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Swiss canton introduces a minimum wage at more than 17 euros per hour

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For the first time in Switzerland, one of the cantons will introduce an hourly minimum wage, following a decision of the Swiss Federal Court. This measure will come into force in the canton of Neufchatel, although it has been disputed by managers and economic organizations.

The highest legal authority of Switzerland, the Federal Court, has dismissed appeals made against this economic measure, according to a decision released on 4 August 2017. This measure entered into force after the cantonal vote held in 2011, following a petition calling for the introduction of the minimum wage.

The measure is consistent with the Swiss Constitutional Principles

After obtaining approval from the cantonal population, the cantonal authorities of Neufchatel voted to implement this measure, which was subsequently appealed to the Federal Court. According to the Federal Court, the minimum wage established in Neufchatel is in line with the constitutional principle of economic freedom and the federal law.

The Federal Court added that the minimum wage aims to combat the situation of “poor workers”, meaning those workers who are paid a very low wage. The minimum wage claimed by the residents of Neufchatel is 20 CHF (17, 38 euros) per hour. As a comparison, in other European countries such as France, for example, the gross hourly wage is 9, 76 euros. However, exceptions are foreseen especially in certain industry sectors such as agriculture and viticulture.

With a minimum wage of 20 CHF per hour and a working week of 41 hours, the corresponding minimum annual income is 41, 759 CHF (36, 303 euros) and respectively 3,480 CHF per month. Having this income it is difficult to have the necessary financial resources for the cost of living in Switzerland without social assistance. Employers from the Swiss canton have estimated while the measure was in work that the additional cost to the economy generated by this measure is 9 million CHF.

Similar initiatives in other Swiss cantons

The canton of Neuchatel is the first of the 26 Swiss cantons to introduce a minimum wage in the country. Similar initiatives are underway in the cantons of Jura and Ticino, but the procedure is not yet complete. On the other hand, other cantons such as the cantons of Geneva, Vaud and Valais refused similar measures.

Switzerland rejected the introduction of minimum wage in the past

The Swiss rejected by referendum the introduction of a single minimum wage in the country of about 3,300 euros in May 2014. If it had been approved, it would have become the world's highest minimum wage at the time. Only 23 percent of Swiss voted to raise the minimum wage, proposed to increase to 22 Swiss francs per hour (18 euros).

Swiss trade unions and left-wing parties claimed that a minimum wage of at least 4,000 euros was needed to cope with the cost of living in this country. A study published by the World Bank at the end of April 2014 also indicated that Switzerland and Norway were the countries with the highest cost of living.

Opposing this project, right –wing parties, the agricultural sector, the Parliament and the Government said that a minimum salary that high would be a threat to jobs and stressed that there was already a minimum wage established in some sectors.

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