Swiss to vote on executive pay limit

Voters in Switzerland will decide this month whether to introduce a rule that would make it illegal for businesses to pay any of their staff more than 12 times the wage of their lowest earners.

Swiss constituents will take to the polls on November 24 as the country holds a referendum on a proposal intended to combat unfair executive pay, masterminded by the youth wing of Switzerland’s Social Democrats. The party’s younger representatives have already gathered the necessary 100,000 signatures to call a referendum.

The Democrats argue that the change would help reduce income inequality, which they say has risen in Switzerland – and the rest of the western world – in recent years.

The Swiss federation of trade unions reports that the wages of the top 1 percent of the country’s earners rose by 39 percent between 1996 and 2012, while middle and low earners saw their pay packets grow between just 6 percent and 9 percent.

‘The point of the 1:12 initiative is to distribute jointly created wealth more fairly,’ David Roth, president of the young Social Democrats, tells the Financial Times. ‘The idea is to stop inequality before it comes into being, rather than trying to deal with it once it is already entrenched.’

The upcoming referendum will be the second time in a year the Swiss have voted on big salaries; in March, voters overwhelmingly supported an initiative to curb big bonuses and ban golden handshakes or goodbyes. Around the same time, it was revealed that Swiss bank UBS had awarded $2.6 mn in bonuses to its executives – a figure that exactly matched the bank’s 2012 losses.

The vote reflects growing dissent surrounding further revelations that some executives are taking home more than 200 times what their employees earn.

Joseph Jimenez, CEO of pharmaceuticals firm Novartis, earns SFr15.7 mn ($17 mn) annually, 266 times as much as his lowest-paid colleague, who has a salary of SFr59,000. Executives at Lindt & Sprungli, Nestlé, Roche and ABB all also earn at least 200 times the salaries of their lowest-paid employees.

‘In the last couple of years these managers were really earning a lot ‒ too much,’ says Corinne Fankhauser, of the Young Socialists, which also supports the referendum. ‘For example, the chief executive of Credit Suisse was earning at one point 820 times what his employees were earning. It’s kind of crazy, these wages. We want to stop this.’

The outlook for the upcoming vote is unclear, however, with recent polls suggesting the numbers of those in favor of the reform are dwindling.

Though a quick survey last month found that the vote enjoyed 44 percent support, last weekend support for the initiative appeared to have slipped to just 34 percent of voters. The proportion of those who opposed it, meanwhile, had risen to 55 percent.