12:1 salary cap fails in Switzerland and that’s good news

A Swiss referendum to cap executive pay at 12 times the lowest paid employee’s salary has failed, rather dramatically, with 65 percent of the population voting against it. Hopefully this will be a signal to the rest of the world that this is a bad idea.

Sure, it sounds fair that no one should earn more in a month than someone else in the company earns in a year — the idea being that with such a restriction the wealth would be spread around a bit more. John D. Sutter at CNN called for the U.S. to examine the idea of limiting the wage gap between the highest and lowest paid. He is in favor of “tethering top executive pay to SOME sort of concrete metric,” which, he argues “might stop American execs from floating further into the stratosphere.”

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4 thoughts on “12:1 salary cap fails in Switzerland and that’s good news

  1. For me the problem it’s not the executives wages, but that they almost never take real responsability for their failures. If the company has losses that are bigger than their competitors, then they should be the first to be fired or get a cut in their wages. But they won’t even said that they were wrong. That’s a problem. And the fact that they neglect workers wages while getting rises for themselves only makes things worse.
    I don’t think banning high wages it’s the solution, but some short of personal responsability should be enforced.

  2. In all the articles about the dreaded income gap, I have yet to see any explanation of WHY the size of the gap matters. If the person at the bottom makes $500 per year, what difference does it makes if the person at the top makes 5 million or 50 million? How does changing the income at the top directly affect the income at the bottom?

    In any event, the income gap never takes into consideration welfare benefits for the lower group or taxes paid by the higher group. And no, I’m not in the higher group.

    Good for Switzerland!

  3. I would love to tie executive pay in some way to employee morale. It sounds too subjective to be realistic but I think it would be fabulous. Also, if the executive has to get workers to lower their wages or has to lay off large numbers of workers then his pay should drop. He has less responsibility if the company is smaller.

  4. Ben and Jerry’s attempted to do this in the 1980’s and failed to attract top CEO talent. they tried a 5:1 ratio for CEO pay. I do think that CEO bonuses should be just that – a bonus and if the company doesn’t perform – that portion of their salary should be decreased or forfeited.

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