Ben & Jerry's used to have a company policy that limited the pay of top employees to 5x an entry level employee. Of course it was dumb-foundingly stupid and they ultimately had to drop it when they were unable to find a CEO capable of managing a $75 million dollar company for $88,000 a year. The company suffered from mind-boggling mismanagement as some positions remained unfilled for years and were then often filled with grossly incompetent hires who were willing to work for such pay.<p>We no longer live in a manufacturing economy. In service industries the value of an employee is almost entirely reflective of their responsibility and/or the amount of money they bring to a company. Most of you work in software... how much more valuable is a GREAT engineer vs a mediocre engineer... or an awful engineer?<p>This is childish sophomoric ideological baloney based on jealousy, not on need. How many Swiss do you know that are dying of starvation or lack of health care? The world bank says the average income in sub Saharan Africa is a little over $1,300 a year. Maybe we should tie all out incomes to a maximum of 12x THAT number. Would that make the world more fair? Would that actually help anyone in Africa? Would it help economic development or encourage more people to start businesses?<p>It is hard to see this stupid legislation as anything more that rich people in rich countries bitching that someone's Bentley is bigger than their Mercedes.
<i>>> The aim was to reduce the salary gap to a 1:12 ratio – in other words to limit the salaries of top executives based on the annual minimum wage of the lowest paid employee within the same company.</i><p>I don't know how the law works in Switzerland, but as a hypothetical top-exec in an American company I can think of a way to screw over the little guy. I would not hire anyone below a certain salary range. I'd have those jobs filled with contractors; technically not employees. Thus defeating this law. And as an added bonus I suddenly don't owe a bunch of people health-care benefits either.
It's fairly ignorant to think it's impossible for one employee to be worth more than 12 of another. For example, I imagine Drummond (Google's CLO) provides far more than 12x the value of a new hire.
The more interesting referendum that is still pending in Switzerland is the guaranteed monthly income referendum. There is another pending referendum, as yet unscheduled for vote, about paying every Swiss citizen a guaranteed monthly income of 2500 CHF (~$2755).<p>The guaranteed monthly income has long been a proposal for getting rid of a whole host of complicated welfare schemes, which sometimes have perverse incentives that prevent you from getting back to work as they go away if start earning money. The idea is simple; just give everyone a certain basic amount of money, no matter how poor or wealthy.<p>It would be quite a bold move if Switzerland actually implemented it. I have my reservations, but traditional need-based welfare has so many problems, it would be interesting to see if such a dramatic change would actually work.
American here, watching from afar. I personally do not mind the socialist overtones of the measure. I think a big problem was that it aimed for an unrealistic ratio (1:12). A ratio that was closer to existing practice might have been more tactically effective. If at first you fail, try, try again (somewhere else)!<p>What I really like about the 1:12 idea is that a more practicable version of it would put in place an incentive for self-interested and self-serving execs and board members to look after the wellbeing of employees in a more substantial way than the "career advancement" programs and similar palliatives that are currently fashionable. At the moment there are few real incentives in place for companies to look after employees, and this feeds into the ghastly and unseemly wage inequality that we're seeing.<p>Obviously there would be an ongoing game of closing loopholes, but that's always been the case with things like taxes, so the difficulty of implementing something like this is not a showstopper in my mind. The worries about talented execs leaving in droves seem to me to be speculative; if anything, I wonder whether companies might benefit from the flight of execs who are there primarily for the extremely generous compensation.
"The aim was to reduce the salary gap to a 1:12 ratio – in other words to limit the salaries of top executives based on the annual minimum wage of the lowest paid employee within the same company."<p>Can't you get around that by having a company owning smaller companies? Kind of like a corporate franchise.
Let's say that this passed and became law. With this law in effect, why would I want to work as an executive in Switzerland when I can get much better pay elsewhere?
I'm from switzerland. We voted yes this year on the "restrictions on fat cat salaries" [1]. And this was a try to hop on the train on people's currently antipathy regarding some top executives in our country. But there are like a dozen ways to get around this. Fortunately we voted no (my opinion).<p>[1] <a href="http://www.swissinfo.ch/eng/swiss_news/Voters_accept_restrictions_on_fat_cat_salaries.html?cid=35127030" rel="nofollow">http://www.swissinfo.ch/eng/swiss_news/Voters_accept_restric...</a>
Am I the only one who actually agrees with this law? In fact I'd go even lower to a 1:5 or 1:3 salary ratio. This way all employees become independent contractors who can set their own hours, they become emancipated from the corporate ladder, they're forced to develop entrepreneurial experience, network, form micro-companies that can work for multiple companies and develop enhanced specialities, have low level workers become CEOs by virtue of necessity, have less job security leading to increased competition and quality among all levels of workers preventing the big company style slide into mediocrity etc, etc.<p>Sounds like a much better system to me.<p>Edit: The analogy I see is like changing from owning your own servers to moving to a cloud/aws-like pay for use model. This sort of change reduces risk and unlocks innovation.
This kind of law just invites hacks to work around it. It might sound nice on paper but it will never ever work.<p>I actually agree with the spirit of it, but rather than provide a hard cap, I think it'd make more sense to offer incentives instead.<p>I don't know exactly what the right incentive would be, but off the top of my head I think you could offer tax breaks to companies that have lower salary deltas, or allow executives to make as much money as they want but incentivise investing that money in local swiss ventures.
I think it should have failed. There are too many ways to get around this law by just outsourcing labor, creating subsidiaries, issuing dividends, etc. I think the better approach is marginal tax rates.
Anyone who actually thinks this is a good idea should read Thomas Sowell's The Quest for Cosmic Justice (<a href="http://www.amazon.com/Quest-Cosmic-Justice-Thomas-Sowell/dp/0684864630" rel="nofollow">http://www.amazon.com/Quest-Cosmic-Justice-Thomas-Sowell/dp/...</a>), and everything else Sowell wrote, and Hayek and von Mises, and Friedman and all the other economists who've long since debunked this kind of idiocy . . .