On June 14, Swiss citizens will have the opportunity to vote on a far-right proposal aimed at limiting future immigration. What consequences would approval of this measure have for the economy—and for Switzerland's European partners?
Swiss voters will soon be able to cast their ballots in a referendum on the Civilian Service Act, which asks whether the number of individuals transitioning from military to civilian service should be reduced, as well as on a far-right plan to restrict the population to 10 million, known as the "No to 10 million" initiative.
The core issue of this populist proposal, set for a vote on June 14, revolves around how many people should reside in Switzerland. The far-right Swiss People's Party (SVP), which put forward the plan, aims to prevent the permanent population from exceeding 10 million after 2050.
A comparable initiative by the SVP was unsuccessful 12 years ago.
Economic implications
This matter is not solely about nationalism, psychology, or xenophobia—it also involves economic stakes.
From an economic standpoint, the situation is far from straightforward, according to Tobias Heidland of the Kiel Institute for the World Economy (IfW). He told DW that if voters opted to restrict immigration, a "conflict would emerge over what type of immigration should still be permitted." He anticipated widespread discontent in the business sector and broader society, as "many highly qualified individuals would choose not to move to Switzerland, likely leading to a perception of '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 are sensible cannot be "answered with a simple yes or no." The real difficulty, she noted, lies in differentiating between "migration of refugees for humanitarian reasons and labor migration driven by economic needs."
For Zinn, several economic arguments oppose a blanket cap on immigration: "Many European countries, including Germany and Switzerland, face significant demographic challenges," she explained, highlighting that fewer people are in the workforce to support social security systems. She added that there is already a shortage of qualified applicants in the labor market. "A general limit on immigration is likely to worsen these issues."
Wido Geis-Thöne, a migration expert at the German Economic Institute (IW) in Cologne, noted that while the shortage of skilled workers is a concern, the problem may be more pronounced with "unskilled labor." He explained that many EU nationals work in hotels, restaurants, and construction, and if they could no longer enter the country, it could create difficulties. They are "vital for Switzerland," he said, pointing out that the country "is, after all, a tourist destination."
A "10 million cap would almost certainly cause significant damage," he stated.
Could other nations, like Germany, follow suit?
Financial news outlet Bloomberg reported that for the SVP, the referendum represents "a milestone in two long-standing priorities: limiting ties with the EU and tightening immigration controls."
In a report, Bloomberg cited the Swiss think tank Demografik, which estimates that if the SVP's proposals are implemented, economic output could drop by up to 12% by the end of the century. The healthcare, hospitality, IT, and construction sectors would be especially affected by labor shortages. The key question now, it said, is whether Swiss voters will be influenced by the risks of long-term economic repercussions.
If Swiss voters approve the SVP initiative, could other countries, such as Germany, do the same? Geis-Thöne told DW that he does not see this as a risk, "because political processes in Germany and Switzerland are quite different." He explained that Switzerland's role in Europe cannot be compared to Germany's. "As an EU member state, Germany cannot restrict the free movement of people (without leaving the EU), so even if it wanted to, it cannot follow Switzerland's path."
Heidland was less certain and saw a clear risk: "Germany is already looking to its more restrictive neighbors, like Denmark." This was apparent in discussions about migration for social welfare benefits, he said, as well as the debate over whether Ukrainian refugees should receive a basic income.
Zinn said she fears the referendum could serve as a "signal beyond national borders." She noted that the results would be closely monitored, "especially in European countries with far-right and center-right governments," adding that they could be seen as proof that "demands for stricter immigration controls can potentially gain majority support."
Good for Germany, disastrous for Switzerland
Geis-Thöne said that approval of the SVP initiative could actually benefit Germany: "Depending on how the proposal is implemented, Germany could potentially gain a lot. If it becomes much harder for German skilled workers to immigrate to Switzerland, many of them would likely stay here and help stabilize the domestic workforce."
However, it could be catastrophic for Switzerland, especially if it leads to a rift with the European Union, its largest export market. Switzerland currently benefits from the EU's principle of free movement, giving Swiss companies access to a $23 trillion (€20 trillion) market with about 450 million consumers.
This article was translated from German.