By Caroline Copley
BERNE (Reuters) - Swiss business groups rallied together on Monday to reject a proposal to re-impose quotas on immigrants from European Union countries, warning the measure would exacerbate a shortage of skilled workers and damage firms' competitiveness.
Despite the country's wealth and economic success, immigration is a hot-button issue in Switzerland where the right-wing Swiss People's Party (SVP) has long blamed rising rents, crowded public transport and higher crime on an influx of foreigners.
The Swiss will decide on February 9 whether to back a popular initiative "against mass immigration" which is spearheaded by the SVP and aims to set annual quotas on permits granted to foreigners in Switzerland.
Representatives from 12 Swiss industry groups including the machinery, watches, IT and tourism associations said quotas would impose unnecessary red tape on businesses and curb their ability to hire flexible and highly-qualified staff.
"Terminating free movement of people would have devastating consequences on our labor market, since our innovative companies are reliant on specialists," said Heinz Karrer, president of business lobby Economiesuisse.
While neutral Switzerland is not a member of the European Union, its immigration policy is based on free movement of people from the EU and allowing a restricted number of non-EU citizens to enter the country.
The vote comes at a time when many politicians elsewhere in Europe are also fearing what will happen now Romania and Bulgaria have full access to the bloc's job market and welfare systems.
Across the continent the media are railing against "welfare tourism", and politicians worry this will boost the far right in May's European Parliament vote.
Swiss industry heavyweights such as drugmakers Roche <ROG.VX> and Novartis <NOVN.VX> as well as banks UBS <UBSN.VX> and Credit Suisse <CSGN.VX> have traditionally looked outside the country for highly skilled and specialized staff.
Christoph Maeder, president of scienceindustries, said 45 percent of employees working in the pharmaceutical, chemical and biotechnology sector were EU citizens, while around 40 percent of workers in the hotel sector are foreigners.
Europe is also Switzerland's biggest trading partner buying goods worth 120 billion Swiss francs ($130 billion) last year and re-imposing quotas would call the country's bilateral agreements with the bloc into question, the lobby groups said.
Net immigration to Switzerland ran at around 63,000 people per year between 2002 and 2012, government data show.
The number of foreigners from EU countries living in Switzerland rose 4.6 percent in the year to August to 1.23 million. Italians, Germans and Portuguese make up the biggest groups of immigrants.
February's vote is the first in a string of upcoming referendums aimed at curbing immigration. Environmentalist group Ecopop wants to cap population growth through immigration at 0.2 percent. The Swiss will also vote on whether to enlarge the free movement of people agreement to include Croatia.
(Editing by Toby Chopra)