Latest minimum wage adjustment approved, IRE report on impact in Ticino published

Ticino's minimum wage is nearing final confirmation. In fact, the State Council has approved the message on the evaluation of its impact, based on a study conducted by the Institute of Economic Research (IRE) of Università della Svizzera italiana (USI). The study found that there are "no particular effects that would prevent the final minimum wage range from taking effect." If the Grand Council approves, the minimum wage will be set between 20 and 20.50 francs per hour starting from 1 January 2025.

The Minimum Wage Law, which was passed in 2015 and took effect in 2021, mandated an evaluation of its impact by 30 June 2024. For this assessment, the State Council commissioned a study conducted by the USI Institute for Economic Research (IRE). The study indicated that following the law's implementation, hourly wages in the most affected sectors have risen by 36 per cent, with this percentage to be regarded as an upper limit. "Concerning employees earning below the minimum wage in the company, this increase means a change from an average hourly wage of 17.25 francs to 23.46.," reads the USI institute's report. "The increase impacts all wage classes around the minimum wage, not just the lower ones, and has a positive effect on wages above the statutory wage as well.

In its analysis, IRE found that the law had a "positive and statistically significant impact on incomes in secondary sectors and particularly for some manufacturing activities," with an average increase of 3.4 per cent in 2022. This increase mainly affected foreign workers. "Overall," the report continues, "it is evident that the Minimum Wage Law has resulted in an increase in incomes, particularly for foreign workers. This outcome is not unexpected, as this group of workers was disproportionately represented in the wage range below the minimum wage." After analyzing the data, the USI institute did not find a statistically significant impact on the total number of employed individuals and firms. This also applies to the probability of remaining employed, including that of young people. "The overall results," the report reads, "do not indicate the presence of substitution effects due to the introduction of the minimum wage."

The government, for its part, has proposed an increase in the minimum wage with the intention of raising the range to 20-20.50 francs per hour from 1 December 2024. The Executive believes that it is necessary to grant an increase due to the trend of wages actually paid in the private economy, while at the same time taking into account the looming economic difficulties. As State Councilor Christian Vitta reiterated, again based on the IRE study, the situation will in any case need to be constantly monitored. "The analysis notes that at the moment it is premature to draw definitive conclusions about the structural effects of the minimum wage in the medium to long term." The last word, we suggested, now rests with the Grand Council.