If the proposal to cut immigration is accepted by Swiss voters, the subsequent demographic shift would impact the country’s labour shortage and pension fund reserves. But the move’s instigators say those consequence an be avoided.
If the referendum on the ‘No to 10 million’ initiative – to be held on June 14th – passes, the consequences for Switzerland’s economy and the country’s future will be enormous.
That’s because it seeks to curb the number of foreigners settling in Switzerland once the country’s population is close to reaching the 10-million mark from the current 9.1 million.
As the baby boomer generation is gradually reaching retirement, and Switzerland’s low birth rate is thwarting further population growth, a pressing question is how to compensate for the loss of workforce and, consequently, for lower contributions into Switzerland’s social insurance and pension fund.
Foreign nationals currently account for nearly 35 percent of the country’s workforce,
Experts say this scarcity of personnel will result in lower productivity, affecting economic development and, consequently, the country’s prosperity as well.
But that’s not all: Foreigners who are gainfully employed in Switzerland pay taxes, which fill their municipal, cantonal, and federal coffers.
They are also paying into the obligatory social security scheme, which means they have had a positive effect on the state pensions.
According to research carried out by Universities of Zurich and St. Gallen, immigrants pay proportionally more into the state pension, disability, and unemployment insurance schemes than they receive in benefits.
In 2023, “persons born abroad paid more than 40 percent of the total contributions, while receiving less than 30 percent of the benefits,” the study found.
On the other hand, “persons born in Switzerland paid less than 60 percent of the contributions, but received more than 70 percent of the benefits.”
Switzerland’s own State Secretariat for Economic Affairs (SECO) has laid out how much more foreign workers contribute to the welfare system.
In terms of disability insurance, foreign nationals paid 26.5 percent into the scheme, receiving only 14.9 percent of benefits in return.
All this goes to say that if fewer immigrants are allowed to work in Switzerland, the country will face a major conundrum.
But it appears that the the right-wing Swiss People’s Party (SVP) which spearheaded this measure, has some ideas.
More children
Switzerland’s birth rate has dropped to a record low in the past several years; currently, it stands at 1.29 children per woman.
This is not nearly enough to offset the loss of foreign workforce.
But Domenik Ledergerber, one of the move’s instigators, is optimistic that this trend reversal is in Switzerland’s future – even though it goes against most predictions.
“I strongly question the idea that the population will simply continue to age as it does today,” he said. “I hope that the birth rate will increase in Switzerland if we limit immigration.”
Later retirement
According to Ledergerber, “if the population continues to age, we will have to raise the retirement age.”
But in a national referendum in 2024, 74.7 percent of Swiss voters rejected a bid aimed at gradually raising the retirement age from 65 to 66. So Ledergerber’s suggestion disregards the will of Swiss people.
It also angers the initiative’s opponents, including MP Adrian Wüthrich.
“Without foreign workers, the pressure to raise the retirement age will automatically increase,” he said, adding that a ‘yes’ vote would lead “to retirement at 67, or even older.”
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