Switzerland’s population cap vote explained

Switzerland, a wealthy country that has historically embraced free movement and foreign investment, is about to vote on whether to cap its population and therefore restrict immigration measures.

Sunday’s referendum comes as the country’s population grew by 10% in the decade to the end of 2025, at which point it stood at just over 9.1 million. For the first time in the country, there are more people over 65 than under 20. Net migration and birth rates fell last year.

Switzerland’s relatively low taxes make it home to global conglomerates, including consumer goods giants. nestlea heavyweight in the pharmaceutical industry Novartis and other multinational companies in the finance, luxury goods, and technology sectors. It has one of the highest concentrations of billionaires in the world and a much higher GDP per capita than many other developed countries.

Official data also shows that at the end of 2024, 41% of the population will have an “immigrant background” (a term applied to immigrants and their Swiss-born children), and that 32.5% of the country’s permanent residents are first-generation immigrants. An estimated 1.4 million EU nationals live in Switzerland, accounting for around 16% of the country’s population. A further 340,000 EU nationals cross the border every day to work there.

A recent poll found that 52% of respondents reject a population cap, while 45% support it.

But if voters support a population control plan, the country’s parliament and parliament would have to take steps to limit population growth until 2050.

If the population exceeds 9.5 million at any point over the next 24 years, the immigration system will be tightened, with asylum and family reunification programs being among the first to be cut. Switzerland’s freedom of movement initiative with the European Union could also end if the population exceeds the 10 million threshold.

Switzerland is part of the borderless Schengen Area, along with many large EU economies. The bloc and the country also have agreements that allow free movement of each other’s citizens, allowing them to live and work in each other’s territory as long as they have a job or another source of income.

Switzerland’s right-wing SVP party is calling on voters to “send a clear signal” to policymakers to curb what it calls “overwhelming” population growth.

The senior vice president said in a statement last week that a vote in favor of a population cap would still allow 40,000 people a year to move to Switzerland, but MP Piero Marchesi said population growth was causing problems for public services, wages, rent prices, education and the labor market.

Swiss-based companies argue that imposing a significant cap on immigration would undermine the country’s competitiveness and strain a struggling economy facing slowing growth, a strong currency, disinflation and President Donald Trump’s tariff regime.

Economiesuisse — important industry association Amazon web services, Roche, google and johnson & johnson Some of its 100,000 members oppose the idea of ​​population control.

Switzerland’s prosperity depends on “openness, innovation and strong economic ties with Europe,” Chief Economist Rudolf Minsch said in an emailed statement to CNBC.

“We understand that concerns about housing, infrastructure and population growth must be taken seriously, and that these challenges require practical political solutions,” he said.

“Strict entry restrictions are not the right answer, especially if they risk undermining the bilateral agreement with the European Union, which is most important for the Swiss economy.”

Minsch added that Switzerland relies on highly qualified foreign workers, especially in sectors such as pharmaceuticals, technology and healthcare.

“Wast-scale restrictions on immigration will reduce innovation, growth and competitiveness, while making it harder for companies to attract international talent,” he said.

He told CNBC’s Carolyn Ross at the Swiss Economic Forum last week. nestle CEO Philippe Navratil explained how attractive Switzerland is to external investors, adding: “It is important that this situation remains in Switzerland.”

“We must not take this for granted. This is the result of a lot of hard work and a willingness to push for reforms,” ​​he added.

He said his company has nine factories and three research centers in the country and that “the main part of our research and development is still carried out in Switzerland, and has been for 160 years.”

He added: “Switzerland has credibility. Switzerland has quality, Switzerland has talent and Switzerland creates and establishes attractive framework conditions for global companies.”

At the same conference, UBS Chief Executive Officer Sergio Ermotti said he was concerned about the “extreme approach”.

“Switzerland has a foreign-born population of 30%, about the same as Australia and twice as much as Germany,” he said. “And that’s going to cause some frustration within society. But that’s not the way to solve the problem.”

UBS is one of Switzerland’s largest employers, with approximately 33,500 employees based in Switzerland.

Joao B. Duarte, a professor of economics at Portugal’s Nova School of Business and Economics, told CNBC in an email that population controls could undermine Switzerland’s credibility in a number of ways.

“If companies believe access to European labor could become more uncertain, they could change their investment decisions well before any legal triggers occur,” he told CNBC.

Duarte said Brexit “offers a salutary warning: the end of free movement did not result in a smooth transition to domestic labor self-sufficiency; it caused shortages, recruitment tensions and higher costs in sectors that relied on flexible EU workers.”

He added that the EU is Switzerland’s main trading partner and free movement is linked to an extensive bilateral framework that gives Swiss companies privileged access to European markets.

“If Switzerland is ultimately forced to abandon the Free Movement Agreement with a ‘yes’ vote, the burden will not be limited to migration policy, but could spill over to the entire economic relationship between Switzerland and the EU,” Duarte said.

—CNBC’s Carolin Roth contributed to this report.