The Swiss senate accepted a motion already agreed by the lower house earlier this year which will set aside a 300 million franc compensation pot for Switzerland's thousands of Verdingkinder – or ‘contract children' – Swiss media including Le Matin reported.
Sums of up to 25,000 francs for every living victim could be awarded as soon as April 2017.
Speaking after the vote – approved by all but one out of 37 senators – Swiss Justice minister Simonetta Sommaruga said the most important thing was to “recognize the suffering and the injustice that was done to those children. That's what we have done today with this law”.
In a period of history that Switzerland would rather forget, over several decades up until 1981 a state-backed policy saw tens of thousands of Swiss children forcibly removed from their families and sent to work as cheap labour, often on farms.
Many of these contract children came from difficult families, were orphans or had sick parents who couldn't care for them. While some were treated well on their placements, many suffered sexual or physical abuse or were forced to undergo sterilization.
On Thursday Sommaruga said it was important to recognize that it wasn't just individuals implementing the policy who were responsible but also the government. Consequently, the new law will require parliament to initiate a research study about the policy to “try and understand what happened” and learn from it for the future.
The historic vote comes after years of campaigning by victims of the policy, which the government formally apologized for in 2013.
A year later a popular initiative entitled ‘Repair' headed up by Swiss businessman Guido Fluri demanded a compensation fund for the victims, suggesting a figure of 500 million francs.
The initiative had already gathered the required 100,000 signatures to take it to a referendum when, in May this year, the lower house of parliament gave the green light to a counter-project offering the lower sum of 300 million – the sum now accepted by both houses.
Following Thursday's senate vote backers of Fluri's initiative said they were satisfied with the agreement and would withdraw their campaign for a higher amount.
“These last three years have been full of emotion,” Fluri told the press including 20 Minutes, hailing it a “historic” day.
“For many years victims of abusive work placements have tried in vain to assert their rights. No one wanted to listen to them, not society, not politics. I am now persuaded that today, this dark chapter of history is finally behind us”.
The only senator to vote against the bill was Wener Hösli of the Swiss People's Party (SVP), who claimed that some children undoubtedly had a better life on placement than they would have had otherwise and that contract children were not the only victims of abuse at that time, 20 Minutes reported him as saying.
Responding, Green politician Luc Recordon, who campaigned for the compensation agreement, told the paper those arguments held no sway.
“The question is above all about how they were placed, without checking what happened to them nor the conditions in which they lived. That's the most shocking thing,” he said.
“And that they were often denied any contact with their families even though that would have been possible in many cases.”
A law recognizing the injustice done to the children involved was enacted in 2014, and some money has already been paid towards the rehabilitation of the victims.