By Michael Shields
ZURICH (Reuters) - Swiss voters look set to decide for a second time whether to impose curbs on immigration from the European Union after the cabinet proposed on Wednesday allowing a straight yes-or-no referendum on an issue that still bedevils ties with the EU.
In a 2014 referendum, voters narrowly backed upper limits and quotas to reduce immigration from the EU, amid concerns that foreigners who already make up a quarter of Switzerland's population were continuing to flood into the country. The quotas were then enshrined in the Swiss constitution.
But pro-Europe activists, worried about ending free movement of EU citizens -- a condition for enhanced Swiss access to the single market -- countered with an initiative called 'Raus aus der Sackgasse' (RASA), or "Out of the Cul de Sac", that would gut the 2014 vote by removing the quotas from the constitution.
The government opposes the RASA initiative because it still wants a constitutional mandate to steer immigration.
But it was unable to forge an alternative to RASA that it could push through parliament and win public support under Switzerland's system of direct democracy, which gives voters final say in major matters.
That means the RASA initiative is set to go to voters after parliament takes its stance on the issue by an April 2018 deadline.
Justice Minister Simonetta Sommaruga told reporters in Bern that RASA had already met its goal of preserving the patchwork of bilateral accords Switzerland has knitted with the EU.
The Swiss parliament passed a law in December that gives local people a first crack at jobs that come up, skirting the demand of voters for hard limits on the foreign influx and enraging far-right activists who said the people's will expressed in the referendum was being ignored.
The debate in non-EU member Switzerland mirrors in many ways the situation in Britain, where voters decided last year to quit the EU as a way to control immigration, which critics said was putting too much strain on public services.
But, unlike in Britain, Swiss officials are determined to uphold the free movement of people, a prerequisite for full access to the EU single market of 500 million consumers.
Losing bilateral accords that ease access to the EU market could cut Swiss output by as much as 7 percent of national output by 2035, and business leaders decry the impact on finding qualified staff. Still, the EU's faltering reputation could make the second referendum a close call.
Sommaruga said net immigration from the EU and EFTA countries had fallen from nearly 61,000 in 2013 to 38,000 last year and to about 8,560 in the first quarter of 2017, the lowest in a decade.
(Reporting by Michael Shields; Editing by Gareth Jones)