On June 14, Swiss voters will be able to decide on a far-right initiative to curb future immigration. What will it mean for the economy — and the country's European neighbors — if they approve the proposal?
https://p.dw.com/p/5F9P4The Swiss population has grown in recent years but many say this is good for the economyImage: Maria Maar/Westend61/IMAGOAdvertisementSwiss voters will soon have the chance to have their say in a referendum on the Civilian Service Act, asking whether the number of people moving from the army to civilian service should be reduced, as well as on a far-right initiative to cap the population at 10 million dubbed the "No to 10 million" initiative.
The question at the heart of the populist initiative, to be voted upon on June 14, is how many people should live in Switzerland. The far-right Swiss People's Party (SVP), which proposed it, wants to ensure that the permanent population does not exceed 10 million after 2050.
A similar initiative by the SVP failed 12 years ago.
The issue is not only about nationalism, psychology and xenophobia but also about economic interests.
From an economic perspective, this matter is far from simple, said Tobias Heidland from the Kiel Institute for the World Economy (IfW). He told DW that a "struggle would arise over what kind of immigration to still allow" if voters decided to limit immigration. He predicted that there would be widespread dissatisfaction in the business community, as well as in wider society, as "many highly qualified people would decide against migrating to Switzerland, which would probably be seen as "deterring the wrong ones.'"
Sabine Zinn from the Berlin-based German Institute for Economic Research (DIW) told DW that the question of whether immigration restrictions made sense could not be "answered with a simple yes or no." The real challenge, she said, lay in distinguishing between "migration of refugees on humanitarian grounds and labor migration based on economic necessity."
For Zinn, there are several economic reasons against imposing a general cap on immigration: "Many European countries, including Germany and Switzerland, face significant demographic challenges," she explained, pointing out that there were increasingly fewer people in the workforce who were responsible for funding social security systems. There was already a lack of qualified applications on the labor market, she added. "A blanket cap on immigration is likely to exacerbate these problems."
Wido Geis-Thöne, an expert on migration at the German Economic Institute (IW) in Cologne, pointed out that although the shortage of skilled workers would be a concern, the problem might lie more with "unskilled labor." He explained that many EU nationals worked in the hotel, restaurant and construction sectors and if they were no longer able to enter the country, this could cause problems. They are "important for Switzerland," he said, pointing out that the country, "after all, is a tourist destination."
A "10 million limit would almost certainly cause significant harm," he said.
Financial news outlet Bloomberg said that for the SVP, the referendum represented "a milestone in two longstanding priorities: limiting ties with the EU and tightening immigration controls."
In a report, Bloomberg cited the Swiss think tank Demografik, which has calculated that if the SVP's proposals are adopted, economic output could be reduced by up to 12% by the end of the century. The healthcare sector, the hospitality industry, the IT sector and the construction industry would be particularly affected by labor shortages. The central question now, it said, was whether Swiss voters would be swayed by the risks of long-term economic consequences.
If Swiss voters approve the SVP initiative, could other countries, such as Germany, follow suit? Geis-Thöne told DW that he did not see a risk of that happening, "because political processes in Germany and Switzerland are quite different." He explained that the significance of Switzerland in Europe could not be compared to that of Germany. "As an EU member state, Germany cannot restrict the free movement of people (without leaving the EU), even if it wanted to it cannot follow in Switzerland's footsteps."
Heidland was less confident and saw a definite risk: "Germany is already looking to its more restrictive neighbors, such as Denmark. This was evident in the debate about people migrating to access social welfare, he said, as well as the question of whether Ukrainian refugees should receive a basic income."
Zinn said that she feared that the referendum could act as a "signal beyond national borders." She said that the results would be closely watched, "particularly in European countries with far and center-right governments," adding that they could be interpreted as evidence that "demands for tighter immigration control can potentially gain majority support."
Geis-Thöne said that it could even work out in Germany's favor if the SVP initiative garnered approval: "Depending on how the proposal is implemented, Germany could potentially benefit greatly. If it were to become significantly more difficult for German skilled workers to immigrate to Switzerland, many of them would likely stay here and help stabilize the local workforce."
But it could be disastrous for Switzerland, particularly if there were a break with the European Union, which is its biggest export market. Switzerland currently benefits from the principle of free movement in the EU, which gives Swiss companies access to a $23 trillion (€20 trillion) market with some 450 million consumers.
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