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WORKING IN SWITZERLAND

Why Switzerland can’t rely on foreign workers to fill its labour shortages

Switzerland has long depended on workers from European countries to fill the vacancies in its labour market. But this could change within the next few years.

Published: 22 November 2023 14:41 CET
Why Switzerland can't rely on foreign workers to fill its labour shortages
EU workers may be discouraged from coming to Switzerland in the future. Photo: Pixabay

For more than two decades, Switzerland has relied on people from the European Union and European Free Trade Association (EFTA) countries to cover its need for qualified skilled workers.

Currently, about 1.7 million workers from EU / EFTA (Norway, Iceland, Liechtenstein and Switzerland) states are employed in Switzerland.

“Over the past 20 years, immigration from the EU has been essential to meet labour demand,” according to the State Secretariat for Economic Affairs (SECO).

In the future too, “further growth of the working-age population will continue to depend on immigration, even more so than currently,” SECO said. “The number of people leaving the employment market to retire tends to be higher than the number of incoming workers,” — a phenomenon which will further widen the deficit on the Swiss labour market, and where EU employees will be particularly needed.

READ ALSO: How EU immigrant workers have become ‘essential’ for Switzerland

However, it doesn’t look likely that the country can continue to rely on the foreign workforce indefinitely.

Why is this?

Demographic forecasts for Switzerland show that, by 2029, there will be a shortfall of 28,400 people in the labour market — a significant number in a small country like Switzerland.

In years past, workers from EU /EFTA countries were hired to fill this gap.

However, the demographic gap — that is, shortages created by retiring workers — is even greater in most European countries, according to economist Manuel Buchmann.  

“EU nations themselves need this skilled workforce and are willing to do a lot to ensure that their nationals don’t leave the country,”he said.  

“This is why it will become increasingly more difficult to bring people from the European Union to Switzerland,” he added. “This will inevitably impact Switzerland’s economy, which will probably shrink because of a shortage of workers.”

How will Switzerland compensate for this loss of foreign workforce?

One of the solutions Buchmann suggests is to encourage employees to work longer — that is, beyond their statuary retirement age of 65 for men and 64 for women (the retirement age for the latter will be raised gradually to 65 starting in 2025).

Another suggestion is to recruit more workforce from outside the EU / EFTA.

That may not be feasible, however.

That’s because Switzerland’s justice minister Elisabeth Baume-Schneider has asked the Federal Council to reduce the permit quotas the government makes available for people from third countries each year.

READ ALSO: Will Switzerland cut number of work permits for third country nationals?

In 2022 and 2023, the government issued 12,000 permits for people from outside the EU / EFTA, but Baume-Schneider is calling to have this quota lowered to 9,600 permits in 2024.

The Federal Council will decide in the next few weeks whether it wants to act on Baume-Schneider’s proposal and tighten the screws on the third-country immigration and if so, when.

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For members

WORKING IN SWITZERLAND

Why Swiss employers are eager to hire US professionals

Personnel shortages are pushing big Swiss companies to recruit executives from abroad, specifically from the United States.

Published: 23 May 2024 10:43 CEST
Why Swiss employers are eager to hire US professionals

Some Swiss employers, including pharmaceutical giants Roche and Novartis, pull out all the stops to attract foreigners — especially from the United States — for top management positions. 

Companies even go so far as to cover the rent, private school tuition fees, and sometimes even taxes and health insurance, of the senior US executives.

Why are these employers offering perks to the professionals from the US?

“Depending on the size of the company, the number of [locally-based] candidates is very limited for certain positions. Hiring foreign executives is therefore inevitable,” according to recruiter Erik Wirz. “And in the United States, there are very qualified employees in the pharmaceutical or technological fields.” 

The demand also extends to top researchers or those who are recognised specialists in their field, Wirz added.

The high cost involved in relocating sought-after US personnel, as well as all the perks they receive once in Switzerland — typically a package ranging from five to six-figures — are worth every franc, according to a Roche spokesperson.

 “What matters to us is the aptitude and performance of our employees. We want to attract the best talent, regardless of their origin.”

But wait…aren’t Americans third-country nationals and therefore have restricted access to Switzerland’s labour market?

Yes, and as such, they are subject to stricter employment rules than their counterparts from the European Union and EFTA states (Norway, Iceland, and Liechtenstein).

However, according to rules set out by the State Secretariat for Migration (SEM), “admission of third-country nationals to the Swiss labour market is only granted if it is in the interests of Switzerland and the Swiss economy as a whole.”

Furthermore, “you must be a highly qualified specialist or skilled professional in your field. This means that you should have a degree from a university or an institution of higher education, as well as a number of years of professional work experience.

And in Switzerland’s employment hierarchy, you can be hired only if the employer can prove to the authorities that no suitable Swiss or EU / EFTA candidate could be found to fill the vacant position.

Clearly, the top US executives recruited by Swiss companies meet all these requirements, which is why they are allowed to come and work in Switzerland.

What’s in it for the American employees?

The financial benefits are obviously generous, as these execs earn more, and get additional benefits, while working in Switzerland they would back home.

“It is impossible to attract top managers if they get the same salary,” Wirz said.

There is, however, one negative aspect of working in Switzerland — or anywhere else outside of the United States.

And that is the burden of dealing with both the Swiss and US tax system, as Uncle Sam operates citizenship based taxation, even on people who live overseas.

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