The Confederation of Enterprise Will Not Pull Out of Collective Agreement

Halldór Benjamín

The executive board of the Confederation of Enterprise (SA) made a unanimous decision to uphold the collective agreement signed with Icelandic Unions in April 2019, RÚV reports. The board has cancelled a vote planned for today on whether to pull out of the contract following the government’s presentation of measures to stabilise the labour market.

The collective agreement, signed in April 2019 and approved later that same month by union members, covers over 100,000 workers in 30 different unions in Iceland. Valid until November 1, 2022, the agreement raises minimum wage by ISK 90,000 ($650/€550) over the contract period. Due to the current economic crisis, caused by the global pandemic, the Confederation of Enterprise considered the premises for the wage agreement broken. Still, unions were not ready to back down and accept that wages wouldn’t be raised by the end of the year. Once the government stepped in and presented new measures intended to aid companies through the crisis, the executive board of the Confederation of Enterprise decided to uphold the contract.

A notice from the Confederation of Enterprise’s executive board stated that the decision was made after an assessment of the government’s actions. They consider cohesion in the labour market to be important and want to support it.

“[cohesion in the labour market] won’t be bought at any price. The union leadership had, unfortunately, not been ready to negotiate actions to respond to the sudden change in the economy,” the statement continues. The confederation of Enterprise laments that their ideas to postpone wage raises, extend the wage agreements, temporarily decrease the employers’ contribution to pension funds, or postpone wage agreement revision were all rejected without discussion by the Unions. That’s why the federation was forced to cooperate with the government to shape a collective response to the changed situation in the economy since the current wage agreement was signed.

“This statement is a testament to Confederation of Enterprise and the government’s communal responsibility and their will to lead this community through this depression,” the notice states.


Government Presents Measures to Stabilise Labour Market

In an effort to resolve tension on the labour market, the Icelandic government will implement eight measures intended to support businesses and minimise job losses. Prime Minister Katrín Jakobsdóttir announced the measures in a short press conference shortly before noon today. The Icelandic Confederation of Enterprise (SA) has stated that the terms of its current collective agreement with 30 unions are no longer feasible due to the economic impact of the COVID-19 pandemic.

“I hope that these measures will simultaneously serve the goals of increasing business, protecting jobs, creating jobs, and ensure that we can grow out of this recession, but will also support parties on the labour market in reaching an amicable resolution on the labour market, which is hugely important in these times we are living through,” Katrín stated at the press conference.

The eight measures are expected to cost the government treasury up to ISK 25 billion ($180 million/€154 million). They are:

  1. Extending the ongoing project “Allir vinna,” which provides full reimbursement of VAT, until the end of 2021. This will cost around ISK 8 billion.
  2. Temporarily lowering social security contributions in order to minimise the impact of wage hikes. This will cost around ISK 4 billion.
  3. Financial support for businesses that have experienced a significant drop in revenue, on top of the measures that have already been legislated, such as partial unemployment benefits and loans with state guarantees. Consideration will be given to providing direct subsidies to companies that have suffered a collapse in income due to the COVID-19 pandemic. Such grants could amount to ISK 6 billion.
  4. Implementing tax incentives for investment in green initiatives, as well as encouraging public investment through the purchase of shares.
  5. Increasing emphasis on and investment in innovation and food production.
  6. Implementing improvements in urban planning and construction.
  7. Reforming the pension system and labour market via policy changes to be addressed in the fall term and presented in spring 2021.
  8. Introducing a series of bills in the fall term in support of the “standard of living contract,” including bills on the Wage Act and Rent Act, amendments to bankruptcy proceedings, and changes to interest and indexation.

SA members will vote today and tomorrow on whether to pull out of the three-year collective agreement they signed with 30 unions in April 2019. The agreement affects some 100,000 workers in Iceland, nearly half of the labour force. It remains to be seen whether the newly-announced government measures will influence SA members’ voting.

Icelanders Should Welcome Accents, Says Iceland’s President

President of Iceland Guðni Th. Jóhannesson.

Born and bred Icelanders need to be more accepting of Icelandic spoken with an accent, Iceland’s President Guðni Th. Jóhannesson stated in a Facebook post. The President published various thoughts on the state of Icelandic after attending a conference of the Icelandic Language Council, which has just released their annual report on the state of the Icelandic language. Icelandic is important to everyone who chooses to live in Iceland, stated Guðni, including foreigners who settle in the country.

“The Icelandic language is one of the mainstays of the Icelandic nation. The language is important to us. But who are ‘we’ in that context? In my opinion, we are the people who want to live in this country, also those who move here from abroad and intend to live here in harmony with others,” Guðni wrote. “Those people need help learning the language, and those of us who are born and raised here need to show understanding of the fact that some speak with an accent and others don’t conjugate correctly.”

Guðni welcomed the Icelandic Language Council’s annual report, which emphasises the importance of fostering a positive attitude toward Icelandic in all its forms. It also stresses the importance of accessible Icelandic language education. “Quality Icelandic courses are also an equality issue,” the report reads, “to prevent the formation of a gap between generations and groups in society, among other things.”

The Icelandic Language Council is comprised of 16 members, nominated and appointed from various institutions and organisations in journalism, education, and other relevant fields. For more information on language policy in Iceland, readers can refer to the Act on the Status of the Icelandic Language and Icelandic Sign Language in English.

Collective Agreement Covering 100,000 Workers Up in the Air

The three-year collective agreement signed in April 2019 by Icelandic unions and the Confederation of Enterprise (SA) could become null and void tomorrow, RÚV reports. SA representatives assert that the COVID-19 pandemic has made the agreement’s terms unrealistic, and will vote at noon today on whether to pull out of the contract. The government is expected to announce measures to prevent the agreement’s dissolution.

The collective agreement, signed in April 2019 and approved later that same month by union members, covers over 100,000 workers in 30 different unions in Iceland. Valid until November 1, 2022, the agreement raises minimum wage by ISK 90,000 ($650/€550) over the contract period. It raises the lowest wages most, proportionally, via flat-rate hikes, and opens the possibility for a shorter workweek. Perhaps the most notable aspect of the agreement is a complementary government initiative called the “standard of living contract,” revealed after the collective agreement was signed. An ISK 80 billion ($577m/€494m) investment, the government initiative aims to further improve terms of employment, particularly for low earners and young families.

Government Met with SA Yesterday

The government met with SA representatives twice yesterday to discuss the collective agreement in light of the global economic situation. “We all have a common concern that the recession will affect the number of jobs in the country,” stated Finance Minister Bjarni Benediktsson. “The situation we are facing is a loss of GDP. We all need to work together to restore GDP and restart the making of capital goods.”

Halldór Benjamín Þorbergsson, CEO of SA, stated that its members were divided on how best to respond to the economic impact of the pandemic, and thus it was decided to vote on withdrawing from the collective agreement. SA’s vote begins at noon today and ends at noon tomorrow. The results should be available by 4.00pm tomorrow.