Swiss voters on Sunday decisively rejected a proposal to cap “fat-cat” pay, in a ground-breaking referendum on the issue.
Final results showed that votes against carried the day by 65.3 percent, to 34.7 percent in favor. David Roth, the president of Switzerland’s Young Socialists and the referendum’s leading sponsor, said he was disappointed.
His proposal would have meant executives would have been unable to earn more in a month than their lowest-paid workers in a year.
The so-called “1:12 referendum” was the second ballot this year in traditionally conservative and business-friendly Switzerland on the subject of executive remuneration.
In March, voters approved a measure that boosted shareholders’ power over managerial salaries and banned one-off bonuses — so-called “golden hellos and golden goodbyes.”
Roth blamed Sunday’s defeat on “scare tactics” by his opponents.
Employers had mounted a vigorous counterattack, claiming approval of the initiative would undermine Switzerland’s competitiveness, slash tax revenues and breach a taboo on giving the state a role in relations between employers and employees.
University of St Gallen professor of public economics Christian Keuschnigg said a study he had carried out for the employers found the cost to the state would have ranged from “close to zero to as much as 4 billion Swiss francs [US$4.39 bilion],” depending on the reaction of business.
The proponents of the scheme, backed by the Socialists and Greens, argued that the savings in top executive pay would be redistributed among the lower paid.
However, Keuschnigg said, companies might have increased their dividends or relocated to other countries.
“Multinational corporations could easily switch their headquarters elsewhere,” he said. “That danger in our view was quite real.”
Both the government and parliament had called for a “no” vote.
Claude Longchamp, head of the polling group gfs.bern, said that, unlike the sponsors of the March referendum, “the Young Socialists were unable to convince older voters.”
However, Sunday’s verdict is unlikely to dispel the controversy over pay imbalances in Switzerland.
A separate initiative by the trade unions, aimed at the introduction of a minimum wage, is expected to go to a national vote next year.
“Our fight will continue against ‘fat cat’ salaries and an unfair pay system. This system has no future. We succeeded in mobilizing many people and launching a broad debate,” Roth said.