Switzerland toughens its stance on newcomer contractors

The outcome of a referendum held by the Swiss on Sunday will have an impact on contractors from Britain looking to work in Switzerland, and could prompt other nations to adopt the same preference for tighter controls, writes Matt Walters of Capital Consulting.

Swiss vote to restrict immigration

Put forward by the right wing Swiss People’s Party, the proposal to go back to the strict quota system that was in place until 2002, and therefore to end the Swiss-EU free movement of people agreement, was accepted by a slim majority – 50.34 %, although voter turnout was healthy.

As has often been the case in the past when voting on immigration matters, the major Swiss cities, and the French-speaking cantons voted against any new restrictions, while the dominant German-speaking cantons and the Italian-speaking canton of Ticino backed the proposed amendments.

Switzerland is the free-movement challenger, but others share its sentiments 

Potentially unnerving for contractors eying opportunities overseas, Switzerland is by no means alone in examining the question of free movement of people in detail, in light of the current economic climate in most EU countries and the ever-expanding list of countries whose citizens are included in the programme.

However perhaps the most prominent proponent of reform is the UK, whose popular pressure upon politicians to restrict access to the country’s labour market and benefits schemes has lead to headline-making statements by senior politicians and a possible popular referendum in 2017, should the Conservative party retain power at the next general election.

Yet the vote at the weekend by the Swiss is certainly the first to openly and actively challenge the EU. Moreover, either side’s moves over the coming weeks and months may set precedent for how EU policy is likely to evolve over the coming years for EU members and third parties alike. In fact, Dutch and French politicians on the right side of the political spectrum have already urged their respective immigration ministers to follow suit.

Brussels’ response to Berne’s message

The EU has two options on how to respond to the Swiss move: either accept the Swiss suspension of the free movement of people treaty with no further consequences, or invoke the so-called “guillotine clause” that deems that any unilateral change to any part of the Swiss-EU bilateral treaties may be considered to invalidate the whole set of treaties, effectively isolating Switzerland from the EU completely.

Or as the Luxemburgish Minister for Foreign Affairs and Immigration, Jean Asselborn, put it on Sunday, “while the EU is not averse to negotiation, freedom of movement is a cornerstone of EU policy and will not readily be sold off.”

The view of the Swiss People’s Party, who are behind the referendum, is that the EU “won’t dare” change the bilateral agreements put in place with Switzerland. But this seems a risky tactic with no assurance from Brussels of what the EU reaction will be, particularly considering Switzerland’s reliance on exports to the EU.

For his part, Swiss president Didier Burkhalter reportedly stated after the vote: “The next step will be to ensure that both partners [Switzerland and the EU] seek the best way forward. It will be difficult, but we will continue seeking the best solution.”

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,” it said by e-mail from Brussels. “This goes against the principle of free movement of persons between the EU and Switzerland”. “The EU will examine the implications of this initiative on EU- Swiss relations as a whole.” It also stated that the fact that the Swiss population voted against the opinion of the Swiss Federal Council “will be taken into account”.

The text of the amendment put forward in the referendum allows three years for a solution to be found, which means that Swiss lawmakers will need to enact changes to national legislation within that timeframe, regardless of the reaction from Brussels.

In other words, the verdict from Berne requires its authorities to introduce restrictions to immigration but how they do it was not specified in the referendum, although its policy-makers have three years to make it happen, irrespective of what Brussels says.

Businesses' response to Berne's message

Swiss enterprise lobbyist economiesuisse will “push for a restrained implementation,” it said in a statement yesterday. It will also seek “to minimise the negative impacts on Switzerland as a business centre”.

But President Burkhalter stated that he “admires” the Swiss system, which allows for these situations to arise, and that “we are now in a period where we need to live with this decision and make the best of it”.

What’s certain is while the outcome of this referendum is worrying for companies whose business depends on bringing foreign labour into Switzerland, there are no immediate implications until the relevant legislation has been revised. In the longer term it remains to be seen, between Switzerland and the EU, whether a mutually agreeable position, where quotas are enforced without becoming a barrier to international business, remains realistic.

Editor’s Note: Further Reading –

Contractors' Questions: Will the Swiss vote to limit migrants impact me?

IT contracting in Switzerland: Living & Working

IT contracting in Switzerland: Money & Tax

Overseas compliance for contractors is a game of carrot or stick

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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