Swiss way to pay parity

In any other country, barring a few socialist and communist states, such a proposal would have met with derision and protests. After all, who would like to sacrifice fat pay cheques for ushering in an egalitarian society? But the Swiss people, in all fairness, want their income disparities reduced so that every citizen, irrespective of the work he or she does, enjoys almost equal standard of living. How to do it is a problem that is overcome by using a mathematical formula according to which a top executive’s monthly salary won’t be more than a year’s total pay of the lowest paid worker.

To put it simply, 1:12. To check whether the pay parity equation is acceptable to all, the Swiss government is holding a referendum tomorrow (November 24). If the nation votes for it, multinationals’ top dogs whose yearly earnings run into millions, have to accept draconian salary cuts. Presumably, the corporations that save billions on salaries to top honchos will give them away to low wage earners by substantially raising their take-home pay if the referendum gets the required yeahs.

The communist giants of yesteryear, the Soviet Union and China, and members of the Red Club had such or similar plan in force before they embraced State-sponsored corporate capitalism. The difference in incomes from a peasant to political leader was marginal. Only the nature of work was different; what was paid for their fruits of labour would not make others turn red with rage. In theory, it is a great socialist concept; but in reality, it has never worked since money is the main inducement to make people more productive and innovative.

Lack of monetary incentives or stagnant wages act as deceleration force on individuals. However, there is no such problem with the Swiss who enjoy a high standard of living; but the problem started surfacing in recent years, particularly post-2010 when a fraction of the population in the corporate world has become moneybags, amassing wealth at disgusting levels. That was also the time when the youth in European capitals and the US were protesting against what is famously called corporate greed and President Barack Obama took the American biggies on and cut them to size.

Huge payouts to top executives are behind the mass movements in global trading centres, forcing governments to think of ways to narrow down salary differences between the top and the lowest rung of employees. According to a Reuters report, French President Francois Hollande is pushing for a cap on pay at State-owned firms of 20 times that of the lowest paid employee. Spain’s opposition Social Democrats has adopted the 1:12 ratio as part of its economic policy.

Surely, a lot of Indians will be wondering whether such a ratio, albeit on a lesser scale, can be tried out in this country and if it is implemented will it work in a situation where transparency in transactions is a much-searched word. In fact, those who cry hoarse about rich becoming richer and poor becoming poorer should soul-search why is this phenomenon increasing despite peddling the worn-out phrase during political campaigns.

Though the system of governance varies from country to country and efforts are being made to bridge the rich-poor gap, particularly among the working classes, no concrete effort has ever been made to find a way to reach a consensus on fair wage level for maintaining certain standards of living. The reasons are not far to seek: How to define decent standard of living that varies from country to country.

A poor American is a rich man by Indian standards and super rich by sub-Saharan calculations. If we go by our Planning Commission’s poverty parameters, lots of young managers and IT professionals, among others, can be grouped into the rich category. Then what about our increasing number of known millionaires and billionaires? The unknown number may be much more. The rich-poor gap in India is our peculiar conundrum. No Swiss formula can help us devise India-specific solution to make the lowest paid feel better.