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SWISS VOTERS HAVE massively rejected a proposal to cap executive pay at 12 times the wage of a firm’s lowest earner, according to official referendum results yesterday.
Two thirds voted against the measure, which had been expected to fail in spite of widespread discontent at excessive pay for top bosses.
Dubbed the “1:12″ initiative after the legally-binding ratio it would have set between the top and bottom salaries in a firm, the plan met with stiff opposition from Switzerland’s business community and political right.
Ahead of the vote, its critics issued stark warnings that inscribing salary restrictions into the law would make the wealthy Alpine nation less competitive and break with a Swiss tradition of limited official meddling in business.
In March the Swiss massively backed rules to rein in golden handshakes, amid a public outcry over high-profile severance payments.
“Shooting ourselves in the foot”
Christoph Darbellay, head of the centre-right Christian Democratic Party, told AFP that voting Yes would be tantamount to “shooting ourselves in the foot”.
Switzerland’s cross-party government had urged a No vote, saying a 1:12 law would dent tax revenues and scare off foreign firms.
Their message was heard as all of Switzerland’s 26 cantons and a full 65.3 per cent of all voters rejected the initiative, according to final results released by public broadcaster RTS.
Swiss Economic Affairs Minister Johann Schneider-Ammann hailed the result, saying it would allow the Swiss economy to remain competitive.
But he urged big bosses to take note of the public outrage over some of their salaries, pointing out to reporters that “I do not appreciate the excessive salaries received by a handful of managers”.
A banner in support of the referendum is fixed at the window of a house in Wildhaus (Image Credit: (AP Photo/Keystone,Arno Balzarini)
Switzerland has long boasted a business-friendly climate coupled with some of the highest average salaries in the world, and has largely avoided the economic crisis dogging the European Union, of which it is not a member.
The referendum campaign was spearheaded by the Socialist Party’s youth wing, along with the Greens and trade unions.
They argued that it was time to clip the wings of the vastly overpaid, underlining that an informal ratio of around 1:12 was the norm as late as 1998, before things went awry.
The debate led to intense scrutiny of bosses’ pay packets, which the 1:12 proponents said were an average 43 times higher in 2011 than those on the bottom of the ladder.
According to 2012 figures published by the campaigners, the then boss of pharmaceutical giant Novartis made 219 times the firm’s lowest salary.
At banking group UBS, the lowest-paid employee would have had to work 194 years to make the same amount the head of its investment bank earned in 12 months.
‘Rip-off’
On Sunday, Swiss Socialist Youth chief David Roth acknowledged that “we did not manage to persuade people that the rip-off going on in companies’ executive circles must end”.
Under Switzerland’s direct democratic system, campaigners can put any issue to a plebiscite by collecting more than 100,000 signatures.
Switzerland hosts a range of popular votes on national issues each year, grouped together on four different Sundays.
Two other federal initiatives were struck down in Sunday’s vote, which saw a participation rate of 53.6 per cent, considered very high in Swiss referenda that usually fail to draw even half of eligible voters.
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Common sense has prevailed. This referenda was organised by the radical left in Switzerland. Where a referendum can be called with petition of 20,000 signatures.
Thank God the radical left haven’t got much of a foothold in this country. Dogmatic bunch of anti-capitalist wasters.
Oh, and watch now as the more talented executives cross the border and head for greener pastures once they’ve hit the pay cap.
“Having developed this marvellous entrepreneurial culture which is delivering so many benefits in terms of employment and wealth to the country we must ask ourselves if there is now a danger that our regulatory environment has gone too far? We should be proud of our success, not suspicious of it. Our wealth creators should be rewarded and admired not subjected to levels of scrutiny which convicted criminals would rightly find intrusive.”
Sean Fitzpatrick. Anglo Irish Bank. June 2007.
Well said Sean fitz it applies now more than ever
Good result. The swiss aren’t fools. The overused word “empowered” certainly applies to the Swiss.
Funny the Journal massaged the story for weeks and weeks and now the results are out we get a reprint of the AFP story.
Thanks for the feedback, Dom. Not quite sure what you’re getting at, but we only had one other article directly dealing with this referendum http://www.thejournal.ie/switzerland-vote-executive-pay-1174184-Nov2013/
This is not correct. There was another article on Switzerland quietly becoming a rebel of Europe where 1:12 initiative was the main theme. And then there were a few articles on basic guaranteed income initiative also the be voted on in Switzerland where 1:12 was also referenced.
The point is that the Journal is happy to elaborate on nonsensical socialist schemes but then when such suicidal ideas get comprehensively defeated we get a copy-paste of an AFP article.
Idiots, why would anyone bar the top 10% of earners vote no to this. “It will ruin the economy”, horseshit! It will ruin our 700k plus salaries. Greed!
Larry
I’m giving you the bird for that comment. If I own my own Company and own all of the assets and decide to employ one hundred people on twice the minimum wage could you please tell me why you think that I cannot pay myself anything I want to from profits. Firstly what business is it of yours and secondly if the Swiss had voted yes then I would simply have laid off all the employees and closed the business.
