Thursday, February 5, 2009

Swiss-EU Ties at Risk Over Vote on Romanian, Bulgarian Workers

Feb. 5 (Bloomberg) -- Hans Grunder has filled 10 out of 70 positions in his engineering company with employees from the European Union, profiting from laws that let the bloc's workers get jobs in Switzerland without bureaucratic hurdles.

A dozen more positions that he wants to staff may remain vacant if voters refuse to extend those breaks to Romania and Bulgaria, the EU's newest members, this weekend. The 27-member EU says it will revoke all special trade, transport and labor arrangements with the Alpine nation should the referendum lose.

“A 'No' would be catastrophic,” Grunder said in a telephone interview from Hasle-Ruegsau, near the capital of Bern. “I might even have to move a part of my operations abroad. The lack of qualified labor has never been worse.”

Businesses have benefited since 2002 from accords that let companies, universities and hospitals tap the EU's 326 million- strong labor market without having to shoulder the cost of their education. Failure to pass the referendum would throw that in jeopardy at a time when the country faces a shortage of 3,000 engineers and scientists, according to the American Chamber of Commerce in Zurich.

The anti-immigrant Swiss People's Party is campaigning against the measure as the economy hovers at the brink of a recession, manufacturers slash production and unemployment rises. The proposal, which was approved by the parliament last year, will be put to a vote on Feb. 8 after opponents collected enough signatures to force a nationwide poll.

Rising Opposition

Public opinion is split. About 43 percent of Swiss voters were ready to reject the proposal last month and 50 percent supported it, said the GfS polling institute in Bern. In a December survey, 40 percent were opposed. The margin of error was 2.9 percentage points.

The country of 7.6 million last rejected membership talks with the EU in 2001. A 2002 package of treaties with the bloc ranging from free trade to open transport would be canceled six months after the Swiss government notifies the EU of a defeated referendum, European CommissionChristiane Hohmann said in a telephone interview. spokeswoman

“It's an illusion and naive to think that we could renegotiate the favorable contracts with 27 EU member states,” said Philip Mosimann, chief executive officer of Bucher Industries AG, the world's biggest maker of feed-mixing equipment. “I'd be forced to move investments abroad.”

Business and Education

Switzerland relies on highly skilled immigrants to fill 43 percent of university teaching positions, according to government figures, and 42 percent of management seats at its 100 largest companies.

Some of the biggest businesses are led by EU citizens, including Swisscom AG Chief Executive Officer Carsten Schloter from Germany, Nestle SA's Peter Brabeck-Letmathe from Austria and Actelion Ltd.'s Jean-Paul Clozel from France.

The Zurich-based KOF economic institute estimates that the free-labor treaties with the EU helped boost Swiss gross domestic product by 5.5 billion francs through 2007. The study found no negative effects on the labor market.

The labor agreement has helped create more than 250,000 jobs since 2004, according to the government. In December, companies were still looking to fill about 9,700 vacancies. Switzerland's jobless rate reached a six-year low last year.

The People's Party, whose campaigns have drawn criticism from the United Nations in the past, is advertising using posters with black birds picking apart a map of Switzerland. It says the measure would trigger a flood of low-wage workers from Eastern Europe and erode the country's welfare system.

Can't Say No?

“If Switzerland isn't able to say 'No' to this EU extension, then it won't be able to reject the next one either,” said Pirmin Schwander, a People's Party member in the lower house of parliament representing the canton of Schwyz.

Even under the free-labor agreement, EU citizens seeking Swiss residence need a work contract or proof that they're not dependent on state benefits. Workers from the 10 countries that joined in 2004, including Hungary and Poland, are subject to stricter limits than those from elsewhere in the EU, as Romanians and Bulgarians would be. Switzerland plans to remove all limits for the 2004 countries by 2011 and for Romania and Bulgaria by 2016.

Some EU countries also curb immigration from new members, though the hurdles must be lifted by 2013. Estonia, Latvia, and Sweden are among countries that allow free access to their labor markets, while Germany, France, the U.K. and the Netherlands imposed restrictions.

“We have all the means to limit immigration from Romania and Bulgaria,” said Bucher's Mosimann, whose Zurich-based company employs 8,290 people, two thirds from EU countries. “A rejection would be very negative and also very unnecessary.”

Tunnels and Rails

Switzerland has benefited for decades from foreign workers, who helped build landmarks including the Gotthard Tunnel, the world's third-largest, and the Alpine railway linking resorts including Davos and St. Moritz over 384 kilometers (238 miles).

In 2007, Switzerland counted 30,100 natives from the 10 EU states that joined in 2004. That compares with 224,300 German citizens, according to government figures.

In Zurich, Switzerland's most populous region, Felix Gutzwiller, a medical professor and parliament member, says almost half the canton's health-care workers come from abroad. Thirty percent are from EU members such as Germany and the Netherlands. He says while it wouldn't be impossible to hire EU workers, a rejection of the referendum would increase hurdles.

“Switzerland would become less attractive and EU workers would hesitate more about moving here,” says Gutzwiller, who voted for the Romania and Bulgaria extension in parliament. “The Swiss know that they rely on foreign labor. Without them, the system simply wouldn't work.”

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