Why the Reform Could Cost Switzerland Up to 900 Million

The issue of cross-border workers is resurfacing in the context of unemployment. A European reform proposes to transfer responsibility for benefits from the country of residence to the country of last employment. For Switzerland, where many companies employ people resident in neighbouring countries, the issue is not merely institutional: according to the State Secretariat for Economic Affairs, the additional cost could amount to between 600 and 900 million francs a year.

For SMEs, nothing will change overnight. But the signal is worth heeding. If the funding of unemployment insurance were to be rebalanced, the effects could be felt indirectly on social security contributions, on HR processes and on cantonal administrations that are already under strain. The issue is still political and technical, but it touches on a very practical question: who pays when the work has been carried out in Switzerland and the employee lives on the other side of the border?

A European rule that would shift the burden of unemployment costs

The principle currently applied to cross-border workers is based on a simple distinction: the person works in Switzerland but, in the event of unemployment, receives their benefits in their country of residence. Switzerland then reimburses part of these benefits to the neighbouring states concerned. This mechanism forms part of the Agreement on the Free Movement of Persons between Switzerland and the European Union, which, amongst other things, governs rights relating to cross-border employment.

The reform envisaged by the European Union would change this approach. The country in which the cross-border worker last held employment would become responsible for paying unemployment benefits. In other words, if an employee resident in France, Germany, Austria or Italy were to lose a job held in Switzerland, the cost would no longer be borne primarily by the country of residence, but by Switzerland, subject to how the scheme is adopted and implemented.

This shift may seem technical. Yet it is of major significance for public finances. At present, Switzerland collects unemployment insurance contributions on wages paid in Switzerland, including those of cross-border workers, whilst the actual benefits are administered by the countries of residence. According to the figures cited in the report, in 2025 Switzerland reimbursed neighbouring countries a total of 283.3 million francs for benefits paid to cross-border workers. At the same time, unemployment contributions from cross-border workers in Switzerland are estimated to have generated around 600 million francs, representing a surplus of approximately 300 million francs for Switzerland.

If benefits were paid directly, the balance would be different. SECO estimates that the additional annual costs could range between 600 and 900 million francs. The federal administration emphasises, however, that these estimates remain uncertain, particularly due to a lack of sufficiently precise data on unemployed cross-border workers. The final version of the EU text and the terms of any adoption by Switzerland will therefore be decisive.

Why Bern cannot simply ignore the debate

The European Parliament approved the reform by 511 votes to 87, with 61 abstentions, according to Allnews. The stated aim on the European side is to clarify and simplify the rules for workers and businesses. For the European Union, the logic is clear: to link entitlements to the country where the work was carried out and where contributions were deducted.

For Switzerland, the situation is more sensitive. The country is not a member of the European Union, but it is linked to it through bilateral agreements, including the Agreement on the Free Movement of Persons. Implementing a change of this nature would not be automatic in every respect: the report indicates that it would require Switzerland’s explicit agreement. It is precisely this point that gives the issue its political significance.

The debate therefore goes beyond the mere accounting aspects of unemployment insurance. It concerns the way in which Switzerland adapts to, accepts or negotiates developments in European law in areas relating to the labour market. For businesses, this institutional dimension can sometimes seem abstract. It becomes a concrete reality when coordinated rules alter costs, obligations or the relevant administrative bodies.

Border regions are naturally the most affected. Businesses that regularly recruit across the border depend on a predictable framework: work permits, social security, tax at source where applicable, insurance, and procedures for departure and termination of employment. A change in unemployment figures does not in itself call into question the use of cross-border workers, but it can alter the environment in which this practice is organised.

Ticino fears pressure on regional employment offices

The issue is not merely financial. The canton of Ticino has expressed concerns about a possible administrative overload on the Regional Employment Offices. If Switzerland were to become responsible for paying benefits to some of the made-up cross-border workers who have been made redundant, it would also be necessary to determine who would manage follow-up, checks, support for returning to work and the exchange of information with foreign authorities.

To understand what is at stake, it is important to recall the role of the Regional Employment Offices (REOs). These offices do not merely register unemployed people. They help monitor job searches, refer people to labour market measures and check compliance with obligations relating to benefits. In a cross-border context, these tasks can become more complex: place of residence, job searches, availability, administrative languages and national rules do not always align.

An SME might wonder how this potential extra burden affects it. Indirectly, it can make a difference. When the offices are under pressure, processing times, requests for clarification and communications with employers can become more burdensome. Companies are sometimes asked to confirm periods of employment, reasons for termination of contract or salary details. The more complex the rules, the more important the quality of HR documentation becomes.

This does not mean that Swiss employers should already be amending their contracts or recruitment practices. At this stage, the situation remains uncertain. However, companies employing cross-border workers would be well advised to monitor developments in the regulatory framework, particularly if they experience fluctuations in staff numbers, seasonal work or restructuring. In such situations, the line between routine HR management and administrative obligations can shift rapidly.

For SMEs, a risk that is mainly indirect but one to watch

If the reform were to be adopted by Switzerland, it would not necessarily mean that a company would immediately have to pay an individual bill for every cross-border worker who is unemployed. Unemployment insurance operates as a collective scheme: employers and employees pay contributions, and benefits are then paid out in accordance with the applicable rules. The impact on an SME would therefore be felt more through changes to the system’s overall funding, potential adjustments to contributions, or new administrative requirements.

The key issue is predictability. An increase in social security contributions, even a moderate one at company level, affects the total cost of a post. However, the total cost of employment is never limited to the gross salary: it also includes contributions, insurance, administrative obligations, time spent on HR management and the risks associated with changes to the rules. In sectors where margins are tight, every adjustment can affect hiring decisions.

Labour mobility is another factor. Cross-border workers play an important role for many companies located near borders, particularly when they struggle to recruit certain profiles locally. A change to the unemployment benefit scheme could influence how the Swiss labour market is perceived by the workers concerned, although this effect will largely depend on the details of the reform and how it is communicated.

Managers and HR professionals can already take some sensible precautions, without over-interpreting a text that is not yet definitively applicable in Switzerland:

• identify the proportion of cross-border workers within the workforce and the roles concerned;
• check that staff files contain correctly documented information on salary, working hours and contract end dates;
• monitor communications from SECO, the cantons and professional associations;
• build a conservative scenario into social security contribution budgets, without hastily changing recruitment policy;
• have sensitive cases reviewed by a trust company or an HR specialist, particularly in the event of collective redundancies, restructuring or regular cross-border recruitment.

These measures are more a matter of good governance than of alarmist foresight. In an environment where social, tax and migration rules intersect, the value of an SME also lies in its ability to have accurate data and consistent processes.

Another test for Swiss-EU relations

The EU reform on cross-border workers’ unemployment benefits highlights a recurring tension: the Swiss economy operates with a labour market that is closely linked to that of its neighbours, but the financial and administrative consequences of this interconnection must be shared. As long as contributions and benefits are not borne by the same parties, the debate may remain low-key. As soon as a change in the rules threatens to shift several hundred million francs, it takes centre stage.

The maximum figure mentioned – 900 million francs a year – is eye-catching. But it must not obscure the uncertainties: the EU reform still needs to be translated into an enforceable framework, Switzerland must decide whether to adopt it, and SECO’s estimates remain dependent on incomplete data. For businesses, the right approach is therefore to monitor the situation closely, without drawing any definitive conclusions. The cost of cross-border labour is not determined solely by the salary paid at the end of the month; it is also shaped by the social coordination rules linking Switzerland to its economic neighbours.