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  #21  
Old 21.11.2011, 13:14
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Re: Vote on minimum wage- what would you do?

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That's a very interesting dilemma.

I have no idea what the consequences would be of introducing a minimum wage ? Will it hold wages low, reducing the ability of individuals to negotiate, will it ensure higher wages for people on the lowest rung ? Are people able to live on the minimum wage, given the high cost of living here. Would employers drop wages for basic staff to whatever minimum is set, or would they be more secure about employing new staff on the basic minimum, expanding the job market ?
It won't hold wages low- in fact minimum wage laws have proven to do the opposite: raise wages. Unfortunately, this ends up being bad for the economy. If/When a minimum wage is enacted, anyone currently working near, at, or below the 'new' minimum wage is at risk of having his/her job eliminated as employers will have to make the tough choice of whether the employee is 'worth' the new wage they will have to pay. This will hit the least skilled workers the hardest (i.e. those for whom this wage is intended to help), namely those near retirement (can't learn new skills to get into another job), the young (haven't learned many skills yet) and the disabled (productivity limited by their disability).

Employers who employ individuals at the low-wage end, to maintain their profits and margins (we all must be honest- businesses exist to make profit, and if there's no profit, they'll close and then every employee is out of a job), will have to decide how many and which employees to keep, whether to move some employees from full-time to part-time, and/or how much to raise prices. Most employers will opt for a mixture of the three, but prices will go up.

Most of the people let go will not have large savings with which to keep themselves afloat for long, or at all, and will have to turn to the social welfare system to survive until they find a new job (if ever, for some ), which will then increase the number of people on that system's roles. Now the government's cost for social welfare has gone up. The government can find the extra money two ways- by reducing costs somewhere else or by raising taxes. Governments usually choose the latter- its easier to do.

So, we have two economic costs increasing- the cost of retail goods and the cost of taxation. So, although most people are making the same amount of money as before, it buys less stuff (i.e. its worth less). This especially hurts savings, as all the money you've saved has suddenly been devalued by the increased costs . This again, hurts the people for whom this measure is intended to help- the people with not much savings (now they really don't have as much) and the elderly (now their money is not going to last as long as they planned, or they have to do without something they may need to meet their budget).

Everyone else, however, will go to their employers and ask for raises based upon the new cost of living and the new wage structure. Not all will get raises immediately, but some will, and eventually the average salary will rise (because employers will want to hire the best employees, and they tend to be more expensive), which will then cause employers costs to rise again, and the cycle begins anew with more tough employment decisions and rising prices.
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  #22  
Old 21.11.2011, 13:21
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Re: Vote on minimum wage- what would you do?

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The scientific approach would be to ask what the consequences have been, over a reasonable period (say 10 years), in places where minimum wages have been introduced.

My reading of the available evidence is that in places/regions/countries where there is a minimum wage, standards of living and social provision are higher.

Cause or effect? Hard to say.
The unfortunate truth is that minimum wage laws have no bearing on standard of living, because when a minimum wage is enacted, it causes inflation, which reduces the amount of discretionary income the average person has (a metric of standard of living is discretionary income- the money one has after all costs and savings have been accounted for), and also makes employment for the bottom-tier laborers very troublesome. Eventually the economy adapts, and an increase in minimum wage is needed to 'keep up' with the inflation that the first minimum wage helped cause, which then leads to more inflation, which leads to.... hopefully I get my point across...

Minimum wage laws are bad for the economy, and bad for those whom they are to help.
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Old 22.11.2011, 17:37
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Re: Vote on minimum wage- what would you do?

minimum wage doesn't protect workers, it just makes those low paying jobs black market instead of above board, thus defeating the purpose. Also, a minimum wage is sadly NOT a living wage in most places. Cf: the entire United States.
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Old 27.11.2011, 19:37
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Re: Vote on minimum wage- what would you do?

Vote result

YES in Neuchatel

NO in Geneva

Will be interesting to listen to the possible reasons for this yes/no in different Cantons.
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Old 28.11.2011, 21:46
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Re: Vote on minimum wage- what would you do?

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Vote result

YES in Neuchatel

NO in Geneva

Will be interesting to listen to the possible reasons for this yes/no in different Cantons.
Probably because workers live in Neuchâtel and bankers live in Genève.
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Old 28.11.2011, 22:23
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Re: Vote on minimum wage- what would you do?

Indeedy - in fact there was a clear split between the poorer regions and the affluent 'burbs + very rural areas.
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Old 28.11.2011, 22:35
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Re: Vote on minimum wage- what would you do?

I believe in the short term this will support the social equality in Neuchatel, but it is hard to believe that this high nominal wages can survive long following whats happening in Europe
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Old 28.11.2011, 22:42
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Re: Vote on minimum wage- what would you do?

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Indeedy - in fact there was a clear split between the poorer regions and the affluent 'burbs + very rural areas.
...Or between the less educated (unable to understand how a minimum wage will hurt their employment opportunity) and the more educated (able to understand the impact on employment and prices).
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  #29  
Old 28.11.2011, 22:47
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Re: Vote on minimum wage- what would you do?

