Frontier workers and allowances: a burning issue (cross-border guide)

Context

Frontier workers and allowances: a burning issue

The decision taken in Brussels on unemployment benefits for border workers could have important financial and political repercussions for Switzerland. The governments of the 27 member countries have given the first green light to a reform that radically changes the rules of the game. Today, if a border worker loses his job, the allowances are paid by the States of domicile. In the future, however, they must be paid by the last country in which the worker was employed.

Switzerland, with its labour market made up of frontier workers, is likely to be particularly affected by this decision. Data from the Federal Labour Office (UWF) show that in 2020, around 240,000 border workers worked in Switzerland, of which 130,000 were employed in the service sector. These workers, who come mainly from Italy, France and Germany, are fundamental to the Ticino economy, especially in the agriculture, industry and services sectors.

Under current rules, if a frontier worker loses her job, the unemployment benefit is paid by the State of domicile. For example, a worker who lives in Bellinzona and loses his job at a company in Lugano, will receive unemployment benefit from the State of Ticino. However, with the new reform, the allowance should be paid from the last country where the worker was employed, namely Switzerland.

This could have major repercussions

Operational details

Frontier workers and allowances: a burning issue Switzerland is among the countries favoured by the current system. Last year, Bern paid CHF 226 million to France, CHF 29 million to Germany, CHF 21 million to Italy and CHF 6 million to Austria. The reform could have a heavy impact on the Confederation, with an estimated additional cost of between CHF 500 million and CHF 1 billion per year. Switzerland is a border country, with over 150,000 registered border crossers. Many of them work in the tertiary sector, as in the case of Lugano, where the presence of foreign workers is particularly high. According to data from the Federal Labour Office (UWF), in 2020, 55% of border workers worked in the tertiary sector, followed by 26% in the industrial sector and 19% in the primary sector. The reform of the compensation system for frontier workers is currently under discussion. According to the federal government's plans, the reform could have a significant impact on the Confederation. The estimated additional cost is CHF 500 million to CHF 1 billion per year. This means that Switzerland will have to pay more than it did in the past. The reform could also have an impact on the Ticino population. The largest municipalities in the Canton, such as Lugano and Bellinzona, could be more affected by the reform. According to data from the Federal Labor Office (UWF), in 2020, 60% of registered border workers worked in Lugano, followed by 20% in Bellinzona. To better understand To better understand the impact of the reform, it is necessary to analyse the data relating to the allowances paid to frontier workers. According to data from the Federal Labour Office (UWF), in 2020, Switzerland paid a total of 2.3 billion francs in compensation to border workers. Most of these funds have been spent on border workers working in Switzerland. For example, in 2020, Switzerland paid CHF 1.8 billion in allowances to border workers working in Switzerland. Most of these funds have been spent on frontier workers working in the tertiary sector. According to data from the Federal Labour Office (UWF), in 2020, 70% of the compensation paid to border workers working in Switzerland was spent on workers in the tertiary sector. The reform of the compensation system for frontier workers could also have an impact on the management of funds. According to the federal government's plans, the reform could result in a 50% reduction in spending for border workers working in Switzerland. This means that Switzerland will have to pay less than it did in the past. To manage funds more efficiently, you need to create an operational checklist. This checklist should include the following points: Identify frontier workers working in Switzerland Calculate the funds needed to pay compensation to frontier workers Check if the funds have been paid correctly Reduce spending on

Key points

Frontier workers and allowances: a burning issue

Switzerland is not required to transpose the European regulation on compensation for frontier workers, but the issue is politically heated. In particular, it falls in the middle of the voting campaign on the initiative 'No to a 10 million Switzerland!' and lends itself to conditioning the discussions on the new package of bilateral agreements. Switzerland could respond to the Joint Committee, the joint body that implements bilateral agreements and discusses disputes.

The theme is also burning for economic reasons. According to the Joint Committee, the benefit for frontier workers is a sensitive issue that could have a significant impact on public coffers. In fact, if Switzerland were to transpose European regulations, the allowance for frontier workers could increase by about CHF 1.2 billion per year. A considerable amount that could have a significant impact on the public coffers of the Canton of Ticino.

The Canton of Ticino is particularly interested in this issue, as it is home to many frontier workers. According to data from the Joint Committee, in 2022, about 20,000 frontier workers worked in the Ticino Canton. Most of them are originally from Italy and have worked mainly in the area of Lugano and Bellinzona. The allowance for these frontier workers is currently around CHF 2,500 per year, but if Switzerland were to transpose the regulations

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Source: cdt.ch