(GENEVA) - The Swiss shook off right-wing fears over job losses on Sunday, voting resoundingly to prolong an EU free labour agreement and extending the policy to workers from bloc newcomers Bulgaria and Romania.
Voters were asked in a referendum to approve legislation adopted by parliament last year that simultaneously extended the accord and endorsed its expansion to the two new EU members.
What was expected to be a tight vote ended in a landslide victory for the government with 59.6 saying yes to 40.4 against, according to official results released through the Swiss news agency ATS.
The outcome brought a collective sigh of relief from the bulk of the Swiss political, business and social establishment, which had been pressing for an extension of the accord.
Voters, confronted by tough economic times, had opted for stability, said centre-right Radical Party president Fulvio Pelli.
"The people realised that the agreements are all the more important in the current, difficult context."
The free labour accord, which also allows Swiss citizens to take up jobs in the EU, has been widely credited with helping fuel Switzerland's economic boom in recent years by overcoming a shortage of skilled labour.
But the extent of the government's victory surprised observers, after the last opinion poll 10 days ago had indicated only a slender lead for the pro-Europeans.
Campaigning over the past two months had pitted non EU-member Switzerland's economic interests against traditional popular fears about immigration and the neutral Alpine nation's prized independence whipped up by the hard right.
The fraught global economic climate, which has hit prosperous Switzerland in recent months, had added to the uncertainty.
The Swiss government and Brussels had warned that a 'no' vote would have torn apart a wider range of interlinked agreements on trade, agriculture, and transport that add about one percent to Switzerland's economic growth.
Opponents in the Swiss People's Party (SVP) had raised the spectre of a surge in immigration from Romania and Bulgaria, which they dubbed "Europe's third world," and said the accord threatened Swiss jobs.
"I think that the leap into the unknown, the fears about unforeseen consequences probably prompted those who were hesitant to vote yes," SVP parliamentarian Guy Parmelin, a party moderate said on Swiss television.
Other SVP members said they would consider launching another referendum camapign later to try to cap labour migration from the EU.
Party vice president Yvan Perrin said: "I have the feeling... that we would have won in a month or a month and half's time because people are starting to realise our fears are real."
Switzerland's unemployment rate surged to 3.3 percent last month, after falling until recently.
More than one million of Switzerland's 1.62 million foreign residents come from the EU and western Europe.
Their number has surged by nearly 200,000 since limits on employing EU citizens were gradually lifted from 2002.
Meanwhile, some 400,000 Swiss citizens live in the European Union.
The accords on Bulgaria and Romania include a seven year transition period that will gradually open up the Swiss jobs market to them.
The focus is now set to shift to more tense areas of the Swiss-EU relationship.
While the Swiss are looking for another bilateral deal open up farm trade even more, the EU wants Switzerland to end regional tax breaks that encourage some European companies to relocate offices there.
The newspaper NZZ am Sonntag reported Sunday that EU officials were ready to raise the tempo on the tax issue at a meeting on February 13.