A $25 an hour minimum wage? It may happen in Switzerland.
Swiss voters will decide on Sunday whether to set the world's highest minimum wage – which many argue is necessary in the world's most expensive country.
Basel, Switzerland — Life is far from cheap in Switzerland. Here an espresso costs $5.50, a fast-food combo meal $15, and two pounds of chicken breast $28.
In fact, Switzerland is the most expensive country in the world, the World Bank said in a recent study.
So to guarantee a so-called "decent life" for low-wage workers, the Swiss are going to the polls Sunday to vote on a union-pushed referendum setting the minimum wage at 22 Swiss francs – or $25 per hour – which would be the highest minimum wage in the world.
If approved, about 330,000 Swiss – nearly 10 percent of the workforce – would see their paychecks rise, with the majority of these working in retail and other low-level services jobs and agriculture. About 70 percent of those affected would be women like Melanie Garcia, a sales assistant making $22 an hour in Basel. At 27, she still lives with her mother because if she moved in with her boyfriend as she wants to, they wouldn't be able to make ends meet.
“It’s difficult to live in Switzerland with this salary,” she said. “I’m young and I would like to go out sometimes, but I need to pay attention to every cent I spend.”
In 2011, consumer goods were 62 percent higher in the Alpine country than the European Union average, according to Eurostat. And Zurich is significantly more expensive than New York City when comparing consumer prices, according to Numbeo, a site that compares cost of living between cities.
The ballot initiative has faced fierce opposition from the government, large corporations such as Nestle and Swatch, and employer associations.
Opponents say it will do more harm than good, increasing inflation and unemployment, currently at 3.2 percent.
“A minimum wage won’t stop poverty,” said Economy Minister Johann Schneider-Ammann. “This system would be counterproductive.”
But Chris Kelley, head of the union campaign in Switzerland's Aargau canton, argues there is no correlation between unemployment and a minimum wage. “Quite the opposite,” says Mr. Kelley. “If you give people a better wage, you increase their purchasing power and that helps the economy.”
According to Swiss unions, minimum salaries benefit workers and governments alike. The Alpine country would save $112 million annually on social welfare payments, as the lowest-paid 10 percent of workers receive public aid.
“Taxpayers are paying for employers that pay low wages, because they pay salaries that people cannot live off of, so they have to go on welfare,” says Kelley.
The Swiss initiative comes at a time when the minimum wage debate is raging in many countries. For the first time in Germany, Chancellor Angela Merkel has agreed to set a minimum wage of $11.50 an hour, while British Prime Minister David Cameron has raised it to nearly $11 an hour. President Barack Obama is also pushing for a significant increase from $7.25 to 10.10 an hour.
It is also the latest proposal to alleviate a growing income inequality that has many in the country concerned.
“The crusade against income inequality in Switzerland is something new and the result of excesses at the top of certain Swiss corporations,” says Arturo Bris, finance professor at the IMD Business School in Lausanne, Switzerland, referring to recent scandals of excessive bonuses given to top executives. “Society's response was first to limit the salaries on the top [via a ballot initiative last year], and given that it failed, now the new initiative is targeting those in the lower pay scales.”
Two months ago, polls showed the referendum would succeed. But a survey last week had 64 percent of respondents against the measure.
Regardless, supporters have something to show whether it passes or not: Some large companies such as clothing retailer H&M and supermarket chain Lidl have already agreed to raise their wages to the proposed minimum.