What you need to know about the Swiss basic income vote

Anmar Frangoul | Special to CNBC.com
Is Switzerland's universal basic income a good idea?
Is Switzerland's universal basic income a good idea?

The people of Switzerland will go to the polls this weekend to vote in a potentially historic referendum to provide everyone in the country with a no-strings-attached monthly payment of 2,500 Swiss francs ($2,524).

This is regardless of whether they're currently in employment or not. CNBC gives you the full lowdown on why the vote is so important.

The big idea

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The basic premise of the referendum is to amend the country's constitution so that the Swiss Confederation would "provide an unconditional basic income."

The proposed figure for the unconditional basic income is expected to be around 2,500 Swiss francs ($2,524) per month. If the Swiss people vote in favor, the federal government says it would pay every Swiss resident this amount, "regardless of their income and assets."

The majority of Swiss people currently enjoy a high standard of living. According to the Organization of Economic Co-operation and Development's Better Life Index, 80 percent of people between 15 and 64 are employed, above the OECD average of 66 percent, while life expectancy is a healthy 83 years old.

Average household net-adjusted disposable income per capita is $35,952 per year, the OECD says.


Switzerland has a system whereby referendums can be called if more than 100,000 eligible voters sign a petition calling for change.

"Under the Swiss constitution, a group of citizens who collect the required number of signatures can put an issue to the vote – this is the so-called 'people's initiative'," Paolo Dardanelli, senior lecturer in comparative politics and acting director of the Center for Federal Studies at the University of Kent, told CNBC via email.

Dardanelli went on to explain that this weekend's vote had sprung from "the growing debate on rising inequality in society and polarization between rich and poor." While the electorate has a tendency to be conservative when it comes to economic matters, inequality caused concern "in a society in which cohesion and consensus are highly valued," he added.

The popular initiative regarding unconditional basic income was proposed in October 2013.

Fabrice Coffrini | AFP | Getty Images

Basic Income Switzerland (BIS), a campaign group set up specifically to support the initiative, says basic income should "be considered as one of the human rights."

Among other things, BIS states that wages in the private sector would become "liberated from securing the livelihood of the employee," meaning that while salaries may be high or low, people's livelihoods would become "inviolable" as a result of them receiving a basic income as a right.

The economic security of a basic income would offer people choice in the jobs they apply for, the group adds. Their rights as workers would also be strengthened, because "the threat of taking away a person's livelihood can no longer be used as a means to force employees to work under bad conditions," it noted.

Supporters of the initiative have been running a visual and vocal campaign. In May, they broke the world record for the largest poster. Measuring more than 8,115 meters squared, the poster was displayed in Geneva and bore the question "What would you do if your income were taken care of?," in large, golden letters.

Better to be jobless?

Switzerland's Federal Council and Parliament oppose the initiative, however, stating that an unconditional basic income would hit both the economy and the Swiss social security system by making it more attractive to stay out of work.

"This would exacerbate the existing labor and skills shortage in Switzerland," the government states on its website.

"Furthermore, considerable cutbacks or tax rises would be necessary to finance this basic income, which could not replace today's social security system entirely," it adds.

For Vincenzo Scarpetta, policy analyst at Open Europe, the desire for a basic income is not unique to Switzerland.

"It's true that the specific issue of a basic income has come up in several European countries, in my own, in Italy, because there are certain parties – the Five Star Movement, or Podemos in Spain – that were actually initially at least campaigning on the need to guarantee basic income to everyone," he told CNBC earlier this week.

"It's interesting that this kind of referendum is coming from Switzerland and not, for example, from the French Socialist Party," Scarpetta added. The vote has surprised many who traditionally see Switzerland as a conservative nation, and such a policy seemingly jars with the right-wing populist political party that currently holds a large slice of power within the government.

The big question

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Dardanelli at the University of Kent said it was "highly unlikely" that voters would support the introduction of an unconditional basic income. "Opinion polls predict over two-thirds of the electorate will turn it down," he said.

If, however, the Swiss vote in favor of the proposal, then the overall impact could be seismic.

"The initiative is formulated in very generic terms and would be up to the parliament to put it into concrete legislation, leaving the actual shape of a UBI wide open," Dardanelli said.

"That said, any UBI of (a) significant amount would have a tremendous impact, in particular on public finances, which are kept on a tight leash in Switzerland. More broadly it may weaken the health of the Swiss economy, one of the most competitive in the world."