No to the minimum wage

The Swiss Trade Union Union wants to introduce a minimum wage of 4,000 francs. This is the issue we will have to vote on next May 18. I must say that after the earthquakes caused by the initiative "Weber" and the one on mass immigration, if this vote passes it would really be the straw that broke the camel's back. In the genre of shooting yourself in the foot, you couldn't do better. Our French friends already know this system, and there is no need to be an expert to see that the minimum wage causes a leveling down and unemployment, especially for young people and unskilled people.

There are so many arguments against a minimum wage that I don't know where to begin... let's take them as they come:

Training Course

Paying 4,000 francs for every employee regardless of age and training has two perverse effects. First, it encourages young people not to train since they can be paid a substantial amount as soon as they finish compulsory schooling. On the other hand, employers will be in trouble because they would then have to pay low value-added jobs, above what they actually bring in, which is synonymous with losses. They will therefore have to find a way to do without this workforce, either by automating tasks or by outsourcing. We will therefore see an increase in the unskilled workforce available at the same time as a loss of the jobs concerned. Therefore unemployment, particularly for young people.

Middle class and leveling down

A minimum wage is paradoxically not fair. Paying any employee at least 4,000 francs means that those with qualifications and/or responsibilities will be relatively less well paid in the future. We must not believe in Santa Claus, employers will not be able to increase everyone in the same proportion. The middle class will therefore be the first to be affected. They will have the worries, without having the advantages and will pay the price for the increases granted to unqualified staff. Salary curves will flatten and annual salary adjustments will no longer be granted for many years.

Economic sectors

There is no need to have a high level of business studies to realize that the functioning of a bank and a restaurant are significantly different. The added value generated by a bank employee is much greater than that achieved by a sommelier. Sectors such as agriculture, hotels and restaurants need a lot of labor, especially unskilled labor. In addition, these latter sectors cannot automate their tasks or outsource. This means that either their rates will have to increase substantially, even though prices are already considered high, or they will have to close their doors. In any case, wanting to establish a minimum wage identical to all branches of activity makes no sense.

Geographic disparities

Nor does it take a Nobel Prize winner to see that the cost of living and salary levels are very different if you live in Geneva, Zurich, Lausanne, Delémont, Bulle, La Chaux-de-Fonds or Sierre. While paying an employee less than 4,000 francs in Calvin's city can indeed be considered theft, it is quite different in peripheral regions, where rents, taxes and insurance are much more affordable. In these regions, introducing a minimum wage means the certain death of SMEs with low added value, particularly in the service sector. We will see a series of layoffs and bankruptcies. Supply will gradually concentrate in a handful of large companies, whose headquarters are located in large cities and which can afford to pay higher salaries. Competition will decrease and prices will increase. The rural exodus already caused by the initiative Weber will get worse. We will replace the flow of foreign labor now considered undesirable, by a flow of internal employees, without training, coming from peripheral regions and looking for jobs in the Lake Geneva region or in the golden triangle of Bern-Basel-Zurich.

Tourism

As we have seen above, many sectors will have no choice but to increase their prices. This is particularly the case for the tourism industry, which cannot relocate or automate. This industry is already subject to very strong pressure due to the excessive overvaluation of the Swiss franc. Alpine tourism has also been sacrificed by the Lex Weber and it is located precisely where the cost of living and wages are lowest. Imposing a minimum wage of 4,000 francs there is like shooting an already wounded animal in the head.

Black work

We are no longer in the world of Care Bears. Some bosses, and even entire sectors, will have no choice but to not declare their workforce. Let's think of agriculture for example. Farmers are already unable to live with the prices paid by large retailers. How do you expect them to do if they have to pay their seasonal workers 4,000 francs per month?

Influx of foreign labor

Many voted for the initiative against mass immigration because of wage dumping. These same people might be tempted to vote for the monthly minimum wage of 4,000 francs (or 22 francs per hour). However, such a provision would only further strengthen the appeal of Switzerland. The map below shows the minimum hourly wage in euros in force in European countries and the United States. Germany is still missing, which will introduce such a wage of 8.5 euros per hour in 2015. No need to draw you a picture of what will happen if anyone can earn an hourly wage of 18 euros here...

Work performance

Wanting to ensure a decent salary for everyone is laudable of course. But human beings have an unfortunate tendency to seek the easy way out and rest on their laurels. If they can earn 4,000 francs without training and without moving their butts, then they have few sources of motivation to excel in their work. Work and training are precisely what made Switzerland rich, a country devoid of raw materials.

Conclusion

Providing a decent minimum living wage for those who work is laudable of course. The working poor who have to hold down several jobs, with hours that no longer allow them to rest and live with their family, should no longer exist today. The question now is what we put under this name. A 20-year-old from Jura with a salary of 3,700 francs per month certainly lives more comfortably than a 30-year-old single mother from Geneva with 1,000 francs more.

More generally, when you live on a low salary, you have to make choices. You can't follow the race at all costs unbridled consumption into which our society pushes us. This is also desirable for all new salary earners. Smartphones, big engines, branded products, consumer credits... this is the real cause of the malaise. And the solution is not a minimum wage, at least not at this level, and for all sectors and all regions.