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I believe in the short term this will support the social equality in Neuchatel, but it is hard to believe that this high nominal wages can survive long following whats happening in Europe
It'll support the 'socialist' equality, not the social equality, unfortunately. Many employers will move away from Neuchatel to cantons without artificial floors on the cost of labor. The resulting unemployment will lead to an increase in social welfare. The sad part is that this will all happen very gradually, and be blamed on other factors, and few will realize what actually happened to them...
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Old 28.11.2011, 22:54
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Re: Vote on minimum wage- what would you do?

This will be taken to the vote on national level in the coming year.
Interesting times. As said before, most trades have agreements on scales of pay arranged between unions and employers, and have done so for a long time. These agreements include 'frontaliers' who travel in from France every day. Those outside those agreements are a small minority.

May I ask what you do 'Jobrobertsshapii'? Employment agency?
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Old 28.11.2011, 23:01
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Re: Vote on minimum wage- what would you do?

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This will be taken to the vote on national level in the coming year.
Interesting times. As said before, most trades have agreements on scales of pay arranged between unions and employers, and have done so for a long time. These agreements include 'frontaliers' who travel in from France every day. Those outside those agreements are a small minority.

May I ask what you do 'Jobrobertsshapii'? Employment agency?
Unemployed. .
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Old 28.11.2011, 23:07
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Re: Vote on minimum wage- what would you do?

Let's hope something will turn up soon. As said though, minimum wage or not, most trades have salary scales arrangements with the main unions and professional associations. Many foreigners do try to come and work for a lower wage to get a run on the ladder- but this would cause great disruption in the work place should employers be tempted. In the watch industry around here - there would be real trouble should frontaliers come and work for a lower rate- so employers are very careful not to put the cat amongst the pigeons.

Bonne chance.
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Old 28.11.2011, 23:11
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Re: Vote on minimum wage- what would you do?

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Let's hope something will turn up soon. As said though, minimum wage or not, most trades have salary scales arrangements with the main unions and professional associations. Many foreigners do try to come and work for a lower wage to get a run on the ladder- but this would cause great disruption in the work place should employers be tempted.

Bonne chance.
Thank you. . I am trying to start back at the bottom (I want to get back into IT), but I'm being told that this isn't normal in Switzerland and I've been battling legal age discrimination, as well as trying to 'refresh' my job skills.
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  #34  
Old 28.11.2011, 23:14
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Re: Vote on minimum wage- what would you do?

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Let's hope something will turn up soon. As said though, minimum wage or not, most trades have salary scales arrangements with the main unions and professional associations. Many foreigners do try to come and work for a lower wage to get a run on the ladder- but this would cause great disruption in the work place should employers be tempted. In the watch industry around here - there would be real trouble should frontaliers come and work for a lower rate- so employers are very careful not to put the cat amongst the pigeons.

Bonne chance.
Oh, and BTW, I think those arrangements are one of the best ways to go. They don't have the drawbacks of an absolute price floor, but allow workers and employers to protect their respective interests through negotiation and still allow for flexibility if the economy should start to struggle.
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Old 28.11.2011, 23:50
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Re: Vote on minimum wage- what would you do?

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Vote result

YES in Neuchatel

NO in Geneva

Will be interesting to listen to the possible reasons for this yes/no in different Cantons.
I was surprised (and disappointed) with Geneva. The Tribune de Genève article mentioned a possible cause that foreigners have the right to vote in Neuchâtel (after five year residence) but not in Geneva. A large number of low-wage earners are non-Swiss.
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Old 29.11.2011, 14:58
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Re: Vote on minimum wage- what would you do?

Here are some back of the envelope calculations I did as I've had this on my mind.

Imagine a cleaning company with 5 employees, plus the owner.

Owner pays the employees 16.50/hour, and bills customers 50/hour.

In an 8 hour day, each employee could generate 6 hours of billable time, considering time getting ready at the base, travel to the clients etc.

So, in a week the 5 employees generate 7500 CHF. They cost 4500 (16.50 plus AVS and all the crap, around 22.50/hour).

They get 4 weeks vacation, so in a year they generate 48 weeks of billable time- 360,000. 360,000 minus their cost (4500x52) of 234,000= 126,000 CHF.

So after their cost, the owner has 126,000 CHF. With that he has to pay for the cars/vans, rent on the base office, supplies, phone, all that stuff. Let's put a conservative number of 3000/month on costs. He's got 90,000 francs. He's the one with all the risk, he fills in when an employee is sick, he organizes all the work; I would say he puts in his 40 hours each week and probably considerably more. He's not getting rich off his workers.


Now- if the workers are bumped to 20/hour, and suppose his employee costs come to 25/hour total, that leaves him with 100,000 to run the business and pay himself. After costs that's 64K for the headaches of managing a business and 5 employees, is it worth it? So he shuts down and there go 5 new unemployed folks.

