As can be seen from the diagram on My Favourite Wiki, Switzerland is not a member of the EU but in 2000 it signed the Agreement on Free Movement of Persons with the European Union. (Reports the Independent on Sunday)
It's not clear why they would sign that since Swiss citizens appeared to be able to move freely without it, but there must have been some reason at the time. Perhaps in those balmy pre-9/11, pre-banking-crisis days it seemed like a good idea. Switzerland's majority trade is with the EU so it makes sense not to annoy the customers. However, it also looks like a surreptitious way to try to get the Swiss to agree, de facto, to something they had already voted against.
Just in case of trouble, there was a safety-clause written in giving the Swiss state the power to restrict entry via a permit system but even that power will lapse. However, for the moment it has been invoked, capping the numbers of people who can come in to Switzerland from certain states. As wth all EU-related matters, the power is hedged about with conditions, categories and implementation dates, making it take effect slowly and incrementally.
But the overall pattern is clear: these levels of immigration are not acceptable to the Swiss people and the government has reacted to that. Since the complaint is reported by the Independent as immigration pushing up house prices as a result of business expansion and Switzerland being a very attractive place for businesses to relocate, it can be assumed that the squeeze is being felt by middle-class voters. The BBC however, reports this as if the concern is about the influx of lower-paid workers .
The doctrine of free movement of people is good for the businesses and the individuals who move to secure better conditions for themselves. However, the doctrine takes no account of the way this also imposes a disbenefit across the rest of the society. Demands for infrastructure: transport, housing, policing, health services and education rise. These have to be paid for by existing taxpayers who may then find they also face greater competition. Benefit is privatized, the wider costs nationalized. There can be good reasons for doing that, such as the general benefit of education, but the costs should be recognized properly instead of pretending they don't exist.
The Swiss mode of government includes regular use of referenda. It is therefore arranging two of them to find out exactly what people - their citizens, not other folk and especially not Germans - want their government to do.