Arion Bank to Ensure 80% of Staff Salaries During Parental Leave

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Arion Bank has announced that it will guarantee employees up to 80% of their wages during parental leave. The bank promises to pay employees with salaries upwards of 600,000 ISK per month (€4,015 / $4,643) – which is the salary cap, before taxes, of the Parental-Leave Benefit Fund – an additional benefit so that they can take home close to 80% of their regular wages.

Encouraged to make full use of their parental leave

In a statement published on the bank’s website on Wednesday, Arion Bank declared that it would henceforth guarantee employees up to 80% of their wages during parental leave. The benefit will be granted in addition to payments from the Parental-Leave Benefit Fund and other compensation negotiated through collective-wage agreements. The statement further encouraged employees to make full use of their right to parental leave.

The salaries of bank employees vary. As reported by Kjarninn, the monthly wages of individuals employed as consultants and brokers, including those working for Arion Bank, exceeded ISK 1.7 million (€11,377 / $13,158) last year. According to the bank’s new parental-compensation package, the average Arion broker would earn approximately ISK 1,360,000 (€9,103 / $10,528) during up to six months of parental leave, or ISK 760,000 (€5,087 / $5,882) more than the expected payment from the Parental-Leave Benefit Fund.

Employees with salaries of ISK 1 million (€6,693 / $7,740) a month receive an additional ISK 200,000 (€1,339 / $1,547) and employees earning ISK 800,000 (€5,355 / $6,192) receive an additional ISK 40,000 (€268 / $310).

Hope to ensure equality of wages in the future

The parental-leave package forms a part of Arion Bank’s endeavour toward gender equality. “The average wages of men, whether in Arion Bank or in society at large, exceed those of women,” the statement from the bank reads – “and fathers are less likely to use their parental leaves than mothers.”

“Guaranteeing employees 80% of their wages during parental leave, regardless of gender or position,” the statement continues, “makes it easier for them to take time off. In this way, this initiative aims to encourage more fathers to make use of their rights. In the future, this step may prove beneficial in ensuring equality of wages between men and women, on the one hand, and increasing the number of women in managerial positions and other positions, on the other hand. Today, women form 44% of the bank’s management.”

The statement ends with a quote from Director Benedikt Gíslason: “We hope to make the bank a more desirable place of employment in the eyes of young and talented people.”

Coalition Talks Inching Forward

Talks between the leaders of the three political parties, who have led the coalition government since 2017, persisted at the Minister’s Residence yesterday. Katrín Jakobsdóttir, Bjarni Benediktsson, and Sigurður Ingi Jóhannsson continue to hold their cards close to their vest.

A majority extended

After the results of the parliamentary elections were called (notwithstanding a few lawsuits demanding a recount), it was clear that the previous three-party coalition government would keep their majority (with 37 MPs out of the total 63). Immediately afterwards, the leaders of the three parties iterated their intentions of beginning negotiations to keep the coalition together.

As reported by Mbl.is, other members of the coalition parties have stated that the negotiations are currently and entirely in the hands of the leadership. They expect, however, to be called to the table when a framework for the government agreement has been sketched, possibly next week.

The “difficult issues” causing a delay

The members stressed that the parties would be allowed sufficient time to resolve “difficult issues” lingering from the previous term before composing a new government agreement. These matters of contention – including the highland national park and questions regarding energy consumption – have, however, proved more time-consuming than expected.

As noted by Prime Minister Katrín Jakobsdóttir on Tuesday, the leadership remains optimistic in its ability to resolve these issues but is not willing to offer a clear timeline regarding the agreement. “We have learned from experience the value of a carefully-composed government agreement.”

Katrín was also unwilling to say whether the relative success of the Progressive Party during the last election would translate into greater influence. “The reason why this coalition has been so successful is that we’ve approached things as equals; that’s how we’ve been able to resolve contentious matters.”

The negotiations between leaders of the three coalition parties are expected to adjourn over the weekend.

Eurostat: House Prices Risen Most Sharply in Iceland Since 2010

architecture downtown Reykjavík houses square

According to a new report by Eurostat, house prices have risen most sharply in Iceland over the past decade when compared to other European countries. Between 2010 and the first quarter of 2021, house prices in Iceland increased by ca. 140% and the cost of rent rose by almost 70%.

Estonia the only country that compares

Yesterday, Eurostat, the statistical office of the European Union, released a new report on the prices of homes and the cost of rent within the EU (and among members of EFTA). The report indicates that house prices have risen most sharply in Iceland compared to other European countries, or approximately 140% between 2010 and the first quarter of 2021. The cost of rent in Iceland has risen by almost 70% over the same period. Compare this to the building-cost index, which has increased by approximately 57% since 2010. The consume-price index has remained relatively stable.

The only other European country that has seen a similar increase in the prices of homes is Estonia, where cost has risen by approximately 130%. In Sweden and Norway, house prices have increased by 80% compared to ca. 50% in Denmark. The average rise in house prices over the past decade in Europe is approximately 35%. Only four countries have seen homes decrease in value over the past decade: Greece, Italy, Spain, and Cyprus.

The cost of rent has generally seen a more minor increase in Europe over the past decade, when compared to house prices, or approximately 15%. In a few countries, however, rent has risen faster than the cost of homes, e.g. in Finland, Ireland, and Lithuania. In Norway, Sweden, and Denmark, the increase in the cost of rent is much lower than in Iceland, or approximately 20%.

Interest rates raised and mortgage regulations tightened

Iceland Review reported on Wednesday that the Central Bank had raised key interest rates by 0.25%, bringing the rate to 1.5%. This change marked the Bank’s third interest rate hike since May, indicating a shift in direction as the economic forecast has improved.

Throughout last year, the bank’s Monetary Policy Committee (MPC) consistently lowered interest rates in response to the pandemic recession but now says it expects the domestic economic recovery to continue. The Central Bank’s key interest rate reached a historic low of 0.75% in November last year. In comparison, rates in January 2020 stood at 3% and in January 2019 at 4.5%.

The Central Bank also tightened mortgage regulations at the end of September, stating that rising real estate prices had “gone hand-in-hand with increased household debt.” The move, which entails instituting a maximum debt-to-service ratio of 35% for borrowers (40% for first-time buyers) is intended to support stability in the housing market.

May put some families in a “tight spot”

As reported this summer, this increase in key interest rates will likely have the most significant impact on those who signed non-indexed mortgages with variable interest rates. A report from Landsbankinn this summer demonstrated a 1% increase in variable interest rates for a non-indexed mortgage of ISK 30 million could result in an ISK 25,000 rise in monthly payments.

Read more about Iceland’s housing market below: