Executive pay and golden handshakes in Switzerland

In the FT some time ago, Costa Vayenas presented the admirable Swiss political system:

  • The country has no prime minister.
  • There are no full-time members of parliament.
  • The budget has to be balanced over the cycle.
  • Taxes cannot be raised without the people’s direct consent (ballot papers, accompanied by return envelopes, are posted to the voter’s home).

Swiss citizens have become increasingly unhappy as wages of executives balloon while those of low-skilled workers lag. A referendum in March this year to give shareholders a binding say over executive pay and ban golden handshakes and parachutes was overwhelmingly backed by voters. Read more here.

The more radical “1:12 initiative for fair pay,” brought forward by the youth wing of the Social Democrats (JUSO), was not so successful.

The idea behind the 1-12 proposal was that nobody should earn more in a month than others earn in a year – a differential accepted in some British worker co-operatives. swiss 1-12

Reuters reported on November 24th that 66% of Swiss voters rejected the proposal to cap salaries, as industry leaders in Switzerland, which has some of the world’s biggest companies, warned that the measure could harm the country’s economy by restricting the ability of firms to hire skilled staff, forcing firms to decamp abroad, and leading to a shortfall in social security contributions and higher taxes.

JUSO President David Roth told Reuters:

“Of course we are disappointed. But I also believe that we have an achievement nonetheless. A year ago, opponents were defending high salaries. Today no-one is doing that. No-one in Swiss politics would dare say that million salaries are justified.”

Other initiatives will be put to Swiss voters to try to address the widening income gap in the country – one being a vote on whether to introduce a basic living wage of $2,800 per month from the state.

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Posted on December 5, 2013, in Banking and finance, Corporate political nexus, Government, Lobbying, Planning and tagged , , , , . Bookmark the permalink. Leave a comment.

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