I had the same initial reaction but if you think it through not having your visa renewed effectively comes down to being fired, i.e. the company terminating their dealings with you.

Doesn't make it better (at all), but it's essentially just the threat of firing albeit with more weight behind it for the visa workers. Not the company calling the visa office about you or holding on to your passport, etc...

I have seen people threatened to have their work visas not renewed in Sweden.

Well, this risk is the price you have pay to work in a better country. And anyway, most probably they would have some time (in my case, up to 45 days) after the contract termination to find a new job, so it's not that tragic.

It's not so different in the US either. My previous manager has indirectly referenced delaying my green card process if I didn't deliver on time.

Not for Gastarbeiter. You're supposed to work, pay all taxes and GTFO before you can legally claim any benefits, while still being despised by unemployed locals for "stealing" their jobs.

It maybe is... but not if you aren't Swiss.