The report by the State Secretariat for Economic Affairs (Seco) paints a rosy picture of the impact of the free movement of people in the EU and the European Free Trade Association (EFTA) on the Swiss job market and social security system.

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It reveals the numbers of workers arriving in Switzerland from the EU and EFTA is falling as the economic situation across the EU picks up.

Falling numbers of foreign workers

In 2017, net migration to Switzerland from EU and EFTA countries was 31,250, down 11 percent on 2016 and 54 percent lower than the record number seen in 2013.

The report also highlights the fact around 50 percent of workers who arrived in 2009 had left by 2014. This is clear evidence that not all immigration into Switzerland from the EU is long-term, Seco said.

The agency also noted that forecasts for further economic growth in Switzerland were unlikely to lead to the arrival of more EU/EFTA workers because of the improving economic situation in the EU.

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In its report, Seco also highlighted that the arrival of EU and EFTA workers had not pushed up unemployment among Swiss-based workers.

It had also done little to push down the wages of Swiss-based workers, according to Seco.

Switzerland experienced real wage growth of 0.7 percent a year from 2002 to 2017, the agency said. Nominal wage growth had been lower from 2009 to 2017 than in the years before the economic crisis but this had been offset by negative inflation.

The report showed that the unemployment rate among EU and EFTA workers in Switzerland was a relatively high 5.5 percent in 2017 against the overall Swiss rate of 3.3 percent last year.

But the Seco figures also show just 2 percent of EU and EFTA citizens in Switzerland were receiving other forms of social assistance, against the Swiss rate of 3.2 percent.

Highly-qualified workers

The Seco report talks about a highly-skilled workforce from EU and EFTA nations, noting that 54 percent of workers arriving in Switzerland from these countries have some form of higher education. By contrast, 17 percent of these arrivals have not completed upper-secondary level education.

The authors of the report also highlighted that most of the highly-skilled workers arriving in Switzerland were carrying out occupations in line with their qualifications.

This put paid to fears that foreign workers would work for lower wages than Swiss-based employees in positions that they were overqualified for, said the head of the Swiss Employers’ Association in comments cited by Swiss news agency SDA.

Lack of focus on cross-border workers

Unions did not contest the overall findings of the Seco report but argued it failed to properly taken into account the role of cross-border workers and foreign firms that provide services in Switzerland.

The Swiss Federation of Trade Unions (SGB) also pointed to the fact that around 120,000 self-employed foreign workers and employees on overseas postings carried out work in Switzerland every year. In many of these cases, workers were undercutting Swiss wages, said SGB chief economist Daniel Lampart.

Lampart pointed out that Switzerland has the highest wages in Europe and measures were needed to protect these salaries. He noted that one in five investigations into possible wage undercutting by foreign firms and workers in Switzerland in 2017 had revealed breaches.

Protecting Swiss wages

Switzerland has a range of measures designed to protect against foreign workers competing unfairly in the local job market by working for lower wages than their Swiss counterparts.

These special measures are a sticking point in current negotiations between Bern and Brussels over a new framework agreement on future bilateral relations.

For the EU, guaranteeing the freedom of movement of workers is considered essential for access to the Single European Market.

Bern now finds itself torn between trying to ensure high Swiss wages are protected through special measures and ensuring it can continue to access the European market.

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In a latest version of a proposed framework agreement deal between Switzerland and the EU, the Swiss foreign affairs ministry is reported to be considering concessions over the so-called eight-day rule, including shortening this duration.

The eight-day rule requires foreign companies to inform Swiss authorities at least eight days before they carry out work in Switzerland so that the Swiss can ensure firms are not bringing in cheaper labour to undercut high wages in the Alpine country.

Unions say they are being sold down the river by Bern, arguing the Swiss government knows Brussels will never accept Switzerland's current regime of checks on foreign workers.

New rules for foreign workers

On July 1st, Switzerland introduced new rules designed to protect Swiss-based workers in occupations with high unemployment. Under the regulations, vacant positions for these jobs must first be advertised exclusively through a jobs portal that is only available to registered job seekers.

These new rules are part of watered-down reforms passed by the Swiss parliament in 2016 after the Swiss in 2014 voted in favour of a popular initiative calling for annual quotas on the number of residence permits handed out to foreign nationals.