What kind of idiot are you Larry?
tell that to the toilet cleaner who works 60 hours a week, brings home 1000 euro a month while the top execs are bringing home his monthly salary in a day for all “their hard work”. if you own the company you can have any form of bik’s you want idiot.
so the owner of a company who took all the risk sinking all he has into it, and prob work 80 hr weeks for years making next to nothing, and against all odds created a successful company should be paid just a little more than someone who cleans toiles?
The cleaner get more than they are worth in most cases I find
Owners should take a good whack for the reasons you’ve outlined and fair play to them. However too many top brass executives are not as you described; especially in the banking sector.
Disgraceful. There’s a reason why only teenage guys and far left loons support socialism. It does not work.
An economics professor at Texas Tech said he had never failed a single student before but had, once, failed an entire class. That class had insisted that socialism worked and that no one would be poor and no one would be rich, a great equalizer. The professor then said ok, we will have an experiment in this class on socialism.
All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A. After the first test the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. But, as the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too; so they studied little.. The second test average was a D! No one was happy. When the 3rd test rolled around the average was an F.
The scores never increased as bickering, blame, name calling all resulted in hard feelings and no one would study for the benefit of anyone else. All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great; but when government takes all the reward away; no one will try or want to succeed.
That’s not socialism , that sounds like a communistic dictatorship! In socialism people are allowed a fair wage for work, and are afforded the same opportunities . Look at America, where wal Mart was recently running a food drive for its OWN paid employees in some stores! That is where unchecked capitalism goes- maximum work for minimum pay!
First of all that a made up story with a false moral…it’s a fairy tale, never happened.
Second the idea that greater the reward means greater the effort is proven false for monetary rewards. In fact it’s proven that after a certain point the greater the financial incentive the worse the return, especially for innovative tasks.
pity :(
A terrible pity.
Sense prevails
It’s hard to believe that some people support an ethos that ensures the rich and powerful can manipulate the system to get richer and more powerful. I don’t necessarily agree with this 1:12 idea as it could potentially raise other difficulties but the responses from some people on here are difficult to understand.
- Poor people are all scroungers
- Wealthy people are heavily taxed (average income tax rate in Ireland is <35%)
- It's ok for someone to want to earn more and more money even if they have no need for it. Greed is NOT good so long as there are others going without.
Rich people are NOT wealth creators, they play a small part in a labour market. Some people come up with ideas, some people are good at management and most are willing to sell their labour and know-how for a price. The people in power (executives, bankers etcetera) manipulate the system to ensure that they are rewarded disproportionately for the work that they do. This greed is the cause of most poverty, all environmental issues and most of the wars around the globe. This is a fact that needs to be addressed.
So basically Switzerland voted against a reasonable fair society and want the rich to become as rich as they like and anyone dirt poor can just have more dirt…There must be f**k all working class people in the country worth talking about anyway for it to pass by such a margin. Or maybe the dopes were too lazy watching judge Judy on telly to go out and vote..
It’s not as simple as that Allister.
Voting yes to this could (or more likely would) have resulted in a lot of effects that were unintended.
Like most pseudo-socialists, you don’t actually know much about what you’re talking about.
1. Capping the wage would leave Switzerland less competitive. Larger companies would decide against setting up shop. Talented executives would hop over the border or simply choose another EU country that doesn’t have such a cap.
2. Social inequality isn’t a big problem in Switzerland. This was proposed by a bunch of socialists who care more about pushing their dogma on people than improving the country.
3. The proposal left loopholes. Executives could still get their wealth through equity.
4. Switzerland is a free society, the last time I heard. Why take away that just so a bunch of anti-establishment loons who grow dreads and partake in drum circles can be happy.
You don’t know much about economics and business, do you
Exactly right Johnny five. But don’t worry, the culture of “I want what HE HAS” culture in Ireland is still alive and well. You can be successful but not too successful, (because that wouldnt be FAIR)
It’s nearly laughable at this stage.
-You don’t know much about economics and business, do you-
Neither does anyone else judging by what they did to it
The excuse of “the highly paid will leave and they will lose competitiveness” is ridiculous. Just because your neighbours have an unfair society doesn’t mean you should too. These changes have to start somewhere. If everyone pushed to live in a fairer country there wouldn’t be the problem of the rich leaving and losing competitiveness. It’s a well known fact that inequality leads to social problems.
Quite staggering ignorance of the Swiss and their country. Absolutely staggering.
They actually work to become rich and the likes of you looking for more handouts has this country in the state it’s in.
Who here is looking for handouts?
High earners are already taxed extremely highly in this country. I’m sick of hearing poor people give out about the so called rich as they fleece the taxpayer for their housing,dole,medical cards and an incredibly long number of other benefits. Those that work hard and have ability deserve less tax and social welfare should be cut to facilitate this.
I think you have misunderstood the topic here. There’s nobody talking about social welfare, medical cards, taxes, etc. This article is about income inequality for working people.
Sean what is unfair if getting what you deserve in life, it’s perfectly fair to me
So you think that if you are able to make money then you deserve it? So where do you draw the line then for bank robbery, drug dealing, or fraud? Is that all deserved?
