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Old 11.03.2018, 15:38
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Collective Labor Agreements & Income Inequality

It's no secret salaries are high in Switzerland up and down the economic ladder. But proportionally, Switzerland stands out as having the second lowest pre-tax & pre-transfer income inequalities in the OECD (behind South Korea).

https://ourworldindata.org/wp-conten...-transfers.png
Pre-Tax and transfers inequality is represented by the red bar. The blue bar represents inequality post-tax and transfers.

Switzerland is also a country that does not have a minimum wage, BUT it has robust Collective Labor Agreements which apparently exist in different manifestations depending on the Canton and sector. E.g., in some they are optional for employers and employees to enter into the terms, in others it's mandated to work or own a business to abide by CLA terms in your region/sector.

Just wondering... How ubiquitous are these CLAs? What is their typical manifestation? Are CLAs the driver of the relatively low pre-tax inequality or is there another dominant factor?
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Old 11.03.2018, 18:13
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Re: Collective Labor Agreements & Income Inequality

I have never, nor would ever, work in a situation with a CLA.

Tom
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Old 11.03.2018, 19:46
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Re: Collective Labor Agreements & Income Inequality

Switzerland showing the way again. And to think there are people who still think the answer to income inequality is higher taxation.
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Old 11.03.2018, 20:22
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Re: Collective Labor Agreements & Income Inequality

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Switzerland showing the way again. And to think there are people who still think the answer to income inequality is higher taxation.
For the record, Income inequality in Switzerland is about average in the OECD. Despite relatively low inequality pre-tax and transfer, it's just average post-tax and transfers. Slightly higher inequality than France and Germany.
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Old 11.03.2018, 20:44
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Re: Collective Labor Agreements & Income Inequality

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Just wondering... How ubiquitous are these CLAs? What is their typical manifestation?
See for yourself, you can find them here:
https://www.seco.admin.ch/seco/de/ho...vertraege.html
(In German, French and Italian only)
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Old 12.03.2018, 16:52
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Re: Collective Labor Agreements & Income Inequality

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For the record, Income inequality in Switzerland is about average in the OECD. Despite relatively low inequality pre-tax and transfer, it's just average post-tax and transfers. Slightly higher inequality than France and Germany.
Sincerely, what's the problem with "inequality"? Why we should care about it?
The real serious problems are people in living in poverty and a struggling middle class. Alas, these are minor problems in Switzerland if compared to neighboring countries or even to other developed nations in the world.
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Old 12.03.2018, 16:58
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Re: Collective Labor Agreements & Income Inequality

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Sincerely, what's the problem with "inequality"? Why we should care about it?
The real serious problems are people in living in poverty and a struggling middle class. Alas, these are minor problems in Switzerland if compared to neighboring countries or even to other developed nations in the world.
I don't agree. You can make any kind of problem small and not important. Fact is that there shouldn't be a difference in pay because of gender only.
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Old 12.03.2018, 17:25
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Re: Collective Labor Agreements & Income Inequality

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Sincerely, what's the problem with "inequality"? Why we should care about it?
The real serious problems are people in living in poverty and a struggling middle class. Alas, these are minor problems in Switzerland if compared to neighboring countries or even to other developed nations in the world.
Generally speaking, I agree. I'm just interested in understanding the mechanism at work here.

For example, the US has a comparable per capita GDP as Switzerland, but its wealth/income is distributed very differently. Resulting in more people "living in poverty and a [larger] struggling middle class." Economists are starting to congeal around the idea that labor monopsony in the US has played a large role in its growing wage gap: https://www.nytimes.com/2018/02/28/o...ing-wages.html

In stark contrast, Switzerland appears to have robust Collective Labor Agreements for low wage workers. Which provides an annual forum for collective negotiation (I think). I'd like to read some more expansive research on it, but I suppose this could explain Switzerland's smaller pre-tax inequality.

Anyway, I was just wondering what EFers thoughts were...

Last edited by taduncombe; 12.03.2018 at 18:06.
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Old 12.03.2018, 21:04
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Re: Collective Labor Agreements & Income Inequality

I may be the only person interested in this... but in case anyone else cares, here's the outcome of the CLA negotiation last year:

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Neuchâtel, 26 February 2018 (FSO) - The social partners signatory to Switzerland's main collective labour agreements (CLA) agreed a nominal rise in real wages of 0.5% and a nominal rise in minimum wages of 0.8% for 2017. Real wages increased by 0.1% at collective level and by 0.4% at individual level. These are the some of the results of the wage agreements survey carried out by the Federal Statistical Office (FSO).
https://www.bfs.admin.ch/bfs/de/home...l.4342917.html
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Old 12.03.2018, 21:42
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Re: Collective Labor Agreements & Income Inequality

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I don't agree. You can make any kind of problem small and not important. Fact is that there shouldn't be a difference in pay because of gender only.
Where the fook it is mentioned gender in those articles?
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Old 12.03.2018, 22:34
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Re: Collective Labor Agreements & Income Inequality

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Where the fook it is mentioned gender in those articles?
misread the thread. how embarrassing
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Old 13.03.2018, 13:22
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Re: Collective Labor Agreements & Income Inequality

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Switzerland showing the way again. And to think there are people who still think the answer to income inequality is higher taxation.
And by the same token, I can argue that higher taxation is the answer to income inequality given a country like Denmark is apparently more equal than Switzerland after income tax. And this with one of the highest tax burdens in the world.

Higher taxation is just an instrument to tackle inequality and I doubt anyone here argues that it is the answer.
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Old 13.03.2018, 13:42
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Re: Collective Labor Agreements & Income Inequality

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Switzerland appears to have robust Collective Labor Agreements for low wage workers.
Only for some sectors, not all or even most.

Tom
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Old Yesterday, 18:02
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Re: Collective Labor Agreements & Income Inequality

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Only for some sectors, not all or even most.
~50% of the Swiss workforce has collective bargaining coverage in one form or another. That number is 12.5% for the US. https://stats.oecd.org/Index.aspx?DataSetCode=CBC

This website has good discussion of how it works in Switzerland, though a little dated (emphasis is mine):
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COLLECTIVE BARGAINING
The dominant level of negotiations is the sector or branch. Besides the major branch agreements there are also numerous collective agreements with individual firms. Collective agreements can be declared generally binding by the federal government (or, in the case of regional agreements, by cantonal governments). The significance of generally binding agreements has increased considerably in recent years. This is a major reason for the higher proportion of workers who are covered by collective agreements.1

FRAMEWORK
The legal framework for collective labour law is to be found in the Swiss ‘Code of Obligations’, Art. 356 to 362.

Collective agreements can be declared generally binding by the Federal government (or, in the case of regional agreements, by cantonal governments) at the request of the negotiating partners and then apply automatically to all companies in the sector. Most notably, the collective agreements in the building sector and in trades and services (Gewerbe), including hotels and catering, are generally binding. This is not widespread in the industry sector.
https://www.worker-participation.eu/...ive-Bargaining
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Old Today, 06:56
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Re: Collective Labor Agreements & Income Inequality

I'm a bit surprised as I don't think unions are particularly strong here, except in a few sectors maybe. Certainly Switzerland is organized much more on the individual rather than the collective level, at least if compared to certain neighbors to the North and West (and what happens there as a result of unions you can see roughly once a month...).

I've never worked under a CLA either and don't think I know anyone who does or ever has
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