Extra Meetings to Prepare for Upcoming Wage Negotiations

Prime Minister of Iceland Katrín Jakobsdóttir

The National Economic Council has held extra meetings in order to prepare for this autumn’s collective agreement negotiations, RÚV reports. Nearly 160 collective agreements expire this fall, and continued inflation, now at 9.9%, is expected to complicate talks. Prime Minister Katrín Jakobsdóttir expressed concern about the economic situation.

“The economic situation here in Iceland is complicated, as elsewhere in Europe,” Katrín stated. “I am concerned about the economic situation, not least because we are emerging from the recession caused by the global pandemic and have entered another situation closely connected to the Russian invasion of Ukraine.”

Wages have increased, but so have housing costs

Housing costs are a key factor in rising inflation, and the Prime Minister says it is important to address inflation by ensuring additional housing availability. The state and municipal authorities signed an agreement earlier this month to build an additional 35,000 apartments over the next ten years. Katrín stated that addressing housing availability was only one of several measures that were required.

While inflation has impacted purchasing power in Iceland in recent months, wage increases over the past year have mitigated its effect. Purchasing power decreased by 0.9% between June 2021 and June 2022 in Iceland according to data from Landsbankinn bank. It has not been lower since December 2020. Purchasing power is expected to continue decreasing over the coming months, as inflation is expected to continue rising and no collective agreements account for wage increases before October.

Collective agreements set to expire

Over 100,000 workers’ collective agreements expire in October or November. The National Economic Council (Þjóðhagsráð), which includes government ministers as well as representatives from unions, municipal governments, the Central Bank, and the Confederation of Icelandic Enterprise (SA), has been holding additional meetings to prepare for the upcoming negotiations. “I think it is very important to continue this conversation,” the Prime Minister stated.

ISK 80 Million Towards Reconstruction Efforts in Afghanistan

The Icelandic government will contribute ISK 80 million [$583,000; €575,000] to the United Nations Multi Partner Special Trust Fund for Afghanistan. The funds are to be used for development projects in the country as well as humanitarian aid. The United Nations estimates that more than half of the country’s population currently requires humanitarian aid.

“Afghanistan is in complete crisis and the need for both humanitarian and development aid is extremely urgent,” Iceland’s Foreign Minister Þórdís Kolbrún Reykfjörð Gylfadóttir stated. “It is therefore extremely important that Iceland does its part to respond to the disasters that have occurred there, both caused by nature and humans.”

Last month’s deadly earthquake worsened already difficult conditions in Afghanistan. Social infrastructure has collapsed and access to basic services is extremely poor.

The Multi Partner Special Trust Fund prioritises projects that focus on ensuring basic services, providing for people’s basic needs, promoting economic recovery, protecting agriculture against natural disasters, and increasing resilience and social cohesion.

Iceland’s Prime Minister Katrín Jakosdóttir stated last year that the country must shoulder responsibility for the situation in Afghanistan, both as a member of NATO and as representatives in the UN human rights council.