The Swiss overwhelmingly rejected a popular initiative that would have capped executive pay to 12 times the wage of the lowest-paid employee in the same business. Some 65% of the voters came out against the proposal, which was proposed by the youth wing of the Social Democratic Party. The referendum is one in a row: the Young Socialists are also proposing referenda on the minimum wage and the inheritance tax.

Avenir Suisse, an important Zurich-based think-tank, published in July a paper that provides food for thought for those who argue that Switzerland is a paradise for the rich. According to Avenir Suisse, “Switzerland is among those countries where the spread of incomes is relatively narrow. In France, Italy and Germany, by contrast, Switzerland’s three big neighbours, spreads are all wider”.

I think it is interesting to compare this, unsuccessful, referendum, with the one that earlier this year approved measures to require a binding annual vote by shareholders to set aggregate pay for directors and required the board members and the chairmen to be individually elected by shareholders every year. One reading may be that “corporate Switzerland”, after having lost the first referendum, had better equip itself lest it lose another one in a few months’ time. This is a perfectly reasonable hypothesis. Another one might be that the “Minder referendum” (named after small businessman and activist Thomas Minder) succeeded because it was framed in the language of shareholders’ democracy, whereas the 1:12 one pushed for an unequivocal salary cap.

The success of the Minder proposal showed how displeased the Swiss were with fat cat salaries: the story of Daniel Vasella’s “golden handcuff” made big noise. The Swiss ended up limiting freedom of contract, but for the sake of empowering small shareholders. Expectations of shareholders’ democracy may be exaggerated but I think they signal an attitude towards corporate capitalism which does not necessarily entail a desire to have the government regulating salaries. Shareholders’ democracy is congenial to the Swiss attitude towards dispersed power and direct democracy, top down regulation of wages and prices is not.

It will be interesting now to see what happens with the other groups that in Europe have flirted on the idea of having a 1:12 regulation to be introduced in their respective countries. In Italy, Beppe Grillo, the comedian turned politician, seemed to be intrigued by the idea. I would guess the same referendum in countries like Italy or France may have produced a very different result.