Basel's Growth at Risk: Swiss Population Cap Threatens Pharma Industry
Economic Impact of Swiss Population Cap on Basel's Pharma Sector
By Dave Graham and John Revill
BASEL, Switzerland, June 12 (Reuters) - For decades, economic growth in Basel has outpaced that of Switzerland as its globe-straddling pharmaceutical and biotech industries have turned the city on the border with Germany and France into one of the most prosperous in Europe.
Drawn by work, four in every 10 residents of the city on the River Rhine that is home to pharma giants Roche and Novartis are foreigners; gross domestic product per capita is almost 2-1/2 times higher than the Swiss average.
That may change if Swiss voters on Sunday back a proposal to cap the population which business groups say will put the country's economic success at risk, and strain ties with the European Union, its main trade partner.
Potential Consequences for Basel's Economy
SWITZERLAND NEEDS TOP TALENT, SAYS ROCHE
Uncertainty for Major Employers
"It would mean uncertainty from day one," said Conradin Cramer, head of the cantonal government of the city of Basel, noting that major employers would need to reconsider their plans. "And that would be poison for our economy."
Drivers Behind the Population Cap Proposal
Tapping in to concern over pressure on public services and housing, as well as crime, the proposal from the right-wing Swiss People's Party stipulates that Switzerland's population must not reach 10 million by 2050. Already above 9 million today, that is forecast to occur by about 2042.
The eurosceptic party stresses the need to cut numbers of refugees and asylum seekers, but also wants to end free movement of people with the EU if the cap is breached for two years.
Nearly 30% of Swiss residents are foreigners, mostly from Europe.
Industry Reactions and Concerns
Pharma Giants Oppose the Cap
Roche, Novartis and other big companies have criticised the cap, mindful that it could threaten access to the skilled labour Switzerland depends on.
Impact on Talent Acquisition and Innovation
Roche, which employs 12,400 people in the Basel region and from 115 countries nationwide, is particularly concerned the initiative would make it harder to get research and development staff who have made Switzerland a patents powerhouse.
"Switzerland's position as a leading innovation hub relies on top talent; without this talent, we jeopardize not only research but also the jobs across our entire supply chain," said Juerg Erismann, head of Roche's Basel site.
Trade and Investment Risks
Chemical and pharmaceutical products made up over half of Switzerland's exports last year and Roche and Novartis were both buffeted by trade threats from U.S. President Donald Trump, who hit Switzerland with the highest tariffs in Europe.
Basel's pharma giants were spared the worst of the tariffs but only after pledging massive U.S. investments and striking a deal with Trump to reduce medicine prices in the United States.
If Switzerland now decided to limit the number of people in the country, it risked encouraging businesses to create jobs elsewhere, said the city of Basel's Cramer, a member of the centre-right Liberal Democratic Party.
"It plays into the hands of this American policy, as well as other places like Singapore that are aggressively competing for companies and investment," he said.
Political and Social Dimensions
Government and Public Sentiment
The federal government has urged voters to reject the population cap. But discontent over high rents, crowded public transport and concerns about rich incomers pushing up prices could prove decisive.
Swiss People's Party Perspective
The Swiss People's Party argues the country's population growth, which has significantly outpaced that of the EU, is unsustainable. An earlier proposal by the party to curb EU immigration narrowly passed in 2014, though its impact was later diluted.
Long-Term Outlook for Switzerland's Economy
Risks of Isolation
Switzerland - whose economy has thrived on openness and trade agreements with the rest of the world - cannot afford to cut itself off, said Stephan Mumenthaler, director of Swiss pharma and chemicals industry association scienceindustries.
"For companies considering investing in Switzerland and perhaps building new factories or research institutions, this is, of course, poison," he said.
(Reporting by Dave Graham and John Revill; Additional reporting by Marleen Kaesebier; Editing by Andrew Heavens)
