By Michael Shields
ZURICH (Reuters) - The Swiss parliament passed a law on Friday aimed at curbing immigration by giving local people first crack at open jobs, skirting voters' demand for outright quotas that the government feared could disrupt close ties with the European Union.
After parliament passed the new immigration law, the focus will now shift to how the EU responds; the European Commission was expected to give an initial reaction at its midday briefing.
Brussels so far has shown scant inclination to compromise on the free movement of people - the principle underpinning Swiss access to the EU's single market of 500 million - so as not to encourage Britain as it negotiates its EU divorce.
The bill's lack of upper limits on immigration to a country of 8.3 million, whose population is already a quarter foreign, prompted the right-wing Swiss People's Party to assert that politicians had defied the people's will in a 2014 referendum.
The SVP, the largest party in parliament, has accused other parties of caving in to Brussels and shirking their duty to stand up for Swiss sovereignty.
Its members held up signs protesting the final vote reading "breach of the constitution" and "mass immigration continues".
But a clear majority in parliament did not want to risk a row with the EU, Switzerland's main trading partner, which could retaliate by abrogating other bilateral accords governing trade worth about 7 percent of Swiss economic output.
The debate in non-EU member Switzerland in many ways mirrors the situation in Britain, where voters decided in June to quit the EU in part as a way to control immigration, which critics said was putting too much of a strain on social infrastructure.
Nearly 1.4 million EU citizens live in Switzerland and more than 300,000 commute in from neighboring countries.
The Swiss think that gives them leverage with Germany, France and Italy, whose leaders may not want to have to explain to voters - especially those in border regions with strong populist party support - why they can no longer work in high-wage Swiss jobs.
Passage of the law clears the way for Switzerland to extend free movement of people to the latest EU member, Croatia. That, in turn, will restore Swiss access to the EU's Horizon 2020 program, which funds research projects.
In any event, Swiss voters look set to decide for a second time whether to impose curbs on immigration or reaffirm close economic ties with the bloc.
The cabinet came out in October against a 'popular initiative' to hold another referendum that aimed to completely overturn the razor-thin result of the 2014 vote, arguing it would not be democratically proper to try to reverse the outcome so soon after voters had spoken.
Instead, it plans its own referendum question, which it hopes will put to rest the main policy conundrum bedevilling Swiss ties with the EU.
Many analysts think the Swiss would opt to uphold the bilateral accords that smooth business ties with the EU. But the wave of migrants that arrived in Europe last year, and a sense that the EU is increasingly divided and ineffective, could make it a close call.
"You have seen what became of (German Chancellor Angela) Merkel's good idea (to welcome refugees from Syria). I would say 'yes' to quotas," said Siegfried, a retiree from Winterthur who did not give his family name.
Others interviewed at random in Zurich disagreed.
"Switzerland has done well with full freedom of movement," said pensioner Fred Jordi. "The prosperity we have now is due to foreigners who came to seek work here, especially the dirty work that no Swiss wants to do any more."
Conrad Hottinger, a retired engineer from Herrliberg, said parliament had found an elegant way out of a policy dilemma triggered by "mean" far-right populist politics.
"The people have said many times that the bilateral accords have priority. This was a political chess move by the populist right," he said.
(Additional reporting by Ruben Sprich in Bern; Editing by Kevin Liffey)