Swiss referendum on population cap threatens economic stability, experts warn

Swiss voters will cast their ballots on June 14 regarding a far-right initiative led by the Swiss People’s Party (SVP) to cap the country’s permanent population at 10 million by 2050. The proposal, dubbed the "No to 10 million" initiative, seeks to curb future immigration and marks a significant milestone in the SVP’s longstanding priorities of tightening immigration controls and limiting ties with the European Union. A similar measure failed in a referendum 12 years ago.

Economic projections suggest severe consequences for the nation if the proposal is adopted. The Swiss think tank Demografik, cited by Bloomberg, has calculated that the policy could reduce economic output by up to 12 per cent by the end of the century. This decline would stem from acute labour shortages in critical sectors, including healthcare, hospitality, information technology, and construction.

Experts from major German economic institutes have voiced strong concerns regarding the feasibility and impact of the measure. Tobias Heidland of the Kiel Institute for the World Economy (IfW) warned that restricting immigration would likely lead to widespread dissatisfaction within the business community. He predicted that the policy would deter highly qualified professionals from migrating to Switzerland, thereby exacerbating existing skills gaps.

Sabine Zinn from the German Institute for Economic Research (DIW) argued that a blanket cap on immigration would worsen demographic challenges already facing both Switzerland and Germany. With fewer people in the workforce responsible for funding social security systems, Zinn noted that there is already a lack of qualified applicants. She emphasised the difficulty of distinguishing between humanitarian migration and labour migration based on economic necessity.

Wido Geis-Thöne of the German Economic Institute (IW) highlighted that the shortage of unskilled labour is particularly acute in the tourism-dependent Swiss economy. He stated that a 10 million limit would almost certainly cause significant harm, noting that many EU nationals work in the hotel, restaurant, and construction sectors. He warned that such restrictions could damage Switzerland’s position as a tourist destination and its access to the EU’s $23 trillion market.

While Germany cannot replicate the policy due to its obligations under EU free movement rules, analysts suggest the referendum result may influence immigration debates across Europe. Sabine Zinn warned that the outcome could act as a signal for other European countries with far and centre-right governments, potentially validating demands for tighter immigration control. Conversely, Geis-Thöne suggested that if skilled workers are barred from entering Switzerland, they may remain in Germany, potentially stabilising the local workforce.

A separate vote on the Civilian Service Act, concerning the reduction of personnel moving from army to civilian service, will also take place on the same day. The central question for Swiss voters remains whether they will be swayed by the nationalist appeal of the initiative or the risks of long-term economic consequences.