* Swiss to vote on proposed minimum wage on May 18
* Follows votes to curb immigration, executive pay
* Poll shows 64 pct reject the measure
* Some firms have hiked low salaries ahead of vote
By Silke Koltrowitz
ZURICH, May 12 Swiss business leaders shocked by
past popular votes to cap executive pay and curb immigration are
wary of a May 18 referendum that could see Switzerland adopt the
world's highest minimum wage of nearly $25 an hour.
A recent opinion poll by gfs.bern found 64 percent of voters
reject the proposal, made by the SGB union and supported by the
Socialist and Green parties. But Switzerland's system of direct
democracy, with frequent popular votes on social, political or
economic matters, has brought surprises before.
The Swiss unexpectedly voted in February to curb immigration
from the European Union - Switzerland's biggest trading partner,
with which it now shares free movement of labour - ignoring
warnings from business that such a move would hurt the economy.
"I'm feeling uneasy about the upcoming vote," said Ralph
Mueller, division head at electronic components maker Schurter.
"We would have to significantly raise the salaries in our
factory in Mendrisio, where about 80 of our 100 workers commute
from Italy, but we would also have to raise the wages of our
higher-paid staff. It would cost about 250,000 francs a year."
Swiss voters overwhelmingly rejected a proposal in November
to cap the salaries of top executives at 12 times that of their
company's lowest earner, but they did back a plan last year to
give company shareholders the final say on pay and incentives.
The State Secretariat for Economic Affairs (Seco) says the
proposed minimum wage of 22 Swiss francs ($25.13) an hour would
be the world's highest even when adjusted for purchasing power
in notoriously expensive Switzerland.
The economically liberal country does not currently have a
nationwide minimum wage. Pay is determined by individual
employment contracts or via collective bargaining agreements,
some of which also set industry-specific minimum wages.
The proposed minimum wage would correspond to a monthly
paycheck of 4,000 francs, almost two-thirds of Switzerland's
median salary in 2012, and a higher ratio than in most other
countries, Seco said. Germany's planned minimum wage of 8.50
euros ($11.83), for example, is about half its median salary.
The government opposes a minimum wage, warning in February
that it "would threaten jobs and make it even more difficult for
little qualified staff and young people to find a first job".
Supporters say it would help smooth out salary inequalities
and ensure a person working full time can live decently.
In 2012, according to the federal statistics office, 10
percent of full-time or equivalent Swiss jobs paid less than
two-thirds of the median salary, with lower paid jobs found
mainly in shops, hotels and personal services. Of 339,000 people
on a low salary, two out of three were women.
"What matters is not the level of the minimum wage but the
number of people concerned," SGB, Switzerland's biggest union,
said in a statement, noting that the sum of all Swiss salaries
would only rise by 0.4 percent if the initiative was accepted.
George Sheldon, a Basel University professor of labour
market and industrial economics, said that although the proposed
minimum wage was very high, its negative impact would be small
because it would apply only to a few people.
"Unemployment won't jump from 3 to 4 percent. The impact
will be well below one percentage point," he said.
Some of Switzerland's lower-paid workers have already seen
their wages rise as the debate over pay intensifies although
employers do not acknowledge a direct link to the proposal.
Discounter Lidl raised minimum Swiss salaries to 4,000 francs
last year and retailer H&M has vowed to follow suit next year.
The electrical and mechanical engineering industry, whose
lobby group Swissmem opposes a national minimum wage of 22
francs, for the first time accepted regional minimum wages in
its collective bargaining agreement with unions last year.
Switzerland's direct democracy has allowed its citizens to
vote on a number of issues affecting the economic framework in
recent years. Some fear the uncertainty that creates could make
the country a less attractive base for companies.
"Switzerland has always been known as a reliable, stable,
liberal and open country," said UBS economist Daniel Kalt.
"But these votes make life difficult for businesses.
"Today it's the minimum wage and tomorrow the unconditional
basic income and the inheritance tax reform. This adds legal
insecurity and damages Switzerland's image as an attractive
After the immigration vote, oil and gas services provider
Weatherford said it would move its headquarters to
Ireland to make sure it can get the best staff in the future.
Fire safety specialist Tyco followed this month,
saying businesses thrived in "stable, predictable environments".
"Recent changes to Swiss law impacting the regulatory
environment are of great concern to us," Tyco spokesman Steve
Wasdick told Reuters at the time.
But Michael Nollert, professor of social studies at the
university of Fribourg, said these referendum initiatives did
not normally have dramatic consequences. "The ones that are too
radical get rejected anyway. That happened with the 1:12 vote
that aimed to cap executive pay," he added.
With political parties increasingly using popular votes to
inspire debate on topics they consider important, some observers
say the number of signatures needed to enforce a vote should be
lifted, to raise the bar and reflect population growth.
Zurich University professor of economic history Tobias
Straumann said referendums were likely to succeed only when they
appealed to a broad range of voters, as the initiative in 2013
to curb excessive bonuses and the immigration vote had done.
"The minimum wage is a traditional leftwing proposal that is
very likely to be rejected by at least 60 percent," he said.
($1 = 0.7183 Euros)
($1 = 0.8755 Swiss Francs)
(Editing by Catherine Evans)