Minimum wage in Switzerland: Current situation, level and benefits

In most countries of the European Union, there is a statutory minimum wage that applies to all employees in the country - regardless of their profession, industry or the company they work for. In Switzerland, however, this is not the case, as there is not just one but several minimum wages that depend on the place of employment or even on collective labour agreements and industry agreements.

Minimum wage set by the canton

In most parts of the country, there is no statutory minimum wage and employers are free to offer their employees the wage they want or consider appropriate. This regulation is based on the freedom of contract that applies in Switzerland in accordance with Article 19 of the Swiss Code of Obligations (CO), according to which the contracting parties are free to determine the content of an employment contract.

However, some cantons have nevertheless introduced a minimum wage in response to local initiatives, although this only applies at cantonal level. These are the cantons of Geneva, Neuchâtel, Jura, Ticino and Basel-Stadt.

Minimum wage set by collective labour agreements

Both within and outside the cantons that have a minimum wage, it occasionally happens that Swiss employees can benefit from a fixed minimum wage. This is possible through a so-called collective labour agreement (GAV) in accordance with articles 356 to 358 CO. These collective labour agreements are usually introduced in companies with a certain minimum number of employees and are the result of negotiations between the respective social partners.

If an employee works in an industry in which a minimum wage has been established by a GAV, he or she may not be offered a lower wage than that provided for in these agreements. This is because a GAV can circumvent mandatory law as long as this is to the advantage of the employees concerned (Article 358 CO).

However, it should be noted that while a GAV can sometimes apply to all employees in the sector, sometimes in certain cases it only applies to the companies in a sector that have signed the GAV. It is also possible that the agreement only applies to a certain group of employees within a sector. Currently, only around a third of employees in Switzerland benefit from an overall agreement.

Calculation and reassessment of the minimum wage

In each canton that has introduced a minimum wage, this is linked to the so-called harmonised index of consumer prices (HICP), which reflects annual inflation. The HICP is an index that measures the price development of essential services and goods for Swiss households. This index is calculated annually, which means that the minimum wage itself is also reassessed every year. In some cantons, however, the minimum wage is only reassessed if the consumer price index also rises. In other cases, however, the revaluation also takes place when inflation falls. It is therefore possible for the minimum wage to fall from one year to the next in the cantons concerned.

The cantons of Neuchâtel and Jura have based their minimum wage calculations on the guidelines for supplementary benefits (EL), which cover the minimum financial needs of an adult so that they do not have to live below the poverty line.

There is no nationwide minimum wage in Switzerland, but five cantons in each of which a regional minimum wage applies (Geneva, Neuchâtel, Jura, Ticino and Basel-Stadt). The level of the minimum wage therefore depends on the respective cantons, with the canton of Geneva currently setting the highest minimum wage.

The minimum wage in the canton of Geneva

The canton of Geneva introduced a minimum wage of CHF 23 per hour in November 2020. Based on a 42-hour week, which is a traditional hourly rate in Switzerland, this corresponds to a monthly salary of CHF 4,182. This is the highest minimum wage in Switzerland.

The minimum wage in the canton of Neuchâtel

The canton of Neuchâtel was the first in Switzerland to introduce a minimum wage in August 2017, setting a good example for other cantons. Currently, the minimum wage in Neuchâtel is CHF 20 per hour, i.e. CHF 3,640 per month (based on 42 hours per week), which is paid over 12 months.

The minimum wage in the canton of Jura

The minimum wage in the canton of Jura is similar to that in Neuchâtel. It therefore amounts to CHF 20 per hour, which equates to CHF 3,640 per month for 42 working hours. Three months after Neuchâtel, the canton of Jura was the second Swiss canton to introduce a minimum wage.

The minimum wage in the canton of Ticino

The minimum wage introduced in the canton of Ticino is the lowest of the five cantons that have introduced a minimum wage in recent years. It amounts to CHF 19 per hour. With a 42-hour week, this corresponds to a gross monthly income of CHF 3,200. The minimum wage in Ticino came into force on 1 January 2021 and is to be gradually increased each year.

The minimum wage in the canton of Basel-Stadt

There is also a minimum wage in the canton of Basel-Stadt, which is CHF 21 per hour. However, employees who have a collective labour agreement with minimum wage agreements are not bound by this minimum wage. The same applies in this canton to internships lasting less than six months.

Five Swiss cantons have currently introduced a minimum wage. These provisions followed the demand of local initiatives that demonstrate the influence of the people on legislation in Switzerland. For example, the population is regularly consulted in order to express its opinion on issues such as tax cuts or holidays and to play a key role in shaping legislation.

In 2014, a popular initiative attempted to promote the idea of a minimum wage of CHF 4,000 per month at federal level. This popular initiative, supported by the UNIA trade union, was called "For the protection of fair wages" and led to a referendum. However, this proposal was rejected by a large proportion of the Swiss population, as more than 76% of voters were against the introduction of such a minimum income. It should be noted that even in cantons that are in favour of minimum wages or have already introduced them (such as Neuchâtel and Jura), voters voted against the introduction of a minimum wage at federal level.

However, even though the initiative failed, it has contributed to the CHF 4,000 amount becoming a reference wage offered to the vast majority of Swiss workers. As a result of the referendum, many companies and sectors have revised their own minimum wages upwards.

The introduction of a minimum wage has several advantages, which is why the trade unions are still trying to introduce the minimum wage at federal level or at least establish it in other cantons.

Fight against wage dumping

Firstly, the introduction of a minimum wage combats so-called wage dumping. This practice aims to offer inappropriately low wages to foreign workers or cross-border commuters in particular, with the result that wages in the profession in question are pushed down overall. The wage level falls and it becomes increasingly difficult for employees to defend themselves against the exploitation of their labour. A statutory minimum wage protects both Swiss and foreign workers and ensures greater pay equity.

Protection against impoverishment of the population

Although wages in Switzerland are comparatively high, the cost of living for Swiss citizens is among the most expensive in the world. Therefore, despite a generally high standard of living, there is a growing proportion of the population that is becoming impoverished, and a poorer, working middle class is gradually emerging.

The poverty line in Switzerland currently stands at CHF 2,300 gross per month for a single person and slightly less than CHF 4,000 for a couple with two children. The introduction of a minimum wage serves to combat poverty by ensuring that every employee receives a decent wage with which he or she can easily cover the monthly cost of living.

Protection of precarious workers

The introduction of minimum wages has benefited and continues to benefit women in particular and provides overall protection for so-called precarious employment relationships. In fact, part-time work is more widespread among women, who are also more strongly represented in low-wage sectors. The same applies to cross-border workers, who are also more frequently forced to work part-time.

Less unemployment

A statutory minimum wage can also help to reduce the number of unemployed citizens - as the introduction of the minimum wage in the canton of Neuchâtel in particular has shown. In 2019, the unemployment rate there fell three times more than in other cantons, which, according to the NZZ, is also due to the introduction of the minimum wage. At the same time, expenditure on social welfare in Neuchâtel also fell visibly, which shows a further positive impact of the minimum wage.