Swiss firms fret over immigration vote backlash

Reuters

* Firms face uncertainty after Swiss immigration vote

* Big banking, pharma sectors rely heavily on foreign workers

* Some companies say vote will encourage them to invest abroad

By Alice Baghdjian and Caroline Copley

ZURICH, Feb 19 (Reuters) - Nestled between the peaks of the Swiss Alps, the Hotel Schweizerhof has provided rooms for weary skiers and hikers for more than a century, profiting like scores of other businesses from Switzerland's close ties to Europe.

But a shock vote last week to cap all immigration to the landlocked country and introduce quotas for those from the European Union, now threatens to cut the hotel off from the pool of workers on which it relies.

"Switzerland is too small, we don't have enough qualified people here - not in tourism, not in the health sector, not in other industries," said Andreas Zuellig, manager of the hotel, which stands in the Swiss ski resort of Lenzerheide and draws around 40 percent of its staff from the EU.

In a country that depends heavily on foreigners in all sectors of the economy, Zuellig is not alone in worrying about the consequences of the referendum, which the Swiss government opposed but must now write into law within three years.

In addition to the Swiss tourism industry, the financial services and scientific sectors, which together account for nearly a fifth of gross domestic product (GDP), have been spooked by the vote.

Scienceindustries, the business association that groups the Swiss pharmaceutical, chemical and biotechnology companies, says nearly one in two workers in the sector are EU citizens.

"Long term, it could mean that we invest and hire less in Switzerland and more in our operations outside of Switzerland," said Paul Verbraeken, a spokesman for Evolva, a maker of ingredients for the health and cosmetics industry which employs around 50 people in Switzerland, two-thirds of them from the EU.

Ruedi Noser, chairman and majority owner of Noser Group, a producer of software for the telecommunications and other industries, echoed that view, saying his company was likely to step up its foreign expansion in the wake of the vote.

"It was already clear that we had to expand abroad before, but the vote certainly underscores the importance of doing so for our company," said Noser, who employs 420 people in Switzerland, 70 in Germany, ten in North America and around seven in Asia.

Analysts at Credit Suisse estimate that the Swiss economy as a whole could generate 80,000 fewer jobs over the next three years as a result of the referendum.

FUNDING FEARS

Immigrants have helped drive the Swiss success story, including Swatch founder Nicolas Hayek who was born in Lebanon, and German-born Henri Nestle, who founded the world's largest food and beverage company.

At bio-tech start-up InSphero, a producer of 3D cell structures used to test drugs in pre-clinical trials, around 80 percent of the people applying for current vacancies are non-Swiss, its German founder and CEO Jan Lichtenberg said.

Lichtenberg is not only worried the extra red tape from quotas will make it harder to hire top talent, but also concerned about counter-measures from the EU throwing up another unwelcome hurdle for exporters.

"If you take everything together, such as the strong Swiss franc and then the additional export and import costs, it's not helping Switzerland as a competitive economy," said Lichtenberg, whose firm makes around 50 percent of its revenues in Europe.

He is also concerned that the company, which gets around 1 million francs in funding from the EU, may be excluded from future funding rounds, if Switzerland's bilateral agreements with the 28-member bloc unravel.

On Sunday, the European Commission announced it was postponing negotiations with Switzerland on its participation in multi-billion dollar research and educational schemes, which allocate grants to fund science projects in areas such as information technology, health and nanosciences.

"Everything that's not going to market in the next 12-18 months is currently research that's funded by European projects. If we were cut out of that it would mean that we would have to look for money from other sources," he said.

Still, some Swiss firms see a silver lining in the vote.

Annette Heimlicher, chief executive of Contrinex, a maker of sensors for factory automation, says the current system makes it difficult to employ non-EU specialists, a problem because it sells a large amount of goods to Asia.

"If we focus on Europe and hiring Europeans, we won't be competitive in Asia in years to come," said Heimlicher, whose company employs more than 500 people, including specialist engineers and product managers from Asia.

She hopes the referendum can lead to a more efficient system which boosts recruitment of people from outside the EU.

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