The World Briefly

March 05, 2024

The Right Balance

Switzerland

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A referendum in Switzerland this week resulted in voters refusing to push back the retirement age and giving themselves an extra month’s pension each year, a rare victory for trade unions in the wealthy country, the BBC reported.

The Swiss were asked two questions at the federal level: to raise the retirement age from 65 to 66 and to enact a 13th monthly installment for pensions. While 75 percent of voters said ‘no’ to the first proposition, 60 percent endorsed the second – an unexpectedly large popular majority, coupled with majorities in most of Switzerland’s 26 cantons. This double plebiscite allows the measures to pass according to Switzerland’s rules of direct democracy.

In Switzerland, pensioners can receive up to $2,760 per month. However, many say this is not enough to deal with the cost of living in the Alpine country, which has some of the highest living costs in the world.

Making ends meet is especially difficult for women taking a hiatus to raise children, and immigrants working low-paid jobs. Many work beyond the legal retirement age because the pension is not enough.

The extra installment would align the pensions with Switzerland’s salary system, which features a double payment in November to help with Christmas expenses and tax bills. Pensions also get taxed.

The ruling coalition, parliament, and businesspeople had opposed the measure, saying it would be too expensive to fund.

Meanwhile, the referendum was a venue for the Swiss to vent their frustration at the government’s handling of public money, the local Le Temps wrote. Billions were spent on Covid-19 and supporting war-torn countries such as Ukraine, breaking from a centuries-long tradition of political neutrality. Recently, the government announced budget cuts for all but the military.

This laid the ground for trade unions to propose a pension increase – and succeed, defeating the federal government for the first time in a referendum on economic matters.

Federal Interior Minister Elisabeth Baume-Schneider said she would table a proposal at the Federal Council, the executive body, to find the $4.6 billion necessary to fund the extra pension installments. In her first brainstorming, she mentioned increasing value-added taxes.

This story originally appeared in the March 05, 2024 newsletter, A Place in the World.