Introduction

In Switzerland, it is still considered inappropriate to discuss wages. Data on workers' average monthly income is difficult to obtain because no reliable statistics are available and living costs and salaries vary across each canton.

The taboo surrounding wages and the lack of guaranteed equal pay for male and female workers suggests that there is still much work to be done in this regard. Many questions remain unanswered – for example:

  • What constitutes a fair or unfair (ie, extraordinarily high) salary?
  • What qualifies as exploitation?

Further, recent trends suggest that young professionals are being exploited. For example, graduates in certain cantons (eg, Basel City) receive no monthly wages during their traineeships. Meanwhile, many directors and CEOs of big companies earn over Sfr1 million a year.

Wage capping

The Swiss authorities are debating whether to cap the annual salaries of CEOs of government-owned corporations. Some of the highest earners include:

  • the CEO of Swisscom, a Swiss telecoms corporation (more than Sfr1.5 million a year);
  • the CEO of SBB, the national public transport corporation (more than Sfr1 million a year); and
  • the CEO of Swiss Post, the public mail and parcel service (slightly less than Sfr1 million a year).

Given that a federal government member has an annual salary of approximately Sfr450,000, most people would consider the above salaries excessive and unfair. Remarkably, the average research manager or university director earns between Sfr250,000 and Sfr350,000 a year, while most CEOs in the financial sector earn at least Sfr500,000 a year.

These numbers prove that financial sector salaries are significantly higher than science sector salaries. While management positions in both fields require highly qualified workers with degrees, the cause of such a significant wage gap is unclear. One explanation could be the comparatively high stress levels in the financial sector.

'Fat cat' regulations

The 'fat cat' regulations of 2014 apply only to stock-quoted companies (for further details please see "'Fat cat' regime – government proposes regulation of top-level management compensation packages").

Under this regime, additional forms of remuneration include:

  • loans;
  • bail;
  • release claims; and
  • equity participation.

Therefore, an employee's actual income can be much higher than their standard monthly salary. Although these forms of remuneration are common in the financial sector, they are rarely offered to science sector employees.

Encouragingly, the fat cat regulations implemented a mechanism for preventing extraordinarily high salaries: all remuneration to company directors and CEOs must be approved at a general meeting. However, this somewhat democratic approach is proving inefficient, as Swisscom and other stock-quoted companies still pay exorbitant salaries.

Solutions

Pay equity could be achieved through the legislative regulation of wages, which would certainly restrict freedom of contract in the private sector (such regulation already exists in the public sector). However, given the fundamental differences between the public and private sectors (eg, with regard to job security), it seems utopic and impracticable to suggest that regulations could address every criterion.

Greater market regulation may be an economic solution; however, this would work only if all wage information was made publicly available (thereby raising data privacy concerns).

As individuals' anonymity must be legally guaranteed, a combined approach may be the best solution. For example, new legislation could require every company to disclose workforce remuneration on a no-name basis, accounting for major business fields, employee numbers and location. This approach would improve pay transparency and make fair wages (ie, based on various criteria and individual circumstances) more achievable.

For further information on this topic please contact Valeria Gumuchdjian at Rihm Rechtsanwälte by telephone (+41 44 377 77 20) or email (valeria.gumuchdjian@rihm-law.ch). The Rihm Rechtsanwälte website can be accessed at www.rihm-law.ch.

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