Swiss Anti-Immigration Vote Could Impact Chemical Sector

11.02.2014 -

Switzerland's narrow 50.3% approval of the nationalist party SVP's referendum to limit immigration on Feb. 9 could cause major staffing headaches for companies such as Novartis, Syngenta and Roche, observers said as the outcome became known.

One of the implications of the vote is that priority must be given to Swiss nationals when filling new positions. It is not specified, however, how high the ceiling for non-citizens should be. This will be up to the Swiss government to determine over the next three years.

An estimated 45% of all employees of the country's chemical, pharmaceutical and biotechnology industries are believed to be foreigners, and multinational enterprises that move personnel between their worldwide operations could potentially face barriers. Another estimate pegs employment of non-Swiss in the health care sector at about 50%.

Around 56% of Swiss exports go to the EU. As the country is home to five of the top 50 European companies by market capitalization, it relies heavily on skilled migrants as staff.

Reports said Canton Basel, the center of Switzerland's chemical industry, voted heavily against the limitations on migrants, as did Canton Zurich, where the international finance sector is located. About half of the Swiss financial industry is said to be steered by foreigners.

Many top executives of Swiss chemical and pharmaceutical companies are foreign citizens. Richard Ridinger, CEO of Basel-based Lonza, is German, as is Clariant CEO Hariolf Kottmann. At Syngenta, only one of the executive board members, Christoph Mäder, responsible for legal and tax matters, is Swiss. The remaining nine are British, American and German. CEO of Vifor Pharma, David Ebsworth, is British.

Ironically, SVP member Christopher Blocher, former owner and chairman of chemical producer Ems-Chemie, was one of the initiators of the anti-immigration forum. In 2004, when he was elected to the lower house of parliament, the Bundesrat, he ceded all shares in the company to his children.

While the Ems group's managing board is purely Swiss - Blocher's daughter, Magdalena Martullo, is CEO - one of the four supervisory board members, former BASF executive Werner Prätorius - is German. Of the 1.8 billion Swiss franc total, 863 million francs in annual sales represent trade with the European Union.

The anti-foreigner vote has caused ripples throughout the EU, which 12 years ago signed a bilateral agreement with its Alpine neighbour, guaranteeing freedom of movement and allowing EU citizens to work in Switzerland. The Swiss initiative "runs counter to the principle of free movement," a spokesman for the EU commission said on Feb. 10.

Leaders of the EU were scheduled to convene the same day to assess the fallout from the referendum. The initiative's success is seen generally in Europe as a rebuke to the Swiss government, as well as leaders of business, banking and industry, who argued that a favorable vote could have undesired economic consequences. Immediately following the vote count, the government in Bern said it would go to work drafting a proposal to parliament on how to implement the results.

According to the stipulations of the referendum, the government must renegotiate its accord with the EU within three years. While some observers said the Swiss parliament could revoke the free movement rules altogether, European officials and the European Parliament said there was no scope for negotiation.

Switzerland has one of Europe's highest proportions of foreigners. Although many job seekers have arrived from countries hit by the euro crisis, the largest national contingent is from Germany, an estimated 300,000, followed by Italy. Another impending referendum calls for capping the immigration rate at 0.2% of the Swiss population, which totals 8 million.