|March 12, 2014|
Previously published on March 10, 2014
On 9 February 2014, 50.3% of Swiss voters backed an initiative calling for quotas on immigrants from the EU. The initiative was proposed by the right wing Swiss People’s Party (SVP) and has caused considerable tension between Switzerland and Brussels. Supporters of the quotas blame the rise in housing costs, the drop in salaries and cramped public transport systems on the high number of immigrants that reside in the country. Switzerland already restricts the numbers of immigrants from the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia. However, if implemented, the new initiative will restrict the number of arrivals from the rest of the EU as well. The new constitutional provisions will require that immigration be restricted by means of quantitative limits and quotas, which the Federal Council is now set to work on implementing. Such implementation will take about 3 years, but the Federal Council expects to have draft legislation completed by the end of 2014.
Putting in place such legislation will force Switzerland to either renegotiate or revoke its suite of bilateral agreements with the EU, as the new constitutional provisions will not be compatible. The most important of these agreements was signed in 1999 and came into force on 1 June 2002. The Agreement on the Free Movement of Persons (the “Agreement”) between the European Community and its Member States and the Swiss Confederation establishes the free movement of persons between the territory of the European Community and that of the Swiss Confederation. The objective of the Agreement, for the benefit of nationals of the Member States of the European Community and Switzerland is, amongst others, to accord a right of entry, residence, access to work as employed persons, establishment on a self-employed basis and the right to stay in the territory of the contracting parties.
The new legislation should not affect the residence and permanent residence permits that have already been granted under the Agreement (article 23 of the Agreement expressly states that in the event of termination of the agreement, acquired rights remain unaffected). However, Brussels has warned that curtailing the free movement of people will have a knock-on effect on Switzerland’s access to the European single market. Viviane Reading, vice-president of the European Commission said that “We respect the democratic vote of the Swiss people. The four fundamental freedoms - free movement of people, goods, capital and services - are not separable. The single market is not a Swiss cheese. You cannot have a single market with holes in it”. The positive vote has been widely condemned by many EU officials; the European Commission President Jose Manuel Barroso said that the positive vote on Swiss controls for migrants from the EU would result in “serious consequences” for relations between Switzerland and the EU. Indeed, in retaliation for the positive vote, the European Commission quickly announced that it had postponed its negotiations with Switzerland on its participation in the multi-billion euro Horizon 20/20 research and educational projects. The EU has also halted its talks with Switzerland over an energy treaty in relation to electricity network integration which would see Switzerland abiding by similar competition rules to the rest of the EU.
The positive vote will also be a big worry for those Swiss companies that do business in Europe (up to a quarter of Swiss bank employees are made up of immigrants). Critics of the vote have argued that being able to recruit the best talent is most important for Swiss businesses. In particular, global insurance companies based in Switzerland (of which there are a number) will not see the vote as good news; Bjoern Emde, a spokesman for Zurich Insurance Group AG told Bloomberg that “as a global insurance company with headquarters in Switzerland, the international job market is crucial. We are dependent on highly qualified staff”. It has also been estimated that as a result of the positive vote on immigration controls, the Swiss economy as a whole may generate 80,000 fewer jobs over the next few years.
Switzerland has attempted to placate the European Union by assuring it that the present suite of bilateral agreements will remain in place until 2017, so EU citizens will still be able to take up employment in the country under the existing treaty. However, what quotas the Swiss are planning to put into place will not be known until the draft legislation is completed at the end of 2014, although whatever the quotas are, it seems that some damage has already been done and more is likely to follow until it is clear where the quotas / limits will be set, and Swiss and international businesses are able to get a better line of sight over what impact (if any) these changes will have.