info suisse Winter 2017
Business | Switzerland-Canada Comparisons
March 2017

Minimum Wages in Canada and in Switzerland

(Kurt Schläpfer)
Canada has minimum wages individually set by the provinces or territories. Contrary to this, Switzerland does not have a minimum wage written into law. As Swiss voters have recently rejected plans for a nationwide minimum wage, it is interesting to compare the arguments in Switzerland with existing solutions in Canada and in other countries.

Canada 

The minimum wage in Canada depends on the province or territory and ranges from CAD 9.50 to CAD 11.00 per hour. Alberta has the lowest minimum wage at CAD 9.95, while Nunavut’s is the highest at CAD 11.00. Minimum wages in all the other provinces and territories are now at least CAD 10.00. Ontario’s minimum wage has been frozen at CAD 10.25 since 2010. Under the Conservative government, it was CAD 6.85 an hour for nine years before the Liberals began to raise it in 2004. Since then, Ontario’s minimum wage has gone from being one of the lowest in the country to one of the highest. Currently, there is a province-wide campaign to increase the minimum wage from CAD 10.25 to CAD 14.00 an hour. The Ontario government has appointed a panel to advise it on increasing the minimum wage.

An important question is in which relationship the minimum wage should be to the average wage. Ontario’s current minimum wage accounts for just 42 per cent of the province’s industrial wage, which is CAD 24.22 an hour. Experts recommend setting the minimum wage to 60 per cent of the average Ontario industrial wage – which would be CAD 14.50 an hour. 

Switzerland

Swiss law does not specify any minimum wage. In many cases, a minimum wage is part of a collective employment agreement negotiated by industries or companies. But only half of all workers are covered by a collective agreement guaranteeing a minimum income.

In January 2011, the Trade Union Federation launched a referendum calling for a minimum wage of SFR 22.00 per hour or around SFR 4,000 per month. This hourly minimum wage of SFR 22.00 represents two-thirds of the average Swiss wage of CHF 33.00. According to the State Secretariat for Economic Affairs, this would be the highest minimum wage in any member country of the OECD. 

The Trade Unions have argued that Switzerland may be a rich country, but there are still many "working poor" – people who work but are under the poverty line – a situation that the Unions want to change. Most employers, however, see minimum wages as damaging for employment. According to them, many countries with minimum wages have not managed to reduce their unemployment rates. And in recessions, a minimum wage would cause firms to move abroad and obstruct the creation of new jobs. Moreover, the Unions make the wrong assumption that only one person of a family works, whereas often there are two wages per family. There are industry sectors in Switzerland where the average salary is only around CHF 4,000, meaning that the new minimum wage would have a strong impact on their salary structure and jeopardize jobs.

On May 18, 2014, the Swiss voters have now rejected to accept a minimum wage with a majority of 76%, mainly because they feel that a government intervention in a free market economy is not necessary. The minimum wage referendum was the third time in less than two years that Swiss citizens had to vote on issues dealing with salaries. Last year, voters approved a restriction of "fat cat" salaries for top managers. Then they rejected to cap executive salaries being 12 times higher than that of the lowest paid employees. 

Minimum wages in other countries

A number of European countries such as Germany, Denmark, Italy, Austria, Finland, Sweden and Norway have no statutory national minimum wages.

Germany is now set to introduce a national minimum wage, because this was a key demand of the new centre-left governing partners to form a "grand coalition" government. The national minimum wage of € 8.50 an hour may be introduced by 2015. Chancellor Angela Merkel and her party had first opposed this scheme, arguing that it would cause job losses.

In the US, the minimum wage is US$ 7.25, the lowest among the countries compared in this article (see table below). Increasing this minimum wage to US$ 9.00 is one of the main items on US President Barack Obama’s second-term agenda. The higher minimum wage would amount to about 40 per cent of the US average income, still not an ambitious goal compared to the solutions in other countries. UK and France have minimum wages that are higher than in USA and in Canada but well below the proposed wage in Switzerland.

Comparison of Minimum Wages

Country

Minimum wage
in local currency

Minimum wage
in US$ *

Effective

Switzerland

Proposed in a
referendum:  SFR 22.00

25.66

Rejected
on 18.05.2014

Canada **

Ontario

min. CAD 9.95

CAD 10.25

10.21

10.52

01.09.2013

31.10.2010

USA

US$ 7.25

7.25

01.07.2009

Germany

€ 8.50

12.38

Not before 2015

UK

£ 6.31

11.85

01.10.2013

France

€ 9.53

13.86

01.01.2014

*Exchange rate of 04.07.2014 (UBS Currency Converter)
** Individually set by each province or territory


SCCC Corporate Members
  • Laderach (Canada) Inc.
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  • Custom Spring Corporate
  • Chocolat Frey Canada Ltd. LTD.
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  • Swissmar Ltd.
  • Roche Canada
  • Lette LLP
  • Rolex Canada Ltd.
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