RPT-UPDATE 2-Swiss vote to set limits on immigration from EU
* Swiss vote 50.3 pct in favour of immigration quotas for EU
* Vote is a turning point for EU-Swiss relations - Swiss govt
* Switzerland can't "cherry-pick" - EU lawmaker
* Swiss companies, banks rely on foreign professionals
By Alice Baghdjian and Albert Schmieder
ZURICH, Feb 9 (Reuters) - Swiss voters on Sunday narrowly backed proposals to reintroduce immigration quotas with the European Union, Swiss television reported - a result that calls into question bilateral accords with the EU and could irk multinational companies.
While neutral Switzerland is not a member of the EU, its immigration policy is based on free movement of citizens to and from the EU, with some exceptions, as well as allowing in a restricted number of non-EU citizens.
That pact on free movement of people, which came into force 12 years ago, was signed as part of a package of agreements with the EU, some of which could now be in danger of unravelling, to say nothing of the effect on a globally oriented economy that employs large numbers of foreign professionals.
"This is a turning point, a change of system with far- reaching consequences for Switzerland," Justice Minister Simonetta Sommaruga told journalists in Berne.
The European Commission in Brussels said in a statement that the vote went against the principle of free movement of people. It said it would examine the implications for its relations with Switzerland, taking into account the position of the government, which had urged citizens to vote 'no'.
"For us, EU-Swiss relations come as a package," said Hannes Swoboda, a member of the European Parliament. "If Switzerland suspends immigration from the EU, it will not be able to count on all the economic and trade benefits it is currently enjoying. We will not allow ... cherry-picking."
In a nail-biting vote, 50.3 percent backed the "Stop mass immigration" initiative, which also won the required majority approval in more than half of Swiss cantons or regions, Swiss television said.
The outcome obliges the government to turn the initiative, spearheaded by the right-wing Swiss People's Party (SVP), into law within three years.
It reflects growing concern among the Swiss population that immigrants are eroding the nation's distinctive Alpine culture and contributing to rising rents, crowded transport and more crime.
Net immigration runs at around 70,000 people per year on average. Foreigners make up 23 percent of the population of 8 million, second in Europe only to Luxembourg.
"This is an enormously important decision because the direction must now be shifted," SVP politician Luzi Stamm told Swiss television. "The Swiss population have said that, instead of free movement of people, quotas have to be introduced."
The Swiss system of direct democracy - which allows for up to four national referenda per year - means popular dissatisfaction can be translated into action relatively easily.
However, such concerns are being echoed around the EU's wealthier countries, where anti-immigration parties such as the UK Independence Party look set to make big gains in elections to the European Parliament in May.
"I fear a 'yes' from Switzerland would set off a further round of debate about free movement of persons in the EU," European Parliament President Martin Schulz told the Swiss newspaper NZZ am Sonntag ahead of the vote.
The provisions of the initiative require the restriction of residence permits for foreign nationals, including cross-border commuters and asylum seekers, according to quotas, the government said in a statement.
These limits will now need to be defined at a legislative level, it said.
NESTLE AND HAYEK
Foreign professionals have helped to power Switzerland's economic success story over the past 150 years, from German-born Henri Nestle, who gave his name to the world's largest food company, to Nicolas Hayek senior, who founded Swatch Group , the world's biggest watchmaker.
The European Union is Switzerland's biggest trading partner, buying 110 billion Swiss francs' ($122 billion) worth of goods in 2013.
Opponents of the move say it could exacerbate a shortage of skilled workers in Switzerland, the home of Roche, Novartis, UBS and other multinationals filled with foreign professionals.
"Explanatory and constructive talks with the EU are needed urgently," the Swiss Banking Association tweeted after the result.
Swiss voters generally have a history of voting down proposals that they feel could hurt their country's economic success story or threaten its competitiveness.
Last year, they rejected a proposal to cap the salaries of top executives at 12 times that of the company's lowest wage, amid warnings from industry leaders that the economy could suffer.
But immigration has become a growing concern. In 2009, Swiss voters defied government advice by backing a ban the construction of minarets, and in 2010 they voted to automatically deport foreigners convicted of serious crimes.
Trending On Reuters
We are living longer but not creating financial plans to keep pace. Advisers give tips on how to make sure you don’t outlive your money. Video