Swiss Back Opening Labor Market

With the count completed in all of the country's 26 cantons, or states, the "yes" camp had won in 19 while the "no' was victorious in just seven, according to regional electoral commissions.

The vote was also seen as a key test of ties between the EU and Switzerland, which stands steadfastly outside the 25-nation bloc but is ringed by its members and does most of its business with them.

At issue was whether to extend an agreement on the free movement of workers to 10 mainly ex-communist countries, such as Poland and Hungary.

It is part of a series of specialized accords, approved by voters in 2000, between Switzerland and the then-15 nation EU. They smooth trade, labor, educational and technical ties, and are seen by most Swiss as a fair compromise between EU membership and the headaches of trying to go it alone.

Fear of flood of cheap workers

The accords were meant to be extended to the countries which joined the EU in May 2004, but opponents gathered enough signatures to give the 4.8 million voters the final say.

Nationalists claimed a "yes" would take the country a step closer to EU membership.

Right-wingers and some on the far left of the "no" camp warned of cheap workers flooding and taking jobs from locals -- playing on the fear of the "Polish plumber" seen in other west European countries.

New opportunities for Switzerland?

The "yes" campaigners, who included the government, centrist and mainstream left-wing parties, business groups and trade unions, had dismissed those fears.

They cited new economic opportunities for Switzerland in fast-growing east European countries, in exchange for the Swiss concessions. They claimed measures such as tough labor inspections will stop companies from ducking Swiss wage rules by using east Europeans who are ready to work for less.

They also said that a "yes" would show that the Swiss are serious about managing ties with the EU through the accords, while a "no," by undermining them, paradoxically would revive the issue of full membership.

There were fears that a "no" could lead the EU to nullify the existing accords with its pre-2004 members, at a time when Switzerland is counting on improved ties to help boost its sluggish economy.

While west European countries may not want to hit back hard, new EU members would likely have pushed for payback for Swiss discrimination, and that could also have caused an internal EU rift.

EU concerned about "no" vote

"We are hoping very much that the voters of Switzerland will approve the decision taken by their government and vote 'yes'," said Emma Udwin, spokeswoman for EU external relations commissioner Benita Fererro-Waldner a day before the vote.

She declined to speculate in detail on the consequences of a "no" vote, but said: "There are different repercussions for different areas of our relationship with Switzerland. Some are clearer than others," she said.

"In the first instance we would need to see proposals from the Swiss government itself on how it would proceed."

Deeply EU-skeptical

In a referendum in June, almost 55 percent of voters backed joining the Schengen area, which eases border controls among 15 countries -- 13 EU states plus non-EU countries Norway and Iceland.

But the Swiss have been skeptical about EU membership, with a 1980s application to join later put on ice.

A motion by pro-EU campaigners in 2001 calling for EU membership talks was rejected by 77 percent.