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On Nov. 24, Swiss voters will go to the polls to vote on a radical new idea — limiting the monthly pay of the highest earners in Swiss firms to no greater than the yearly pay of the lowest earners. It's being called the 1:12 Initiative — and it sure has some people worried.

To understand the context of the vote, you need to know two things about Switzerland. First, the country has a relatively unique system of direct democracy — if 100,000 people sign a proposed change to the constitution, or "popular initiatives," a referendum is held. If a majority of voters and cantons (Swiss states) agree with the proposal, the change can become law.

The second factor is how these Swiss initiatives have been used recently. Earlier this year Swiss voters agreed to an idea proposed by entrepreneur Thomas Minder that limited executive (in his words, "fat cat") salaries of companies listed on the Swiss stock market. The fat-cat initiative aimed to reform CEO pay packages, including making golden parachutes illegal in the country. The measure was affirmed by 68 percent of the population.

On November 24th, the Swiss can take another step in curbing corporate superfluous pay grades. Statistics published in the Swiss press ( http://www.revue.ch/steuersenker-en) suggest that many companies currently pay their CEOs salaries that are hundreds of times the salaries of their lowest-paid workers.

According to World Radio Switzerland, Novartis, Nestle, Bobst, and SBB sent thousands of employees letters asking them to vote no to the 1:12 initiative, arguing that it would make Switzerland a less desirable place to do business. Earlier this year the CEO of commodities giant GlencoreXstrata said the company would consider leaving Switzerland if the law passed.

"I think it's quite arrogant of some people to think that big companies will disappear," David Roth, the leader of the youth wing of Swiss party the Social Democrats, says of that criticism. "Big companies are not here because they can pay the managers high salaries. Big companies are in Switzerland because we create really good conditions for those companies. We have really well-educated people, we have a really good level of infrastructure, we have a health care system that is working, we have social security, and public security, of course, because of the social security. You are able to walk the streets — it doesn't matter how rich you are, you are safe here in Switzerland. Well-educated people, good infrastructure, that is the reason why these companies are here, not because they can pay those high salaries."

"Thirty years ago, there was a relation between the highest and the lowest salary — a relation of 1:6." For decades, Roth argues, as production rose in Switzerland, normal pay and executive pay rose in proportion, and that only changed 10-15 years ago. "So you see, it's really not Switzerland, this latest development."

Whether Switzerland agrees is another matter. It's relatively rare for initiatives to pass, but recent polls have shown the yes and no votes are nearly tied, and Minder's "fat cat" initiative passed with 67.9% in March. http://www.businessinsider.com/switzerlands-112-initiative-why-executi
ves-are-worried-2013-11#ixzz2kSDU6nVq

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