Expats in Crosshairs as Swiss Vote on Immigration Limits

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A Pedestrian Passes a Political Advertisement in Basel
A woman passes a political banner in Basel which reads, "The excess is harmful! Yes to stop mass immigration." Photographer: Sebastien Bozon/AFP via Getty Images

Feb. 4 (Bloomberg) -- More than one in five workers in Switzerland are foreigners. That could soon change.

Almost 12 years after opening borders to European Union expatriates, the Swiss may decide on Feb. 9 to retrench. A vote in favor of immigration restrictions, which is gaining traction in opinion polls, could have a boomerang effect on the country’s economy, according to the Swiss government.

The stakes are high for companies such as Basel-based drugmakers Roche Holding AG and Novartis AG, which rely on overseas professionals for lack of qualified local staff. About half of Roche’s research and development team are foreigners, according to Chief Executive Officer Severin Schwan, himself an Austrian. As Swiss banks struggle in the wake of the financial crisis and secrecy clampdown, the threat to industry and health care, driving forces of the economy, adds to the concern.

“If there’s a qualified Swiss candidate, of course we’ll take them -- often there isn’t,” said Michael Tschopp, head of human resources for Zurich’s University Hospital, which has started a program in Spain to find medical orderlies, helping candidates brush up on technical skills and learn German.

That’s in line with the Swiss hospitals and clinics, where a third of workers aren’t citizens. “We need foreigners, there’s no question,” he said.

‘Hits a Nerve’

Skilled immigrants have played a prominent role in Swiss business for hundreds of years. Geneva’s tradition of watchmaking traces its origins to the arrival of Huguenots in the 16th century, while in 1839 two Polish immigrants joined forces to form the company known today as Patek Philippe. Similarly, German immigrant Heinrich Nestle founded Nestle SA, the world’s biggest food company, and Beirut-born Nicholas Hayek was the force behind Swatch Group AG.

The vote “endangers prosperity,” Justice Minister Simonetta Sommaruga, who with other members of the multi-party government opposes the measure as it would saddle businesses with more bureaucracy, said last month. Even so, “it hits a nerve within a segment of the population.”

Support for the initiative to “stop mass immigration,” which would impose an upper annual limit on newcomers, has been rising, according to the most recent poll by researcher gfs.bern, published on Jan. 29. While rejection still looks likely, 43 percent of respondents said they’d vote yes, up from 37 percent in a survey published Jan. 10. Fifty percent rejected the proposal, down 6 percentage points from the previous poll.

Immigration Wave

By passing the measure Switzerland “would send a clear signal against open markets and massively hurt internationally active Swiss businesses, who greatly contribute to affluence,” the International Chamber of Commerce in Switzerland said in a statement today.

High turnout among immigration opponents could tip the scales, gfs.bern said. That happened in 2009, when voters unexpectedly passed an initiative backed by the Swiss People’s Party SVP to ban the construction of new minarets. Voter turnout in Switzerland is generally about 40 percent.

Over the past decade, Switzerland has experienced the highest immigration relative to its population of any country in the Organization for Economic Cooperation and Development, said Thomas Liebig, an economist at the Paris-based organization’s international migration division. Italians are the biggest group of foreigners in the country of 8 million, followed by Germans, according to 2012 data.

Country Destroyed

While immigration may be a contentious topic in neighboring Italy, Austria and France, Switzerland stands apart because the anti-immigration vote targets some of the biggest economic contributors. Among arrivals from the EU between 2010 and 2012, 69 percent were highly skilled. That compares with a rate of 35 percent within the 28-member union, OECD data shows.

Opponents of immigration -- many of them members of the Swiss People’s Party SVP -- say it’s causing a housing shortage, overcrowded public transport, a rising crime rate, and pressure to blue-collar wages.

“Excessive immigration will ultimately destroy our country,” said Adrian Amstutz, who heads the SVP’s parliamentary faction and is a supporter of the initiative. One campaign ad in favor of the initiative features a tree with monster-like roots that are crushing Switzerland.

Economic Support

Finding affordable housing in Geneva and Zurich is difficult: The vacancy rates were 0.4 percent and 0.1 percent respectively in mid 2013. The inflow of rich foreigners has pushed real-estate prices up both in Geneva and Zurich, according to Daniel Sager, the founder of Meta-Sys AG, which tracks immigration and real-estate trends. The Lake Geneva region, also home to diplomats from the United Nations and other international organizations, is the most affected, he said in a Jan. 31 interview on Le Temps.

“It can’t go on like this,” the SVP’s Amstutz said last month. “Open landscape, expanding public transport and affordable rents are part of the public good.”

To temper the influx, the government enacted a yearlong limit on residence permits for citizens from EU countries including Germany and France. There is also an annual ceiling on the number of new arrivals from extra-EU countries like Japan or the U.S.

Still, immigration has boosted growth, helping national output to exceed its pre-crisis level by 5 percent, the Swiss National Bank said. Immigration generates a gain of at least 6.5 billion Swiss francs ($7.2 billion) for the government annually, Liebig at the OECD said.

Heads, Not Gut

The canton of Zug, a magnate for affluent internationals thanks to low income taxes and home to a host of international businesses including Glencore Xstrata Plc, has seen its population double in the past 40 years.

“Immigration helps to keep taxes low for the Swiss,” Liebig said.

It has also shaped the country. In the late 19th century, Switzerland’s Gotthard tunnel -- at the time the world’s longest and even today one of the main conduits between Germany with Italy -- was built by Italian laborers. More recently, Klaus Schwab, the founder of the World Economic Forum, headquartered by Lake Geneva, was born in Ravensburg, Germany, in 1938. Heads of state and corporate executives head to the mountain resort of Davos each January for the Forum, helping put Switzerland further in the spotlight.

As for the Zurich hospital, the university has changed the rules allowing more young people to study medicine, though that won’t fill the personnel gap for some years, Tschopp said. Asked whether he’s able to put a figure on how much the new immigration curbs would mean in higher administrative costs, he said: “I don’t even want to think about it.”

The Swiss government is doing just that. If the Swiss vote “yes” to the initiative, jobs will be lost, Swiss Economy Minister Johann Schneider-Ammann told the Tribune de Geneve on Jan. 31.

“The Swiss should vote with their heads, not their gut,” he was cited as telling the Geneva-based paper.

To contact the reporter on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net