Business federation says free movement vital

All roads lead to Rome? This one leads to Switzerland Keystone

With federal elections approaching, the free movement of labour is becoming a hot topic again following a report showing an increase in reported cases of abuse.

Yet for the business federation, economiesuisse, free movement remains essential.swissinfo.ch spoke to the head of the business federation in French-speaking Switzerland, Cristina Gaggini, about some of the arguments often used against the accord with the European Union.

swissinfo.ch: Among the arguments used against free movement is that of the quality of economic growth. The [rightwing] Swiss People’s Party says growth based on immigration is a risky strategy. How do you respond?

Cristina Gaggini: Our position is the exact opposite. Since the introduction of the free movement of people in 2002, gross domestic product has grown more strongly than before it. We can make a direct link between this growth, Switzerland’s economic prosperity and free movement.

We have been able to create jobs which have in turn led to higher fiscal revenue for the cantons and confederation. Our assessment of the bilateral accords is very positive, and we are always repeating that we view them as absolutely indispensable for the Swiss economy. Quite simply, the Swiss job market is too limited, and we do not have enough specialists – engineers, technicians in the health sector etc.

swissinfo.ch: Switzerland is said to have experienced a miraculous surge in employment thanks to free movement. But the People’s Party says jobs generated are mainly in the hospital and social branches. In the private sector, free movement is said not to have compensated for the jobs lost in the 1990-95 economic crisis. Is that right?

C.G.: That is certainly not the case. It is industry that needs engineers, for example. Every year we carry out a survey among our members, all of which are businesses and nothing to do with the public or semi-public sector. Year after year they confirm the absolute importance of the free movement accord.

swissinfo.ch: Small craftsmen in the construction sector are said to be the main losers from free movement, as the accompanying measures to the accord have not been successful in combating wage dumping. Is this correct?

C.G.: It’s true that the recent report by the Swiss Secretariat for Economic Affairs, Seco, highlighted violations of the law against wage dumping. The construction sector is one of the branches that depends most on temporary workers. That is why Seco and the different control commissions, notably those in the cantons, are looking at this sector very closely and doing spot checks. When violations are found, fines are imposed. Repeat offenders could be banned from operating in Switzerland for five years.

Swiss business is strongly supportive of the accompanying measures. In our view it is vital to have controls in place against wage dumping. Because this is not what free movement should be about. It must not lead to salary undercutting which would undermine its legitimacy in the eyes of the people.

swissinfo.ch: It is also argued that free movement is detrimental to the middle class as it leads to a loss of earnings and lower salaries for this group. Is that the case?

C.G.:  We have not noticed a fall in the average wage, which has been adjusted in line with inflation. The average wage has not evolved in a spectacular way over the past ten years, but it has evolved. So there is no correlation; this statement is false.

swissinfo.ch: Free movement has increased the available workforce, making it harder to combat unemployment and threatening the most vulnerable wage earners. Do you agree?

C.G.: Regarding the unemployment rate, we see that in Switzerland we have managed to bring it down considerably in quite a short time. But it’s true that unskilled workers are vulnerable in an economy which relies more and more on technology and requires ever more skills  – free movement or not. That is why efforts are being made to help unemployed people back into the workplace and to offer training to help these people. But I don’t see any direct link with the free movement of people.

Background

The free movement of people, which came into force in June 2002, is one of the seven bilateral accords signed by Switzerland and the then 15 members of the European Union. At the beginning there were quotas but these were abolished in 2007. People from Liechtenstein, Iceland and Norway enjoy the same rights of free movement.

The free movement accord was extended, by means of a protocol approved by the Swiss, to the eight new members of the EU in April 2006. Quotas here were eliminated at the beginning of May 2011. The accord also applies to Bulgaria and Romania, which joined the EU in 2007 but quotas will remain in force till 2016.

Seco report

In 2010, 38% of foreign companies who use foreign labour in Switzerland did not respect collective labour accords, according to a Seco report published at the beginning of May. In sectors without such accords, the rate is 12%. The number of offences increased compared with 2009.

The increase in the number of cases registered and companies penalised shows that the accompanying measures to the free movement of people are effective, says Seco.

However, the Swiss Trade Union Federation argues that the report “gives a worrying image of reality”.

Minimum salary

As a result of abuse of the system, the leftwing wants the introduction of a national minimum salary. “We will fight this,” says Cristina Gaggini. “The experience of countries like France shows that employers then lower salaries. It’s the employee who loses out.”

“It also has to be said that in the case of repeated loan dumping, in the framework of accompanying measures to the accord, it is foreseen that an employer can be forced into a labour contract with a minimum wage. In that way those who abuse the system are penalised rather than those who respect it.”

(Translated from French by Morven McLean)