Switzerland's immigration referendum Raising the drawbridge.

Switzerland's immigration referendum

Raising the drawbridge

Feb 12th 2014, 11:07 by N.C-B. | GENEVA / http://www.economist.com/blogs/charlemagne/2014/02/switzerlands-immigration-referendum

JUBILANT members of the right-wing People’s Party that backed the call for immigration curbs broke into the national anthem on Sunday as results from the referendum revealed a narrow victory for their campaign. Business leaders, who value access to a bigger skills pool and overwhelmingly opposed the initiative, were correspondingly despondent over the uncertainty this vote creates for their prospects and profit margins.

Employers and trade unions found common cause, warning that retaliation by the European Union could damage Swiss exports, costing jobs rather than protecting earnings from the influx of cheap foreign labour. Banks and big pharma, pillars of the Swiss economy, were no more encouraging. Credit Suisse, a bank, said the uncertainty generated by the vote would probably slow investment and job creation. The Swiss Bankers Association warned that banks may find it hard to find sufficient qualified staff and pharmaceutical giant Novartis noted that its success was “substantially built on the availability of a qualified work force”.

A front-page cartoon in the Geneva-based Le Temps newspaper caught the mood, depicting a grimacing Swiss businessman sawing off the arm with which he was shaking hands with the EU. One pundit found the vote “rationally inexplicable”, attributing the result to “a mixture of self-aggrandisement and minority complexes”. Others accused ministers and political parties of lethargy and failing to campaign hard against the initiative. Politicians in the capital, Bern, lamented one newspaper columnist, had treated the European question the same way Victorian society treated sex.

Switzerland was a victim of its own success, says Rudolf Minsch, chairman of the Swiss Business Federation’s executive board. The economy is enjoying healthy and stable growth of around 2% a year and unemployment is low. That, he says, was part of the problem. In less propitious circumstances, voters might have hesitated before voting for a measure to cap immigration that Swiss business recognises has delivered wealth-generating skills and substantial economic benefits. But current prosperity may have lulled voters into a fall sense of security. “It was clear we would get in trouble but voters thought the risk wasn’t too high,” says Lukas Goldber, an analyst at gfs.bern, political- and social-research institute.

But as the dust settled, stolid Swiss pragmatism was also evident. Switzerland had come through similar, unsettling uncertainty in 1992 when it voted to stay out of what was then the European Economic Area and still prospered, Mr Goldber observes. With the vote behind them, businessmen were already turning attention to shaping the decisions the government will now have to take on how the voters’ verdict is put into practice. Negotiations with the EU will not be easy but Switzerland is not without leverage. Despite its diminutive size, it ranks as one of the biggest importers of EU goods and its transport infrastructure provides a crucial link from northern Europe to the south. “It is also in Europe’s interest to have a stable relationship with Switzerland,” says Mr Minsch.