Swiss grapple with identity, economy in immigration vote

WINTERTHUR, Switzerland - Low taxes and good infrastructure aside, what entrepreneur Thorsten Schwenke really needs to grow his small Swiss-based business is the right people, regardless of their nationality.

That's why he is so bewildered by a vote in Switzerland on February 9 on whether to impose restrictions on immigrants from the European Union, and by the proposal's increasing popularity in a country where foreign labour helped forge a powerful economy.

"If I was forced to only consider hiring Swiss people, I would just move," said 41-year-old Schwenke, who founded Thelkin, a maker of mechanical testing equipment for orthopedic implants in the northeastern town of Winterthur in 2010.

"For a company my size, the right people are more important than the tax benefits."

A vote in favour of the motion, 12 years after a free movement of people agreement with the European Union came into force, could hurt an economy reliant on foreign professionals by increasing red tape and calling into question its bilateral accords with the bloc.

Hailing from Berlin, Schwenke is one in a long line of foreign entrepreneurs who have helped power Switzerland's economic success story over the past 150 years, including German-born Henri Nestle who gave his name to the company that is now the world's largest food group.

But with net immigration running at around 70,000 people per year on average - equivalent to the size of St. Gallen, a university town in eastern Switzerland - many Swiss blame newcomers for rising rents, crowded transport and more crime.

The right-wing Swiss People's Party (SVP), which wants Switzerland to seize back control by reintroducing immigration quotas, is tapping into concerns immigrants are eroding the country's Alpine culture and bolstering the 'yes' vote.

"Many people feel this is challenging their identity, even if there isn't any concrete economic impact on a personal level," said Georg Lutz, a professor of political science at the University of Lausanne.

Foreigners now make up 23 per cent of the country's population of 8 million according to official data, the second highest proportion in Europe after Luxembourg.

HIGHLY-SKILLED

It's not just the Swiss who are having second thoughts about free movement. With the economy in Europe in the doldrums and austerity policies biting, mainstream politicians across the region fear the right and far-right will gain ground as increasing numbers fret immigrants will take their jobs.

In Switzerland, the proposed curbs take aim at highly-skilled workers from the European Union, who opponents argue are needed to fill jobs at multinationals and hospitals.

Italians are the largest group, followed by Germans, who typically work in IT, financial services and healthcare. Around half of the people employed in R&D at drugmaker Roche in Basel are foreign, its Austrian CEO Severin Schwan has said.

"Innovation is the driver of the Swiss economy. That's why we need highly qualified workers inside Switzerland and from abroad," said Hans Hess, head of Swissmem, which represents the electrical and mechanical engineering industries.

Four in every 10 new companies in Switzerland are founded by foreigners, according to business information provider Orell Fuessli Wirtschaftsinformation. In 2013, they created around 30,000 new jobs.

Foreigners are also bigger shoppers. Around one quarter of the growth in private consumption since 2008 can be attributed to immigration, according to Credit Suisse.

A survey by Gfs Bern published last week found support for the proposal had risen to 43 per cent from 37 per cent in an earlier poll. Opposition eased to 50 per cent and 7 per cent were undecided.

The shift has set off alarm bells among opponents, who fear the SVP - the country's largest party - will manage to mobilize more of its grassroot supporters in the final few days.

A 'yes' vote could hurt relations with the EU, which has warned it will not allow new negotiations on free circulation, a fundamental right.

Pollsters say voters without political affiliation may use the vote to vent their frustration against a perceived lack of action by the government over their concerns about immigration.

"I don't want to live like a sardine in a tin can," independent politician Thomas Minder, who supports the initiative, told tabloid newspaper Blick.

In the town of Zug, 20 km south of Zurich, rock-bottom corporate tax rates have attracted some 30,000 companies to the once poor farming region, including commodities trader Glencore Xstrata. But a flood of rich immigrants has pushed up the cost of living and driven many locals out.

Despite their shared language, the relationship between the Swiss and the Germans is at times testy.

"Germans get the highly-paid jobs and go and buy the big houses," said Thelkin's Schwenke.

"There's a certain amount of jealousy and I can totally see that. If all of a sudden 30 per cent of Berlin were made up of Swiss people, that would be controversial."