it comes to money. According to a newspaper headline, the Swiss are more likely to openly talk about sex than how much they make. The reason is that a great many measure their worth by how much they make, and when you do not know what others make, you feel like you are their equal. Because in turn, they do not know what you earn!

The Swiss psyche

The debate around the "1:12" initiative had started swinging in the opposite direction from where it was a few months before the vote. Opinion polls showed that a majority of Swiss were against the proposed legislation. (It ultimately failed to find support at the polls where 65,3 percent voted against it.) Who can blame them with large employers threatening to leave the country if the initiative were to pass?

Apart from being secretive, the Swiss are a naturally fearful folk, taking threats seriously and doing their best to protect themselves against them. One need only look at tons of explosives built into roads, bridges, and tunnels to fend off an invasion that will likely never come.

When the Swiss speak about the economic health of their country with foreigners, they will always say: "Sure, we're doing well now thanks to our hard work ethic and conservative spending, but we don't know what will happen in the future."

Risk taking and entrepreneurship

It is loss aversion that makes the Swiss tick, rather than the idea of future gains. This is why entrepreneurship and risk taking are characteristically low among native born Swiss. This remains true despite the fact that those who do take a leap are usually richly rewarded. The designer bag company Freitag is a good example of great success for taking a risk.

About the "Guaranteed Basic Income" initiative

This fear of risk taking is one of the issues that another group of politically engaged Swiss were trying to address with their "Basic Income" initiative. It was voted on in 2014 yet failed at the polls. The initiative would have guaranteed every Swiss citizen a basic income of about 2500 francs a month, regardless of how much they work (or don’t) and what their earnings are.

The pay would have been calculated based on the average rent for a flat and other monthly expenses (Note that in a place like Zurich, this would not be enough. But in some areas of Ticino, for instance, it would be more than enough).

The meaning of work in Switzerland

When many hear about this idea, they find it so radical that they don't know where to begin. In part, the economic theory behind the initiative is meant to be a game changer, though the developers do not consider it to be as radical as it may sound. They are argue that it will give people the security to try more daring adventures.

While 2500 francs may sound like a lot, it is hardly enough to not work at all. Anyone presently working in Switzerland and wanting to live their life today would need to keep working. However, those who are in favor of this idea believe that work would become more meaningful, because people would have more freedom to decide exactly what kind of work they want to do. As one of the originators of the idea, Daniel Häni, points out, it would mean a change in the power structures that money has created.

In a pro/contra discussion of the idea, economist Beat Kappeler points out that on average, each Swiss person works 1000 hours a year when all of the hours are averaged across every citizen regardless of age and employment. According to the OECD, the Swiss work on average 1636 hours a year (less than Mexico: 2250, the USA: 1787, and Austria 1696)*.

However, these are just statistics and do not take into account the work people take home at the end of the day. An one reporter in Australia pointed out: "Where's our 15-20 hour work week?" With technology and the world population at the levels they are today, that should be possible. But the existing system is broken - or at least many believe it to be.

Last but not least: My personal opinion

Having a keen interest in these developments, I think it is great that these types of options are openly discussed in public politics. Citizens in democracies are obligated to maintain a forum for the exchange of ideas, weigh the positives and negatives and make decisions that are morally correct and benefit the most.

One of Switzerland’s strong points is that communes, cities, and cantons are always competing with one another. Even if some of these ideas fail to pass on a national level, a commune or canton could pass them into law. In that case, we could see if the presumptions espoused by the "1:12" and "Basic Income" initiatives were correct - or totally flawed.

(*Numbers are based on 2011 statistics, photos copyright Stefan Bohrer, Kopf oder Zahl)