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Cargo firm slammed for ‘discriminating’ against EU workers

Farnair, a small cargo airline based near Basel, has decided to reduce the salaries of its cross-border workers by 10 percent and pay them in euros, in a move slammed by unions and experts as "discriminatory" and "xenophobic".

Published: 17 October 2011 15:00 CEST
Updated: 20 October 2011 15:00 CEST

Cargo firm slammed for 'discriminating' against EU workers

“They convert the salaries into euros calculating them with a fantasy exchange rate,” Hans Hartmann at Unia, the largest Swiss trade union told The Local on Monday.

The move will affect around half of Farnair’s 144 employees with those living in Switzerland retaining the same salaries. Unions have reacted angrily to the move and Hartmann called the practice of differential pay rates illegal, arguing that it violated bilateral agreements with the EU.

He added that while there have been a few cases of companies paying their cross-border workers in euros in response to the recent appreciation of the franc, he denied press reports that it is a “growing problem”.

Farnair announced the measures in an October 4th email sent by chief executive, Guy Girard.

The airline, based in Allschwill in northern Switzerland, justified targeting workers living in France and Germany by arguing that cross-border commuters possess greater purchasing power than their co-workers living in Switzerland.

Farnair cited the lower cost of living in neighbouring countries, allied with a dramatic increase in the value of the franc, which has risen by 20 percent against the euro over the last 18 months.

To support its arguments, Farnair cited a study conducted by the UBS bank entitled “Wealth management research, prices and earnings”. First published in 2009 and updated in August 2011, the report says living expenses in Switzerland are currently 30 percent higher than in neighbouring European countries.

But trade unions and employment experts said Farnair’s decision to cut the salaries of cross-border workers was discriminatory and against the law.

“This is illegal by all means because it is discriminating,” Thomas Geiser, professor of labour law at Sankt Gallen University, told The Local, explaining that “bilateral agreements with the European Union do not allow Swiss companies to pay European workers less than Swiss workers.”

This view is supported by René Zurin, head of the VOPD union’s civil aviation sector. “What counts is the place of work, not where people live,” he said.

Francisca van der Meer, head of Shared Services at Farnair Europe, however disagreed that the firm had done anything wrong.

“We did not want to cut everyone’s salary by 10 percent without looking into their buying power, because that would be unfair,” she told The Local.

To have done so would have been “discriminatory to our Swiss people or the people living in Switzerland, because they did not get a raise in their buying power of 20 percent [like the ones residing in other European countries],” she said.

One of the company workers affected by the new wage conditions, who asked to remain anonymous, however called the decision “unfair” and “ridiculous” and argued that some of her colleagues living in Switzerland “can, and actually do, buy in Germany or France, therefore also enjoying an increase in their buying power”.

“People should not be penalised for where they choose to live,” she told The Local.

Professor Geiser agreed with the criticism of the company’s arguments which he described as “simply absurd”. He gave the hypothetical example of a Farnair employee working in Basel, where apartments are quite expensive, but living in Münchenstein, on the outskirts of the city, where housing is cheaper.

“Why don’t employers think of paying them less in this case? It is absolutely the same thing, I don’t see a difference.”

Geiser argued that the company’s underlying motives may extend beyond simply parrying currency exchange costs.

“I think this is xenophobia, and you have a lot of that in Switzerland,” he said.

Three months after the company’s notice, cross-border employees are set to see their salaries cut by 10 percent and converted into euro using a fixed exchange rate of 1.21 francs per euro.

“It is either this, or we have to leave Switzerland and then everybody loses his or her job,” warned van der Meer, who said that 99 percent of the company’s income is in euros whereas 95 percent of outgoings are in francs.

The letter states that “Farnair assumes full currency risk” so “employees receiving their wages in euro do not have to fear any currency-related loss of buying power in the future should the position of the Swiss franc weaken.”

Those not willing to sign up to the new conditions will lose their jobs.

While experts concur that cutting the salary of only part of the workforce based on their place of residence is illegal, there is no such clear agreement when it comes to paying in euros instead of Swiss francs.

