Foreign Labour, Growth and Productivity: The Case of Switzerland

Abstract

Up until the first oil shock in 1973, foreign worker migration was generally viewed as a blessing to European growth and development. The most prominent voice to be heard was that of Kindleberger (1967), who held that the major factor behind the remarkable economic growth which most of Europe experienced after 1950 was a large supply of labour provided particularly by unemployed and underemployed workers in Mediterranean countries. However, with the decline in the growth of prosperity in Europe, in the wake of the oil crises, opinion changed rather dramatically. Lower output growth, declining productivity gains, and stagnating employment made it seem that the only purpose a foreign labour force could still hope to serve was to fill the already burgeoning unemployment rolls in the host countries. Tight labour markets have, in turn, led to increased social stress and cultural tension between foreign and domestic populations in the recipient countries, and thus given cause to question the astuteness of earlier immigration policies.