Swiss Reject Basic Income, Pay Limit Initiatives

[ZURICH] The Swiss have rejected two populist initiatives that constituted the latest threat to the country's business-friendly environment.

Voters dismissed a measure that would have reduced the pay of Swisscom AG's chief executive officer by three quarters and also shot down a proposal to establish a universal basic income, according to projections broadcast on Swiss television SRF on Sunday. While surveys indicated the latter would fail, the outcome of the so-called Pro Service Public initiative aiming to improve public services had been considered too close to call. Official results are due later in the day.

"Our trend calculation clearly says there's going to be a no," Claude Longchamp of pollster gfs.bern told SRF, referring to Pro Service Public. As for the basic income measure, a projection suggested 78 per cent opposed it, he said.

Plebiscites are a key feature of Switzerland's direct democracy, with votes typically held four times a year on a wide range of topics, and 100,000 signatures are required to make the national ballot.

Pro Service Public, which would also have affected rail-road operator SBB and the national postal service, is the latest in a series of popular initiatives critical of high-earners and big business and follows a 2013 plebiscite that introduced some of the world's toughest rules on executive pay. In 2014 they voted for immigration curbs despite warnings of damage to the economy.

Pro Service Public contained the requirement that an executive be paid no more than a government minister. It would also have banned cross-subsidisation between companies and stopped firms from aiming to post a profit in the area of basic services.

Restricting top earners' incomes would have triggered a cascade of pay cuts, affecting more than 7,000 people at the three companies, according to a study conducted by University of Zurich commissioned by the "no"-committee. At Swisscom, in which the state holds a 51 per cent stake, more than 16 per cent of the company's 17,800 workforce would have been directly hit.

"Criticising high salaries is a powerful argument," said Patrick Emmenegger, a professor of political economy at the University of St. Gallen. "People have trouble understanding the rationale behind paying large sums to individuals."

As for the basic income measure, it was launched to guarantee everyone "a decent existence" in one of the world's wealthiest countries. While the initiators had left it up to the government to decide how large the stipend should be, they suggested 2,500 francs for an adult and a quarter of that sum for a child. They estimated the the plan would cost 200 billion francs a year, with funding stemming from current state and social welfare programs.

The idea of paying everyone a stipend, regardless of how much they work, isn't unique to Switzerland. Finland enacted an initial study on the matter last year, and it has also drawn interest in Canada and the Netherlands. Among the best-known proponents of the endeavour is former Greek Finance Minister Yanis Varoufakis, who contends it will help offset the ill effects from automation, which eliminates jobs.

Polls had indicated the basic income measure, which government argued would have forced tax increases and created a disincentive to work, potentially leading to shortages of skilled employees and prompting companies to move outside of Switzerland, was going to be rejected by a wide margin.

"There has been an enormous interest from abroad, we started a trend," Daniel Haeni, one of the initiators of the basic income proposal, told SRF. "It would have been naive to expect the basic income to be accepted in the first try. In Switzerland, all big changes need several attempts to pass."

BLOOMBERG