Thousands of people have supported an initiative that would cap executive pay at 12 times the annual wage of the lowest earner in a company
Switzerland is staging a public vote on limiting executive pay, in the latest effort by citizens to tackle a widening gap between its top earners and lowest paid workers.
Around 113,000 people signed a popular initiative in support of capping the monthly compensation of executives at 12 times the annual wage of the lowest earner in a company. This was enough to secure a referendum under Swiss law.
Switzerland’s Young Socialists, which proposed the 1:12 Initiative for Fair Pay, believe it will achieve a fairer distribution of wages and better incomes for the lower-paid.
If approved, the move will affect 1.5% of Swiss companies, amounting to around 1,300 businesses, according to a report from the KOF Swiss Economic Institute of the Federal Institute of Technology in Zurich. Larger companies and certain state-run entities are most likely to be impacted by the initiative, with most small and medium business and public sector companies in the country already operating within the proposed limits.
The initiative is one of several actions taken by the Swiss people to address growing pay inequality in the country since the 2008 financial crisis.
Earlier this year the Swiss public backed the introduction of strict controls on top salaries, giving shareholders the power to determine the pay of managers at listed companies.
A separate referendum will be held next month on whether to introduce a basic income of 2,500 Swiss francs for all adults.
Critics say that the 1:12 initiative could reduce Switzerland’s tax revenue by between CHF 2bn (£1.4bn) and CHF 4bn (£2.8bn), and make the country less attractive for overseas companies and investors. They are also concerned that it could result in job cuts as businesses outsource lower paid positions to narrow their pay gap.
The vote will take place on 24 November. If approved, the legislation could be introduced within two years.