The Competition Commission has published its final report on wage-fixing. This allows conclusions to be drawn for the first time about the extent to which employers exchanged information on wages.
When employers poach the best employees from each other, their wages rise. This is good for those who are sought after, but in the medium term it is disadvantageous for the companies because of the higher wage costs.
If, on the other hand, you agree with the employer not to pay more than a certain amount for certain jobs, wages will remain lower. The employees suffer the loss. Competition for workers is stifled.
The Competition Commission reported on such a case in July. Apparently, Swiss companies regularly discuss wages. The focus is on a voluntary disclosure by a bank in the financial sector. But companies in many other sectors also exchange information about wages and wage developments.
Extensive exchange of information
In the meantime, the Weko has published its final report. This allows for the first time conclusions to be drawn about what was discussed at the supposedly conspiratorial meeting of over 200 companies and to what extent the employers exchanged information.
- In the Zurich banking center, for example, according to the Weko report, the Commission for Basic Education of the Zurich Bankers Association has been conducting salary comparisons among the participating banks since at least 2015. The annual salaries for the apprentices (commercial and IT specialists) as well as the starting salaries after the end of the apprenticeship were recorded in a table. In addition to the information on learning, information on salaries, bonuses and meal allowances in the “Bank entry for secondary school graduates” program and on their starting salaries were also exchanged. The commission last provided the updated salary table to members in anonymized form in January 2022.
- The majority of training banks presumably exchanged information at the Basel banking center. The banks informed each other about the annual salaries per year of training. Some of the banks also informed each other about the starting salaries after the apprenticeship.
- The cantonal banks also came under the radar of the Competition Commission. At a later association conference, they recorded the extent to which an increase in fixed salaries was planned. Information on planned bonus payments and their amount in comparison to the total wage bill was also exchanged. At the beginning of the following year, they communicated the effective wage increases among themselves.
- A group of initially seven, then eight cantonal banks in German-speaking Switzerland also created “salary benchmarks” in preparation for an upcoming HR manager meeting. One cantonal bank collected the salary data of the others. Between 2010 and 2022, the banks exchanged information on basic salaries and variable salaries, broken down by employee categories such as head of credit processing, team leader, credit processing clerk and many others.
- But the banks don't just exchange information with each other. According to the Weko report, there were also cross-sector meetings. In the Zurich area, employees of banks, financial service providers and (re)insurance companies form an informal network for exchanging experiences on HR and compensation issues. At least from 2015 to 2019, the participating companies exchanged salary information. Before each meeting, the members were invited to fill out a table. The tables contain information on employees' actual compensation, salary adjustments and bonus payments.
- In the Basel region and northwestern Switzerland, representatives of the Basel Society for Human Resources Management (a regional network for human resources professionals) meet regularly to exchange information on standards and other working conditions.
- In addition, according to Weko, multinational corporations from the chemical, energy, health, insurance, logistics, luxury goods, food, banking and finance, pharmaceutical/life sciences and science and technology sectors have also exchanged personal information.
In its final report, the Competition Commission states that these are not trivial cases. The banking sector is particularly badly affected, where the wage agreements extend across entire cantons or regions. But large companies in other sectors with several thousand employees are also colluding on wages. According to the Competition Commission, there are therefore indications that the agreements would significantly restrict competition.
Social partners react critically
The employers' association reacted critically to the final report of the Competition Commission, not surprisingly. The fact that the Competition Commission wants to regulate this area is not a good idea. In order to negotiate wages between the social partners, an exchange of certain information is simply necessary.
It could not be the aim for Weko to now establish best practices and thus try to standardise guidelines, it says in a written statement. In an issue that the social partners have been dealing with for decades, restraint is important, according to the association.
The unions also reject the interference of the Weko. Instead of being outraged about the wage agreements, they even express understanding for the employers. “A collective agreement does not fall from the sky,” argues Daniel Lampart of the Swiss Federation of Trade Unions. In order for the social partners to be able to negotiate the wages applicable in the collective agreements, each side must first form its own idea of reality and establish a negotiating position. This requires an exchange of information and an agreement with regard to the negotiations, says Lampart.
In fact, wages negotiated by the social partners in collective agreements in Switzerland are generally not subject to the Cartel Act. Otherwise, negotiations between the social partners on collective agreements would not be possible, because these are, in a sense, agreements deemed permissible by the state. However, there are not collective agreements in all regions for all sectors.
However, it is disputed whether unilateral wage agreements between employers without the involvement of the unions are permitted or not. In its final report, the Competition Commission denies this, citing historical interpretation, recent opinions in the literature and EU law. The arguments of the social partners speak against this.
There is therefore scope for the development of best practice regulations, as announced by the Competition Commission, primarily outside of collective agreements.