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|THE LATEST REFERENDUM VOTED ON BY THE SWISS electorate has again resulted in a verdict unwished for by trade unions. Following the rejection of a curb on top managers’ pay (see issue 65) and the re-introduction of a quota for migrants (issue 66), the attempt to institute a minimum wage in the country failed by a large margin. 76% of those voting were against the plan which would have brought in a rate of 22 Swiss francs (£15) per hour. While employers argued that having the ‘highest minimum wage in the World’ would cause unemployment and price Swiss products out of the market unions pointed to the high living costs in Switzerland where the cost of renting a one-bedroomed flat is about 1,800 Swiss francs (£1,200) a month. It was also hoped that the minimum wage would do something to redress the gender imbalance as women currently earn about 18.9% less than men on average. Trade Union Federation Vice President Vania Alleva estimated that ‘Of the 7.7 billion Swiss francs that women lose through discriminatory||
wage deals every year, 1 billion would be paid back thanks to the initiative’. Two-thirds of workers earning less than 4,000 Swiss francs a month were women in 2012.
A Swiss voter at the polling station
AS EUROPEAN POLITICIANS STILL STRUGGLE TO REFORM the financial sector in the wake of the crash of 2008 three areas are soon to be addressed by new laws and regulations. Three new measures are concerned with the banks: a directive on restructuirng and resolution, the single resolution mechanism and another directive on deposit guarantee schemes. The first directive explicitly states that shareholders and creditors will have to ‘bail-out’ failing banks, not citizens; if the amount raised from these sources is insufficient a specially set-up resolution fund will step in. In the case of the euro the fund will be known as the Single Resolution Mechanism, managed independently of the EU institutions and funded by the banks themselves, it will be able to resolve a bank’s balance sheet ‘over a weekend if necessary’ according to Internal Market Commissioner Michel Barnier. Although it will start in November it will gradually build up €55 billion over the course of the next eight years. The third measure will set up a guarantee scheme in each Member State to make sure that individual deposits up to €100,000 are protected.
The second area aimed at by EU legislators is that inhabited by high-frequency traders. Using super-fast computers running algorithms that exploit gaps in regulation, and in the technology of the authorities, these operators are part of a market of millions of euros in securities and derivatives. In the U.S.A. it is estimated that between 50% and 75% of orders for shares are handled in this split-second way. Bugs in the computer programme can cause traders to rack up huge losses but MEPs are also worried by their use in markets such as foodstuffs which can have ‘devastating consequences in the developing world, compounding food insecurity for the world's poorest’ said Sven Giegold, a German Green. The new Markets in Financial Instruments Directive, or Mifid, will enable the recently set-up European Securities and Markets Authority (ESMA) to write new rules to ensure greater transparency and oversight. However some proposals such as cooling-off periods between trades have been thrown out under pressure from national governments. The rules should come into force at the end of 2016.
The third leg of financial reform is the Financial Transaction Tax (FTT) also known as the Robin Hood tax. This has also been the subject of concerted pressure from Member States, particularly the U.K. Originally conceived at 0.1% on share and bond deals and 0.01% of derivatives if either party was based in the EU (see issue 61), enough countries objected to stymie it as a European directive. The eleven nations that were in favour then resolved to go ahead under the ‘enhanced co-operation’ procedure. Further obstacles were put in its way including a legal challenge from Britain at the European Court of Justice. Although this failed, disagreements over which transactions should be included mean that it is likely to be introduced in steps and to raise far less than the €35 billion originally envisaged. It is likely to start in 2016.