Minimum Wage and Maximum Irony

It is a peculiar sight: trade unions, the staunchest defenders of private negotiation between employers and workers, now find themselves championing state-imposed wage floors. This is the uncomfortable position the Swiss Trade Union Federation has been backed into, and its decision to call for a referendum reveals more about its own weaknesses than the supposed strengths of Swiss social partnership.

The country’s parliament has given its blessing to a legal amendment that seems logical on the surface. It stipulates that nationally-valid collective bargaining agreements (GAVs) should take precedence over cantonal minimum wage laws. In essence, a deal struck between social partners for an entire industry will now be permitted to set wages below a minimum mandated by a canton or city. The final parliamentary vote on June 19 is considered a mere formality.

This change directly impacts five cantons and the cities of Zurich, Winterthur, and Lucerne, where voters had previously approved minimum wages ranging from around 20 to 24.59 francs per hour. For the cantons of Neuchâtel and Geneva, a special arrangement is planned: their existing minimum wages will be frozen, preventing any future adjustments for inflation, but they will not be immediately undercut. This is a compromise that satisfies no one completely.

The unions are now in an unenviable strategic bind. For years, they used the threat of a public vote on minimum wages as a lever to bring employers to the negotiating table for GAVs. In sectors where they consistently failed to secure such agreements, like retail, cleaning, or gastronomy, the minimum wage became a safety net. By now having to defend this safety net through a referendum, they are implicitly admitting that their core business—negotiating robust contracts—has failed for some of the lowest-paid workers.

The bourgeois majority in parliament argues that its move strengthens social partnership by elevating private agreements above state law. This is a fine principle, but it conveniently ignores the context. The law is designed specifically to allow lower wages in certain sectors than a local electorate has deemed acceptable. It prioritizes the outcome of a negotiation over a democratic decision, a curious interpretation of partnership.

Now the Swiss people will likely be asked to decide. The referendum will not just be a vote on wage policy. It will be a test of the unions' relevance and a public airing of their inability to secure living wages for everyone through their preferred method. One has to wonder if this is what politicians mean when they speak of strengthening the system: forcing one of the partners to publicly campaign from a position of acknowledged weakness.

Written by Sandy van Dongen sandy.vandongen@alpineweekly.com