The Swiss Times - Swiss News in English

Switzerland: A model for no minimum wage

  • By The Swiss Times
  • 1 May 2023
Switzerland’s workers seem to be exceedingly happy with the highest salaries in the world and four weeks’ of paid vacation per year. They are so happy that the country overwhelmingly rejected a proposal to adopt a national minimum wage.
Switzerland: A model for no minimum wage
A co-working space in Appenzell with inspiring views (Credit: Startupanz).

While Switzerland has the highest average salaries in the world, outsiders may be surprised to learn that there is no national minimum wage in the country.

In fact, about 76% of Swiss voters rejected a measure in 2014 to create a national minimum wage. It would have been CHF22 per hour, or about CHF4,000 per month, which would have been the highest national minimum wage in the world.

Swiss salaries: How do they compare to the rest of the world?

Still, Switzerland boasts the highest wages in the world, on average, at about CHF 6,500 per month, according to the Organization for Economic Cooperation and Development (OECD).

According to Numbeo, an average monthly Swiss salary after taxes is about $6,100 – more than $1,000 more than the second highest monthly salary (Singapore). Third is Luxembourg with $4,961 and fourth is the United States with $4,245.

Switzerland: A model for no minimum wage
Credit: Numbeo

For a country inextricably tied to banking and luxury goods, high salaries may be expected; but, the distribution of income is also fairly equal across the country.

According to the Gini Index (the measure of the distribution of wealth across a population), Switzerland ranks well. A higher Gini index number for a country represents greater inequality, meaning high-income individuals are taking home a much larger percentage of the total population’s income.

According to the most recent data from the World Bank, Switzerland’s Gini Index score is 33, similar to Luxembourg and Jordan. For reference, the lowest Gini score is about 23 (Slovak Republic) and the highest is 63 (South Africa). The United States’ Gini Index is about 40, which is similar to Peru and Morocco.

Here is a global representation of income inequality:

Switzerland: A model for no minimum wage
Credit: Wikimedia

It should also be noted how well Swiss employees are treated once they land a coveted Swiss job.

The country does not allow employees to work long hours or much overtime – their hours are capped to prevent this. Lunch breaks are truly lunch breaks in Switzerland. Employees will be criticized instead of praised for eating at their desks.

Moreover, a minimum of four weeks of paid vacation is mandatory, although skilled employees often receive around eight weeks of paid vacation per year.

Switzerland: A model for no minimum wage
A co-working space in Zermatt with the Matterhorn in the distance (Credit: Startupanz).
How are salaries determined in Switzerland?

Swiss salaries are negotiated between the employer and employee, using an employee’s age, experience, education level, location and which industry the employee works in.

The State Secretariat for Economic Affairs (SECO) provides a wage calculator to help potential employees negotiate for a fair wage. Industry and canton are the two most important factors in making the decision. According to data from the Swiss Federal Statistics Office (FSO), here are some of the average monthly salaries by industry:

  • Financial and insurance activities: CHF 9,286 per month;
  • Education: CHF 8,570;
  • Energy: CHF 8,199;
  • Professional, scientific and technical activities: CHF 7,873;
  • Human health and social network: CHF 6,549;
  • Construction: CHF 6,218;
  • Water supply, waste management: CHF 6,179; and
  • Transportation: CHF 6,097.
  • Professional, scientific, and technical services: CHF 7,873.

These salaries fluctuate depending on the factors listed above. For example, Swiss employees who have two to five years of experience make about 30% more than novices. Those with five to 10 years of experience make 36% more than those with two to five years of experience.

As far as education, employees with a bachelor’s degree earn 24% more than those with only a high school diploma. And those with a Master’s degree earn 29% more than those with a bachelor’s. Meanwhile, those with a PhD earn 23% more than those with a Master’s degree, even if they hold the same position.

Employees living in Geneva and Zurich make about 8% more than the national average, while employees in Ticino make about 18% less than the national average.

Switzerland: A model for no minimum wage
A high school classroom in Glarus (Keystone SDA).
How about expats?

About 25% of Switzerland’s population is made up of foreign nationals, but roughly 33% of the Swiss workforce are expats, which absolutely does not mean it is easier for foreigners to find a job in Switzerland.

To the contrary, expats submit about 30% more job applications that native Swiss before they even land a job interview, according to the FSO. And an expat can accept a Swiss job only if they can secure a much sought-after work visa or permit.

There are some minimum wages in Switzerland

It should be noted that despite the 2014 vote to not adopt a national minimum wage, a few regions of Switzerland have implemented their own. Geneva passed the world’s highest minimum wage at CHF23.14 per hour. The canton of Ticino launched a minimum wage of CHF20.25 in 2021, Neuchâtel adopted a minimum wage of CHF 20.08 in 2022, and the Jura region mirrored Neuchâtel.

There are similar proposals in the works in the cantons of Zurich, Winterthur, and Kloten; but the topic remains highly controversial among the Swiss. The city of Basel launched a CHF21 per hour minimum wage in 2021. The city of Zurich has proposed a CHF23.90 minimum wage which will be likely voted on this June.

Switzerland: A model for no minimum wage
The best things in Switzerland are free: the nature (Keystone SDA).
Switzerland’s quality of life

What Switzerland cannot put a price tag on is its quality-of-life ranking; which, no surprise, is often ranked the first in the world.

U.S. News & World Report has ranked Switzerland the Best Country in the World on its annual index five times, including its most recent list. Some of the top reasons for the #1 ranking include safety, health, economic stability and politics. Another reason: “People generally stick to their 40- or 42-hour work week.”

While Switzerland is often seen as a leader in global finance, the national economy is actually “dominated by small and medium-sized firms, which constitute more than 99% of the total number of its enterprises,” according to recent GIS Reports data.

“The Alpine nation has perfected what many other industrialized nations have eschewed: creating a highly-skilled workforce engaged in making premium products and selling them on the world market,” the U.S. News report noted, adding that Switzerland as the second highest GDP in the world.

“This helps explain why the country placed first on the list of nations perceived as a good place to headquarter a corporation, as well as scoring in the top five among best countries for a comfortable retirement, green living and to start a career,” according to the report.

In fact, the other nations that often contend with Switzerland for the best quality of life rankings are also those without national minimum wages; such as Norway, Iceland, Denmark and Sweden. Perhaps it the nature or maybe the chocolate, but we think it is Switzerland’s commitment to pay its employees fair wages which make for happy residents.

This article may be freely shared and re-printed, provided that it prominently links back to the original article.

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