Geiser said it was legally permissible, but the unions are continuing to fight against a measure being considered by several firms that point to the superior purchasing power of cross-border workers.

Over the summer, Unia handed over a petition to the government asking it to forbid the payment of salaries in euros, having collecting 18,000 signatures in previous weeks.

But on September 16th the Federal Council decided not to ban the practice, although the final word will be reserved for the courts.

“It is just the Council’s opinion, because it is the courts that have to decide the matter,” said Ewald Ackermann, spokesperson for the Federation of Swiss Unions (USS).

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Far right ahead

Europe’s far-right parties were winners in many places, coming out on top in France, Italy and Austria, while Germany’s AfD came second – but still ahead of Chancellor Olaf Scholz’s SPD party – and the hard-right also did well in the Netherlands.

But experts warned against reading too much into their success.

“The far right did well but not excellent – let’s not forget these are second order elections,” said Francesco Nicoli, a visiting fellow at Bruegel think tank.

“We cannot say that this is a very, very significant push as things stand,” Christine Verger, vice chair of Jacques Delors think tank said. “There may be movements within the political groups. We don’t know where some MEPs will end up.”

A big question being raised is whether two main far-right groups in the parliament — Identity and Democracy (ID) and the European Conservatives and Reformists (ECR) — can unite, creating a supergroup.

Verger dismissed that notion out of hand.

“I absolutely do not believe in a unification, it is out of the question for ID and ECR to merge,” she told AFP.

The ECR includes Italian far-right prime minister Giorgia Meloni, whose Brothers of Italy party came top in the elections.

As to the far right’s likely impact on lawmaking in the European Parliament, experts appeared sanguine.

“The rising number of far right MEPs will likely have only a limited impact on the EU,” predicted expert Marta Lorimer. “They do not form a blocking minority.”

Weaker Macron

The biggest single loser of the elections was Emmanuel Macron after his centrist party received a drubbing by France’s Rassemblement National (National Rally) led by Marine Le Pen.

The French president responded by swiftly dissolving France’s national parliament and calling for snap elections.

“France remains a large country with a president who has a lot of power,” Verger said.

As the head of a major EU member state, Macron will remain an important player on the European stage.

But she said the poor election performance of his Renaissance party would see it “lose some influence” within the Renew grouping that it belongs to, and the parliament in general.

Return of Von der Leyen

Analysts agreed it was a pretty good night for European Commission President Ursula von der Leyen, who hopes to secure a second five-year mandate after the vote.

She will need the support of the EU’s 27 leaders and the new parliament – and in the latter respect the data suggests von der Leyen can breathe a sigh of relief.

Her party, the European People’s Party (EPP), remains the parliament’s biggest grouping and experts predicted she would be able to get the extra votes she needs.

Based on preliminary results, Nicoli said she could rely on the support of the Socialists and Democrats “with a choice between liberals, ECR and Greens as junior partner” – and could deal with 20 defections or more in each scenario.

“I think the elections could have been worse for her.”

Wilting Greens

It was a disappointing night for the Greens political group, which is on course to lose around 20 EU lawmakers – in a result that came as little surprise.

“Greens are the clear losers, and so is Macron, but again these were trends clearly evident before,” Nicoli said.

European concerns about security and the cost of living following the outbreak of war in Ukraine in 2022, and other issues including migration, displaced the environement as a voter concern.

“The Greens have not been very well placed to answer those demands,” Nicoli added.

And all across Europe, right-wing opponents have successfully channelled discontent into anger at the EU’s environmental push of recent years.

But Greens’ EU lawmaker Bas Eickhout saw the results as a “mixed bag” – and “a bit more nuanced than just saying it’s a big loss”.

He pointed to the Greens’ success in the Netherlands and Spain as well as smaller countries in the north and Baltics, including Denmark and Lithuania.

Higher turnout

Around 360 million people could vote in the elections and in welcome news, turnout was the highest in 20 years at around 51 percent, according to provisional EU data.

“The good news for democracy is that the turnout looks likely to be above half of the electorate, although that is still below participation rates for national elections, and very low in countries such as Slovakia and Lithuania,” said Heather Grabbe, a senior fellow at Bruegel.