HSG: 1:12 - A worker’s worth and family ties Montag, 18. November 2013 - 17:24

The Swiss referendum heats up, a focus on family business and a look at international trade: these are some of the topics covered by HSG experts in the media.

18 November 2013. Swiss citizens will head to the polls on November 24 to vote on what is being called the 1:12 initiative. The proposal, being spearheaded by the youth wing of the Swiss Social Democrats, wants to make it forbidden for companies operating in Switzerland to remunerate any staff member more than 12 times what they pay their lowest earners. Proponents of the referendum believe that it would help reduce income inequality, which has risen in Switzerland as it has in other European nations in recent years.

A way around it In the Aargauer Zeitung, public economics specialist and HSG Professor Dr. Christian Keuschnigg suggests that voters use caution. In the event that the initiative passes, he states that owners of a company could establish several legally independent companies, organised by pay scale. That would enable them to avoid having to adhere to the spirit in which the 1:12 initiative was drafted.

Keuschnigg also pointed out in the Neue Zürcher Zeitung that many large companies could conceivably move top earners to offices in other countries thus depriving the Swiss government of the tax revenue these salaries represent.

Alarm clock ringing In an article in the Financial Times, Public Policy and Comparative Political Economy Professor Dr. Patrick Emmenegger weighed in on the debate stating that, “the fact that something so un-Swiss is being so strongly considered is a wake-up call for the business establishment.” Referring to the deal Novartis had planned for Daniel Vasella, its outgoing chairman, which was rescinded because of public outrage, “The general mood is that some companies have gone too far. How anyone could be offered a farewell payment of SFr70m is hard for people to understand.”

Family ties In an article in the The Times Professor Dr. Thomas Zellweger, an expert on family business, discussed strategies for building a happy family business. He states that while there are challenges on the tax and legal sides of transferring a family business the hardest part is dealing with the emotional side of passing the business on to the next generation. “How would you react if your children reject the opportunity,” Zellweger asked. In a global survey he conducted, only 23 per cent of students with a family business background were interested in taking the reins from their parents.

Trade winds blowing When global economists at HSBC Holdings recently pooled their forecasts, it showed that all of them had predicted similar sources of growth: exports. But mathematics tells us that it is impossible for every nation to sell more goods than it buys…so some of the analysts must be wrong. International trade and economic development professor Dr. Simon Evenett weighed in on the topic in BloombergBusinessweek.

He states that protectionism is on the rise despite pledges by the leading industrial and developing countries in the Group of 20 to avoid it. Evenett estimates that 452 protectionist measures have been imposed in the last 12 months, based on the research of Global Trade Alert, a group of economists who monitor actions that block free trade.  He also notes that  economies of emerging markets from Brazil to India are slow and trade is falling short. “Trade would have picked up much more in a normal recovery. The outlook is more of the same, as there is much more economic uncertainty than at the start of the year.”