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Swiss government warns a minimum wage threatens economy

Swiss Economy Minister Johann Schneider-Ammann attends a news conference in Bern February 25, 2014. REUTERS/Thomas Hodel
Swiss Economy Minister Johann Schneider-Ammann attends a news conference in Bern February 25, 2014. REUTERS/Thomas Hodel

BERNE, Switzerland (Reuters) - Introducing the world's highest minimum wage would hurt Switzerland's competitiveness and lead to job cuts, harming precisely those low-income workers it is designed to help, the Swiss government said on Tuesday.

Swiss voters will decide in a popular vote on May 18 if they want to introduce a minimum wage of 22 Swiss francs ($24.73)an hour, or 4,000 francs a month, much higher than in other countries.

"The government is convinced it would be wrong for the state to impose a nationwide wage," economy minister Johann Schneider-Ammann told a media conference.

A minimum wage of 4,000 francs could lead to job cuts and even threaten the existence of smaller companies, notably in retail, catering, agriculture and housekeeping, Schneider-Ammann. "If jobs are being cut, the weakest suffer most," he said.

A vote in favor of the initiative, brought forward by Swiss union SGB and supported by the Socialist Party, would be another setback for the government and business leaders. Swiss voters ignored their warnings and backed curbs on immigration from the European Union this month.

In Switzerland, interest groups can enforce votes on new laws if they collect a sufficient number of signatures.

"I warned before the mass-immigration vote that it could have consequences also in the job market ... both (mass immigration and minimum wage) together would be very problematic," Schneider-Ammann said.

About 330,000 workers in Switzerland, mainly female, have full-time jobs that pay under 4,000 francs - too little to live on decently in the expensive country, the SGB says.

The cost of living in Swiss cities is among the highest in the world, but high salaries make up for it, UBS said in a recent report. That report showed Zurich residents had the highest purchasing power worldwide in 2012.

The SGB argues the minimum wage would not lead to higher unemployment. It would encourage welfare recipients to take up a paid job, the union says, and allow those who now work several jobs to focus on one position.

"A minimum wage would also make sure employers can no longer import cheap labor from abroad, at the expense of those who already live here," SGB Chief Economist Daniel Lampart said.

The proposed minimum wage is more than double Germany's newly decided 8.50 euros ($11.69), the UK's 6.31 pounds ($10.55) or the $7.25 U.S. rate that President Barack Obama wants to raise to $10.10.

Industry lobby Swissmem said a "massively" higher minimum wage than in neighboring France or Germany would mean some industrial activities would no longer be competitive.

"It could literally chase some jobs from the country, particularly in regions close to the borders," Hans Hess, Swissmem's chairman, told a separate media briefing.

In an opinion poll conducted in November on behalf of SGB, 74 percent of participants backed the minimum wage.

($1 = 0.8897 Swiss francs)

(Reporting by Silke Koltrowitz. Additional reporting by Paul Arnold and Isabelle Cox; Editing by Larry King)

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