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".

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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".

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THE LOCAL EXCLUSIVE

EUROPEAN UNION

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".

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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WORKING IN SWITZERLAND

Switzerland sees record high immigration from European countries

Switzerland has seen record immigration from European countries and a new report reveals a correlation with the country's low unemployment rate.

Switzerland sees record high immigration from European countries

Lots of data indicates that Switzerland needs foreign workers to fill job vacancies.

Now a report from the State Secretariat for Economic Affairs (SECO) confirms the importance that employees from the European Union and EFTA (Norway, Iceland, and Liechtenstein) have had for Switzerland’s labour market and economy in general. 

That is why “demand for foreign labour was strong in Switzerland in 2023,” SECO said in its annual report published on Monday, which assessed the impact that the Free Movement of Persons agreement (FMPA) has had on the country’s employment.

In 2023, 68,000 people from EU and EFTA countries came to work in Switzerland, according to SECO, driven by “employment growth that has significantly exceeded the EU average.”

Why does Switzerland need EU / EFTA workers?

Simply put, they are needed for the country’s economy to function optimally.

As SECO pointed out, while the number of pensioners is growing (due mostly to Switzerland’s exceptionally high life expectancy), “Swiss working-age population has experienced only slow growth over the past 20 years.”

“The country’s economic growth is not possible without immigration,” said Simon Wey, chief economist at the Swiss Employers’ Union. “We need foreign labour if we want to maintain our level of prosperity.”  

READ ALSO: How EU immigrant workers have become ‘essential’ for Switzerland 

In what sectors is the need for these workers the highest?

“A large number of people from the EU coming to work in Switzerland are highly qualified and are employed in demanding activities in high-growth branches of the service sector, such as the branch of special, scientific and technical activities, that of information and communication or the health sector;” SECO’s report said.

But the Swiss economy also recruits EU nationals as low-skilled labour, particularly in the hotel and catering industry, as well as construction and industry.

Why are only people from the EU / EFTA states recruited?

The reason is that, unlike nationals of third countries, people from the EU / EFTA have an almost unlimited access to the Swiss employment market, thanks precisely to the FMPA. 

Also, those coming from the neighbour countries (as most of Switzerland’s foreign labour force does), have the required language skills to easily integrate into the workforce in language-appropriate Swiss regions.
 

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