This week Swiss voters narrowly approved a plan to set new limits on the number of foreigners allowed to settle and work in Switzerland. Though the government has 3 years to implement the rules and the exact details are yet to be decided companies are already expecting an impact on hiring and investment to start this year.
Giles Keating and Fredy Hasenmaile of Credit Suisse stated in a research note that “Uncertainty is poison for investment” and that Switzerland will pay “a high price” for its decision. They predict that employment growth will contract by 50% in 2014 leading to 80,000 fewer jobs being created over the next 3 years and economic growth to drop to 1.7% from a forecasted 2%.
With 1 in 5 residents of Switzerland being a foreign national and foreign employees accounting for up to 45% of workers in some industries (pharmaceutical, chemical, and biotechnology companies) the knock-on effect could be enormous. The Swiss Bankers Association stated “fears that the available pool of trained staff will decrease” with around 25% of bank employees being from the European Union.
Alongside this there could be irreparable damage to Switzerland’s relationship with the EU which is it’s top export market along with impact on the local real estate market. In broader terms this vote will also prompt further calls for immigration restrictions in other European countries.
Though unemployment is low in Switzerland supporters of the ballot were frustrated by “an influx of foreigners has created housing shortages and traffic bottlenecks”. The ballot though only requires that Swiss nationals are given priority when making hiring decisions the use of caps and quotas to stop “mass immigration”. It remains to be seen quite what these quotas will end up being though given its possible impact and the concerns raised in the business community.