Moved out last year after 10y in the Zurich area.

There's always been a pull-and-push between getting skilled workers and protecting the internal labor market. Right-wing political parties never made a secret of the fact that they hated immigrants, because they stole jobs and redirected/exported money that would have otherwise been received by Swiss. IIRC this was historically mostly felt in Ticino (the southern region), where Swiss companies sourced very cheap Italian labor by undercutting Swiss salaries by a lot, shrinking the job market for Swiss people (a Swiss can barely get by in Switzerland with an equivalent Italian salary).

Switzerland is geographically in the middle of Europe, but it's not part of the EU. This allowed the country to thrive outside some of the more restrictive EU regulations and keep its own currency, but because it has a smaller job market that can barely replenish the high-skilled workers pool and is often in defect (not just finance bros, but also doctors, for instance), it always had to import workforce from neighboring countries to some extent. Over the last 40 years Switzerland basically opened up to more-or-less follow many EU rules and put in place agreements to have a play in the same market and be allowed to easily keep importing people it needs.

This initiative as I understand it would be equivalent to a Brexit (because sooner or later the cap would be hit, considering more housing keeps being built), which would undo 40 years of openings and IMO greatly weaken the integration with EU, and as a result the country as a whole.