And I don’t believe it’s very easy to be very rich without living off the backs of others. Try to list a few people who are super-rich who haven’t in some way damaged the environment or used workers in 3rd world countries for example.
I wonder is paying ridiculously high salaries a method for a company to reduce its profits for taxation purposes. An avoidance method for corporation tax and the excessive pay by the employee can be put into a private pension scheme with little or no tax. A screw the state at all opportunities type mentality.
Mark. That is like asking why do premiers football players get the wages they do. Its because that is what clubs are willing to pay to get the very best. Companies are no different. So why should they be dictated to has to how much their senior executives get paid.
I hear your point, and I cannot fathom how spectators/fans agree to support such wages with their hard earned cash. It’s an issue of personal pleasure and quality of service provided with regard the sports industry sector and each to their own on that front. However when companies which hold a monopoly on services that both the state and private sector must utilise decide to increase the wages offered to the top executives it ultimately increases inflation within the economy as the company passes on the cost to the consumer. This transfers wealth at an alarming rate to the elite in these positions. I’m sure these professionals are extremely effective operators however I think there should be some control over these salaries so as to protect the state from inflation.
@mick jordan. The fact that premier clubs fork out so much for players has nothing to do with signing the very best. The very best come through the Spanish cantera system and seldom end up in the premier league. Secondly, two wrongs don’t make a right, so wouldn’t it be better to cap sports salaries to a fixed percentage of a clubs income instead of paying totally non productive entertainers outlandish salaries. Thirdly, the success of every executive is dependant on the labour of all em
Employees. Therefore is it not rational to suggest the success of executives is inherently dependent on the labour of all employees and the salary therefore should be a fair reflection thereof.
Mark what’s the difference between income tax rates and corporate tax rates- serious you need to educate yourself
It’s interesting that capping the salaries of senior executives would make Switzerland “less competitive ….. and scare off foreign firms”
while the OECD claims that capping or reducing the salaries of ordinary workers in Ireland has the completely opposite effect.
“Wage restraint will be required in the short run to help maintain competitiveness and crowd in foreign demand.”
http://finfacts.ie/irishfinancenews/article_1013801.shtml
More and more wealth is being concentrated in fewer hands.
At this stage societies are reverting away from shared futures in to the old days of them and us, that eventually leads to upheaval.
The rich create jobs:
Yes if they have no other choice, otherwise they prefer hedge funds, bonds and the like.
They work hard for their money:
Actually no, most of them inherited it, some of them improved their inheritance.
They’ll move to another country and take their money with them:
Just how much of their money do you think they have here? Most of it is already off shore.
Mark don’t judge everyone in your low standards, the rich are rich because they deserve to be
So you’re saying that the poor are poor because they deserve to be?
Demand for a service creates jobs
Yes and no, a business from the beginning up to a middle size business provides the vast majority of employment within a country, and is the pillar of an functioning economy. However when a business grows successful beyond a certain point it no longer creates employment, in fact it destroys employment. It does this by out sourcing to poorer countries with cheap labour or by mechanisation. However they continue to hover up capital from an economy at an exponential rate by availing of foreign tax havens and by loop holes deliberated created by corrupt politicians. Moral is Big Business is as damaging as big government when allowed to grow without restriction.
Demand creates demand. Banks decide is a business is funded and allowed to survive. http://businessetc.thejournal.ie/ulster-bank-rbs-small-firms-default-1192097-Nov2013/.
Wealth as an economic reward is rare and unlikely.
I don’t understand why so many people give out about people earning too much, I bet those same people would jump at the chance to have that much money, jealousy!
The less you earn technically the better of you are because when you are earning a lot of money a lot of it goes on taxes and Levy’s , So the more you earn to more you pay. Because the Levy and tax are a percentage of your wage.
Do yourself a favour then Francis and ask for a pay cut this Christmas.
What a moronic comment.
Obviously Francis is working hard to eork for free….
…. please report back on how that goes.
My point is in the current Culture is that The Levis and taxes are screwing peoples wages. I think that People should get a fair wage for a fair days work. I do think its unfair that their is a Hugh gap in Wages between the to and lower paid. As regards asking for a pay hike at Christmas I cant because I am now unemployed.AS I SAID PEOPLE WHO ARE EARNING THE MOST PAY THE MOST TAXES. Even if you do overtime now most of it goes on taxes that is NOT FAIR.. So I was only trying to get a point across .
Pity about the defeat.
However, at least Switzerland has a system which brings democracy much closer to the people.
All we can do here is hang in there for four years at a time before we can have a go at shifting wasters out of office.
The 1:12 Initiative was a very good idea and should not be allowed fade off the political radar in Switzerland.
We sure need something like it here. Apparently our 1922 Constitution had a built in facility whereby if 75000 citizens signed a petition the matter could immediately be brought to Government.
For some reason that provision was removed.
Perhaps it’s time we went looking to have it re-instated. It could be a mechanism through which we might begin to re-balance income in this country and restrain the Banking and Industrial fat cats from constantly gulping up the cream.
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