Of course he probably already pays on average more than 16.50/hour, that may be a starting salary, as Odile pointed out her neighbor makes 25/hour. So he may well put considerably less than 90k in the bank each year (before taxes of course ).

Question: can anyone fill in some unknowns here? What are cleaning companies charging per hour to clients? What are independent cleaners charging? From the above it seems clear that if a company is charging 50/hour or less they will have a hard time staying afloat if they pay their workers more than 16.50.
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Old 29.11.2011, 15:12
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Re: Vote on minimum wage- what would you do?

Privately, cleaners charge around CHF 25 in the Bern area, so working for an employer they would obviously earn less than that. Supply and demand rules that more would have to be paid if there were no cleaners available.

The idea is to make CHF 16 per hour the minimum wage, to stop loan dumping. To stop workers from Poland being imported for manual work and paid CHF 10 per hour with free accomodation and food, meanwhile the construction employers association refuse to agree on a new wage agreement (GAV)
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Old 29.11.2011, 15:14
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Re: Vote on minimum wage- what would you do?

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Here are some back of the envelope calculations I did as I've had this on my mind.

Imagine a cleaning company with 5 employees, plus the owner.

Owner pays the employees 16.50/hour, and bills customers 50/hour.

In an 8 hour day, each employee could generate 6 hours of billable time, considering time getting ready at the base, travel to the clients etc.

So, in a week the 5 employees generate 7500 CHF. They cost 4500 (16.50 plus AVS and all the crap, around 22.50/hour).

They get 4 weeks vacation, so in a year they generate 48 weeks of billable time- 360,000. 360,000 minus their cost (4500x52) of 234,000= 126,000 CHF.

So after their cost, the owner has 126,000 CHF. With that he has to pay for the cars/vans, rent on the base office, supplies, phone, all that stuff. Let's put a conservative number of 3000/month on costs. He's got 90,000 francs. He's the one with all the risk, he fills in when an employee is sick, he organizes all the work; I would say he puts in his 40 hours each week and probably considerably more. He's not getting rich off his workers.


Now- if the workers are bumped to 20/hour, and suppose his employee costs come to 25/hour total, that leaves him with 100,000 to run the business and pay himself. After costs that's 64K for the headaches of managing a business and 5 employees, is it worth it? So he shuts down and there go 5 new unemployed folks.

Of course he probably already pays on average more than 16.50/hour, that may be a starting salary, as Odile pointed out her neighbor makes 25/hour. So he may well put considerably less than 90k in the bank each year (before taxes of course ).

Question: can anyone fill in some unknowns here? What are cleaning companies charging per hour to clients? What are independent cleaners charging? From the above it seems clear that if a company is charging 50/hour or less they will have a hard time staying afloat if they pay their workers more than 16.50.
Excellent example. Why would a small-business owner want to absorb the costs of a forced wage increase? Any business owner near retirement would probably consider closing or selling the business, which could cause all the employees to lose their jobs. Any business owner in a narrow-margin and low price-flexibility market would probably just shut down (can't pass the costs on, and could probably get paid a better salary working for someone else and with less risk). Most other businesses would probably cut hours for/let go of an employee and/or raise their prices and hope they keep their customers. Almost no business owner would opt to earn less for working just as hard as, if not harder than, before.
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Old 29.11.2011, 15:21
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Re: Vote on minimum wage- what would you do?

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Privately, cleaners charge around CHF 25 in the Bern area-

The idea is to make CHF 16 per hour the minimum wage-
Ah- that was another question, what is the proposed minimum wage (probably already been posted and I missed it).

So a company employing people has to be able to compete with independents who charge 25/hour- did I get that right, the 25CHF is for one-man-band operations? I can see why they want to import Poles, and why, if it's the same in Neuchatel, there will be some people looking for work soon .
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Old 29.11.2011, 15:30
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Re: Vote on minimum wage- what would you do?

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Privately, cleaners charge around CHF 25 in the Bern area, so working for an employer they would obviously earn less than that. Supply and demand rules that more would have to be paid if there were no cleaners available.

The idea is to make CHF 16 per hour the minimum wage, to stop loan dumping. To stop workers from Poland being imported for manual work and paid CHF 10 per hour with free accomodation and food, meanwhile the construction employers association refuse to agree on a new wage agreement (GAV)

So the construction workers and construction employers can't come to an agreement, and the option is to use the police power of the state to force employers to pay more than they want to?

Also, what does it matter whether the workers are foreign or domestic? If they're willing to work, legally, for that wage and benefit (room & board), and that prices local labor out of the market, then the locals need to figure a way to make themselves more appealing to the employers. Why would an employer pay a worker 16 CHF/hour when he can pay 10 CHF/hour + benefits, if everything else (like productivity) is equal?

Most Swiss employers probably would prefer to hire locally, but if local labor prices itself too high for the market, then they (the local labor) run the risk of not finding employment.
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