A Proposal To Limit Swiss Executive Pay To 12 Times That Of Low-Paid Employees Has Fat Cats Worried
By Adam Taylor
On Nov. 24, Swiss voters will go to the polls to vote on a radical new idea — limiting the monthly pay of the highest earners in Swiss firms to no greater than the yearly pay of the lowest earners. It’s being called the 1:12 Initiative — and it sure has some people worried.
To understand the context of the vote, you need to know two things about Switzerland. First, the country has a relatively unique system of direct democracy — if 100,000 people sign a proposed change to the constitution, or “popular initiatives,” a referendum is held. If a majority of voters and cantons (Swiss states) agree with the proposal, the change can become law.
The second factor is how these Swiss initiatives have been used recently. Earlier this year Swiss voters agreed to an idea proposed by entrepreneur Thomas Minder that limited executive (in his words, “fat cat”) salaries of companies listed on the Swiss stock market. On the other end of the spectrum, a proposal to give every Swiss adult an unconditional income of $2,800 a month recently gained enough signatures to be voted on.
The 1:12 Initiative lies somewhere between these two extremes in terms of its radical ambition, but its core idea comes from the same place — an angst in Switzerland, a country most famous for centuries of private banking, that executive pay and income inequality are out of control.
To understand the thought process, Business Insider called David Roth, the leader of the youth wing of Swiss party the Social Democrats, and one of the architects of the plan. Roth explained that high executive salaries only became a big issue in 2002 or so, and by 2006/7 they became a public issue. The preparation for the 1:12 Initiative began in 2009.
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