Southern Swiss canton fears for new cross-border agreement with Italy

Around 80,000 employees commute across the border from Italy to Switzerland to work every day. © Keystone / Gaetan Bally

As a result of the new tax agreement, the Swiss labour market is less attractive for Italian cross-border workers. The southern canton of Ticino is now worried about the impact this will have on its economy and about the urgent need for labour force from Italy.

Over the last six months, new cross-border commuters in Italy have been facing notably increased taxes when employed in Switzerland. This makes it less financially attractive for Italian cross-border workers to work in Switzerland. The Ticino economy, heavily reliant on the so-called “frontalieri,” is now expressing concern about the urgent need for labour from Italy.

Noticeable consequences

Initial reports from the industry and catering sector indicate a decrease in the number of applicants for specific jobs. “We have observed a decline in applications,” says Massimo Suter, President of Gastro Ticino. The local economy in canton Ticino is heavily dependent on cross-border commuters from the Lombardy region in northern Italy. Around 80,000 employees commute across the border to work every day. Almost one in three people working in Ticino comes from Italy. The reason: wages are usually twice as high as in Italy.

Piero Poli, owner of a generics company in Manno, in canton Ticino, fears that this could change with the new tax agreement. “It’s quite possible that people will now reconsider working in Switzerland. They pay higher taxes in Italy, which means a lower salary, yet they still endure a two-and-a-half-hour drive every day.” The frequent traffic jams on the roads from Italy to Ticino, caused by the substantial number of cross-border commuters, are a constant source of irritation for the local population.

Politics against low wages

According to Luca Albertoni, Director of the Ticino Chamber of Commerce, the new tax agreement with Italy isn’t favorable for employers but is politically motivated. He explains, “Politicians aimed to impose penalties on cross-border commuters, making their earnings less attractive and Switzerland less appealing. The goal is to narrow the pay gap between locals and cross-border commuters, and that’s likely to be the outcome.”

Because if cross-border commuters pay more taxes, they may no longer be willing to work for the minimum wage in canton Ticino. This currently stand at CHF 19.75 ($23.24). Companies, especially the ones that compete internationally, have little room for manoeuvre to increase wages, says Luca Albertoni: “It is quite possible that Ticino will become less attractive for certain companies.” However, he believes that the consequences of the new tax agreement will only become apparent in a few years.

Pharmaceutical entrepreneur Piero Poli, who presides over the Ticino Pharmaceutical Industry Association, is more relaxed. He says that as long as the Swiss franc maintains its strength against the euro, cross-border workers will continue to find Swiss employment advantageous. In addition to salary, development opportunities and other salary components also play a role in employment. He does not want to talk about wage adjustments yet.

Massimo Suter, President of Gastro Ticino shares the sentiment, believing that Swiss wages will stay attractive for cross-border commuters residing near the Swiss border. He anticipates a diminishing fear of earning less in the future.

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