Feb. 9 (Bloomberg) -- Switzerland voted in favor of new immigration curbs, risking a backlash from the European Union and thwarting the ability of companies to hire top talent abroad.
The measure, which requires the government to set an upper limit for foreigners, was supported by 50.3 percent of voters, the government said at a press conference in Bern. Voters in the cities of Zurich and Basel and cantons in western Switzerland opposed the measures, while those in rural German-speaking cantons and the Italian-speaking region of Ticino backed it.
“It’s a change of system with wide-ranging consequences,” including to relations with the European Union, Justice Minister Simonetta Sommaruga said, adding that the result was due to rising unease among citizens. “We can’t be sure how these negotiations will turn out.”
Immigration has supported economic growth, and the EU bloc is Switzerland’s top export destination. Roughly a fifth of its 8 million inhabitants come from abroad. About 45 percent of employees in its chemical, pharmaceutical and biotech industry are foreigners, according to scienceindstries, an association whose members include drugmakers Roche Holding AG and Novartis AG, and food company Nestle SA.
In the run-up to the vote, the initiative “against mass immigration” pitted companies small and large against the euro-skeptic Swiss People’s Party SVP, the biggest in the lower house of parliament. Corporations argued they need top talent from around the world to maintain their competitive edge, while critics, many of them members of the SVP, said the flood of newcomers is leading to worse working conditions, crowded trains and a housing shortage.
“It’s an economic and foreign policy defeat,” said Christian Levrat, a member of parliament’s upper house for the Social Democrats. The economic elite “allowed a state of affairs where people felt the losers” of the open borders, he said.
The vote also risks creating a rift between Switzerland and the EU, its biggest trading partner. The decision to open the borders 12 years ago was negotiated as part of a package of agreements that allow Swiss companies access to the common market, the government has warned.
“That’s the open question -- one doesn’t know what the EU will do,” said Andreas Ladner, professor of public administration at the University of Lausanne. “The EU has indicated that the initiative violates its free movement of people and won’t be tolerated.”
“In the interest of Europe, Germany, but also in its very own interest, Switzerland shouldn’t take the path of progressive self-isolation now,” said Andreas Schockenhoff, deputy chairman of German Chancellor Angela Merkel’s Christian Democratic Union. “Switzerland’s economic power in the last few years was also founded on foreign skilled workers. Switzerland would be ill-advised to restrict the influx too much.”
The European Commission, the EU’s executive body, “regrets that an initiative for the introduction of quantitative limits to immigration has been passed by this vote,” is said by e-mail from Brussels. “This goes against the principle of free movement of persons between the EU and Switzerland,” it said. “The EU will examine the implications of this initiative on EU-Swiss relations as a whole.”
In response to public unease about the number of newcomers, the government had already enacted yearlong curbs on residence permits for citizens of EU countries including Germany and France. There are also quotas for citizens of non-EU countries such as Australia and Canada.
“We do need to hire talented individuals,” Credit Suisse Group AG Chief Executive Officer Brady Dougan told reporters on Feb. 6. “Having access to talent is something that’s important for all the businesses here.”
In a sign of how anxious the Swiss population is about foreigners, another initiative, which would cap the immigration rate at 0.2 percent of the resident population, is in the pipeline. The government, which opposes that measure too, hasn’t set a voting date yet.
Today’s initiative against immigration, which supporters illustrated as a tree with monster-like roots crushing Switzerland on a campaign ad, doesn’t specify how high the ceiling should be for newcomers. It gives lawmakers three years to revise national legislation.
“It’s clear that immigration needs to be reduced,” said SVP President Toni Brunner. “ I won’t stipulate any numbers. What is clear we need to be more selective.”
While polls signaled rejection by a narrow margin, research consultancy gfs.bern had said a high turnout among immigration opponents could tip the scales, mirroring what happened in 2009, when voters unexpectedly passed an initiative backed by the SVP banning construction of new minarets.
Voter turnout in Switzerland is generally about 40 percent. It was 55.8 percent today, the government said. That’s one of the five highest participation rates ever, according to Claude Longchamp, head of pollster gfs.bern said.
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, data from the Organization for Economic Cooperation and Development shows.
“I don’t think the Swiss people voted this way because they want to isolate themselves, but because they’re worried” about housing and public transport, said Martin Landolt, president of the Bourgeois Democratic party.
The steady stream of newcomers helped 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.
Business lobby Economiesuisse will “push for a restrained implementation,” it said in a statement today. The “ negative consequences to the Swiss business hub must be kept at a minimum,” it said.
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 maker of Nespresso coffee, and Beirut-born Nicholas Hayek was the force behind Swatch Group AG.
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.
Even so, critics of immigration say Switzerland has now taken in too many. Italians are the biggest group of foreigners followed by Germans, according to 2012 data.
“It’s cumulation of unease that has been allowed to grow for years,” said Philipp Mueller, member of parliament’s lower house for the pro-business Free Democrats. “I can’t blame the population.”
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