By Astrid Jacques from L&E Global with the kind assistance of André Lerch from Schmid Heinzen Humbert Lerch
On March 20, 1815, during the Congress of Vienna, it was decided that Switzerland would be a neutral territory. Since then, the country has always granted importance to this status and has had some reluctance to join International Organizations.
Nevertheless, the Free Movement of Persons Agreement (“Le traité sur la libre ciruculation des personnes”) was signed by the Swiss government in 1999 and entered into force in 2002. This approbation meant the opening of the borders to European workers who were, from now on, allowed to settle and work in the country.
14 years after this historic opening, each year around 80,000 foreign workers cross the border to work in Switzerland. The level of immigration has been such that out of 4.899 million people working in Switzerland, 1.439 million are foreigners1; this is to say that 23,5% of the working population is non-Swiss.
Even though significant evidence exists that the Free Movement of Persons permitted in the country contributed to a very low rate of unemployment2, some politicians in favor of restricting the opening of the Swiss boundaries, have pointed out the fact that the massive immigration has had some negative aspects such as the augmentation of prices in the main cities, overpopulation of the public transportation and declining salaries. On February 9th 2014, a slim portion of the Swiss population expressed its despondency.
This was not the first sign of discontent since Switzerland applied the safeguard clause in 2012 and, hence, established limits for B type work permits (maximum 5 years) to the EU-83 countries as of May 2012 and then to the EU-174 as of January 2013. The ability to limit immigration is stated in the Agreement, so that Switzerland did not break any rules by implementing these measures.
The Initiative was proposed by the right-wing Swiss People’s Party (SVP) and had to be approved by a majority of the population, as the Swiss system dictates.
The Initiative aimed to modify the Swiss Constitution that allows the Free Movement of Persons and actually add a new section, Article 121a, stating that “Switzerland manages autonomously the immigration of foreigners. The number of authorisations delivered to foreigners for a period of stay in Switzerland is limited by annual quotas […] Quotas have to be set with regard to the economic aspects of Switzerland and with respect to the principle of national preference.”
The Initiative also states that “all opposite international treaties must be reviewed within 3 years of the vote” and that is where the debate actually lies, since it means that the Free Movement of Persons Agreement in itself shall be reviewed and most likely reconsidered.
50,3% of the Swiss population that voted said “yes” to the Initiative with almost 6 out of 10 Swiss citizens taking part in the referendum. An interesting coincidence, since the same small majority said “no” on December 6 1992, to the European Economic Area. The Swiss government now has to act in order to comply with the popular decision. The voted text states that the said government has a period of three years to come up with a legal solution.
Changes in the Swiss Immigration
Many companies are based in Switzerland for several reasons, the favorable tax regime being one of them. Since 2002, those companies have been able to hire workers from all over Europe – however with some restrictions. This situation is going to change now. Here are further explanations on the modifications to come.
Each European – and non-European – worker willing to settle and work in Switzerland will need a work permit. This is not a new situation, but a step back since workers used to be subject to such regulations before the signature of the Agreement on Free movement of Persons. Furthermore, quotas are relevant for non-European citizens and citizens from some new European countries – such as Bulgaria or Romania.
The system of quotas expresses an idea of security for the Swiss population. If fewer foreigners are allowed to work in their country, it will require national companies to have a higher threshold of locals hired. So, this system brings back the principle of “National Preference” that is also used in other countries of the world – e.g. the “Qatarization” in Qatar.
This principle imposes on Swiss employers to prefer a Swiss worker over a foreign worker. In the future, this principle may require the employer willing to hire a foreign worker, to be obliged to prove that no Swiss worker was available who was qualified for the job.
Criteria to work in Switzerland
If only some workers are allowed to legally work in the country, it means that the criteria itself will make the difference between one and another. The SVP, the political party that launched the Initiative, proposed to use “the Points Test” that is applied in countries such as Canada, Australia and New Zealand.
This “Points Test” is a method of selecting skilled migrants with the skills and attributes needed in the country. In this sense, criteria such as integration capacity, knowledge of the official languages, education and professional skills would be used to determine if a work permit should be granted.
People concerned by the quotas
An important fact that should be underlined: foreigners who are already working in Switzerland before the reintroduction of those quotas will not be subject to the rules explained here-above. If they already work in Switzerland, they will be allowed to stay and to continue performing their work. However, this group should pay attention to the fact that those quotas might also be applicable for family reunification. With the exception of these workers, all other new workers will be submitted to some limitations, including cross-border workers.
The decision of delivering the permit will be in the hands of the Federal Entity, as is the case for non-European workers nowadays. Cantons also have an important role to play since they have to explore and analyze the market in their territory. Then they refer to the Federal authority that will verify if the candidate meets the conditions provided by the law.
This procedure could lead to an important difference based on the market involved or on the canton in which the candidate would like to perform his work.
Short term Employment Contract
The only situation for which a worker does not need a work permit is when an employment contract is entered into of less than 90 days. For those contracts, a bare announcement is sufficient and can be completed online. That being said, this situation is authorised once a year for the same person and is totally precarious.
Risks linked to the reinsertion of quotas
The quotas could have negative effects for companies. Numerous companies with Swiss operations have built their team by hiring skilled people from all over Europe. The consequences of the quotas and, hence, the diminution of possibilities to hire foreigners can lead to problems for these companies. It is still unclear how companies will deal with this issue and whether it will lead to an increase of Swiss workers that are hired by these companies or to the outsourcing of the activities that are affected by the regulations.
Also, employers will face a heavy administrative burden. Indeed, an employer willing to hire a non-Swiss worker would presumably need to complete a variety of paperwork to prove that he tried to find someone fitting the job on the Swiss market, etc.
Another risk is a rise in the rate of undeclared work. There is a fear that employers facing the need to hire foreign workers may be tempted to hire them illegally.
After the refusal to integrate the European Economic Area, several treaties were signed between Switzerland and the European Union, including the treaty about the free movement of persons. All of those treaties are judicially linked to each other by the “guillotine clause” which requires that the legislation takes effect in the participating country at the same time, and that if any agreement comes to an end, the whole package should be considered as null and void.
The re-assessment of the Free Movement of Persons could then lead to broader effects than just the reimplementation of quotas, since the agreements about technical barriers to trade, public procurement markets, agriculture, research, civil aviation and overland transport could, by consequence, be jeopardized.
Major changes are coming in Swiss labor law legislation, to Europe’s great concern. The text of the Initiative is very general, which gives discretionary power to the Swiss Government, especially concerning the number of quotas.
Political parties now have the opportunity to think about how to combine the population’s vote and the obligations towards the rest of Europe. Needless to say, the possibility to apply quotas only if a defined threshold of foreigners working in the country is reached could be an interesting track to follow.
1 «Indicateurs du marché du travail 2013, July 2013 written by the Swiss Confederation.
2 «Répercussions de la libre circulation des personnes sur le marché suisse du travail – Neuvième rapport de l’Observatoire sur la libre circulation des personnes entre la Suisse et l’UE » written by the Swiss Confederation.
3 Hungary, Poland, Estonia, Lithuania, Leetonia, Czech Republic, Slovakia and Slovenia.
4 Germany, Austria, Belgium, Cyprus, Denmark, Spain, Finland, France, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, United Kingdom and Sweden.