Reuters International

ZURICH (Reuters) - Swiss lawmakers approved legislation on Wednesday giving locals hiring preference, a compromise aimed at preserving economic treaties with the European Union while still easing pressure on the job market from foreign workers.

The move buys the non-EU country more time to work out a deal with the European Commission, which insists the Swiss retain free movement for EU citizens in exchange for keeping enhanced access for Switzerland to the EU single market.

That arrangement has been put at risk by a Swiss referendum in 2014 demanding immigration quotas.

The upper house is to address the compromise plan in December.

Just over two million foreigners - a quarter of the population - live in the affluent Alpine republic including about 1.4 million from the EU plus Iceland, Liechtenstein and Norway, although the stream of newcomers has slowed this year in the face of an anti-immigration mood. [nL5N17M1NW]

The plan favours local people including EU citizens who already resident in Switzerland for jobs that open up. It could also require employers to inform employment offices of open positions before recruiting more staff from abroad. [nL8N1BE2A6]

European Commission President Jean-Claude Juncker signalled after talks in Zurich on Monday that he could live with the compromise - as long as a joint EU-Swiss commission also signs off. [nL8N1BV489]

With the 2014 referendum meant to be implemented by February, the Swiss government had threatened to introduce unilateral immigration curbs before the compromise emerged this month as lawmakers sought to head off a clash with the EU.

Kurt Fluri, an MP from the pro-business Liberals party who helped broker the compromise, called it a way to preserve the bilateral accords with Switzerland's main export partner while limiting the EU's leverage on Switzerland to adopt more of the bloc's laws and let EU courts rule on disputes.

"We would be freed from the pressure that the EU wanted to exert on us," he said during parliamentary debate, noting Switzerland could adopt the plan without needing permission from the EU.

The right-wing Swiss People's Party (SVP) condemned Flury's formula as an unprecedented breach of the constitution, given the outcome of the 2014 referendum.

"This is where direct democracy is being buried and we are the gravediggers," SVP parliamentary leader Adrian Amstutz said in a debate so rowdy by Swiss standards that the speaker had to remind MPs to treat each other with respect.

Any accord with Brussels will be scrutinised for potential hints of what Britain might expect after its June vote to exit the bloc, largely to limit immigration from the EU that critics contend has put pressure on jobs, social services and schools.

Many in Brussels believe any compromise with Switzerland would heighten demands from Britain. Juncker said this week any deal would have to be tailor-made for the Alpine nation.

(Reporting by Michael Shields; editing by Mark Heinrich)

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