Cabinet to Receive 6% Raise Amid Inflation and Interest Hikes

Prime Minister of Iceland Katrín Jakobsdóttir

Iceland’s government ministers and top officials are set to receive a 6-6.3% raise from July 1, RÚV reports. Union leaders and opposition MPs have called for the salaries to be frozen to show solidarity with the public, who is facing a cost-of-living crisis. Prime Minister Katrín Jakobsdóttir says there are no plans to reduce or stop the pay hikes to ministers, which are laid out in legislation.

Food prices in Iceland have risen sharply over the past few months, as the Central Bank has raised interest rates on mortgages and loans, putting many households in a tight spot. Union leaders have called on the government to respond with measures to help low-income families whose finances are strapped.

In light of the approaching salary hikes, the President of Iceland’s Confederation of Labour (ASÍ) has called on the government’s top officials to show responsibility by not accepting higher raises than workers received in the newly-negotiated collective agreements. The highest wage hikes among workers this year amount to ISK 66,000 per month [$475, €442].

“I very much understand the discontent within society because of this,” stated opposition MP Þorhildur Sunna Ævarsdóttir, member of the Pirate Party. “Especially because the message from those in power in this country have time and time again been that the public needs to accept poorer conditions and bear the costs due to inflation.”

Cancelling raises would require an amendment bill

Speaker of Alþingi Birgir Ármannsson has stated that legislation would need to be amended in order to stop or reduce the salary hikes. With Parliament set to recess for summer vacation on June 9, Birgir says it would be possible to amend the law, but only if there were broad agreement on the issue. No amendment bill has been introduced at this time.

Prime Minister Katrín Jakobsdóttir has stated there are no plans to cancel or reduce the raises and called the current legislation on raises for government officials an improvement from the previous arrangement. “I think that the legislation we have, which is based on ideas developed in a working group under my leadership at that time, I think it’s a good system,” Katrín told RÚV. “This system is transparent and it guarantees that we do not lead salary development, but follow the salary development of government employees. And it’s completely predictable, too, which it was not with the old system with the old wage council.”

Those who are set to receive a raise on July 1 according to the current legislation are Iceland’s President, government ministers, ministry secretaries, judges, public prosecutors, police commissioners, the state mediator, the governor of the Central Bank of Iceland, and members of parliament.

According to the legislation, the current salary of Iceland’s President is ISK 2,985,000 [$21,450, €20,000] per month. Members of Parliament receive a monthly salary of ISK 1,101,194 [$7,910, €7,375]. As Prime Minister, Katrín Jakobsdóttir currently receives a monthly salary of ISK 2,021,825 [$14,530, €13,540]. Recent figures from Statistics Iceland stated that the median income in the lowest income quintile was ISK 343,000 per month [$2,460, €2,300].

Preschool Staff on Strike in 11 Municipalities

school children

Staff at 60 preschools in 11 municipalities went on strike today as negotiations between BSRB, the Federation of Public Worker Unions in Iceland and the Icelandic Association of Local Authorities (SÍS) remain at a standstill. Other municipal staff across the country, including swimming pool and harbour staff, are already striking. Negotiators had an informal meeting two days ago but called it a step backwards.

“It was an informal meeting, so it wasn’t a traditional negotiation meeting,” Sonja Ýr Þorbergsdóttir, chairperson of BSRB, told RÚV. “But the result of the meeting was that we went backwards rather than forwards, so this dispute is still just in a deadlock.”

Today’s strikes affect preschools in Kópavogur, Garðabær, Mosfellsbær, Hveragerði, Árborg, the Westman Islands, Skagafjörður, Borgarbyggð, Stykkishólmur, Grundarfjörður, and Snæfellsbær. On Wednesday, harbour staff in Ölfus and the Westman Islands will strike.

BRSB has demanded that the collective agreement be retroactive from the beginning of this year, but the SÍS negotiating committee has resisted agreeing to such an arrangement.

Kerlingarfjöll Construction Project One of Largest Ever in Highlands


The tourist facilities at Kerlingarfjöll in Iceland’s Highland are receiving an overhaul these days to the tune of ISK 2-3 billion [$14-21 million, €13-20 million], RÚV reports. The development includes a luxury hotel and renovations to the campsite. It’s possibly the largest single investment in the Highland region that is not a power station.

Kerlingarfjöll is a mountain range in Iceland’s Highland and one of the most popular tourist destinations within the region. It was operated as a summer ski resort in the 20th century which was dismantled in 2000 due to decreased snowfall. The site is known for the spectacular colours of its rhyolite mountains and hot springs. Kerlingarfjöll was declared a protected area in 2020 by the Icelandic government.

Hotel smaller than planned

The hotel has been downscaled from its original plan, which called for 120 double rooms. In 2016, the Icelandic Environment Association appealed the construction of the hotel to the Environmental and Natural Resources Appeals Committee as the first phase of construction had begun without an environmental assessment having been completed.

The luxury hotel will have space for 50 guests and hostel-like facilities for 30 campers. Along with renovations to the neighbouring campsite, a new restaurant will be opened at the site. The hotel buildings facades will be in dark, earthy colours in order to blend in with the landscape and the construction aims to limit vehicular traffic around the site to improve guests’ experience.

Highland an important breeding ground for birds

The Highland of Iceland is an uninhabited area that covers most of the centre of the country. It is only accessible to humans during the summer, as deep snow and wide rivers make its dirt roads impassable most of the year. The Highland is an important nesting area for many species of birds, with the Þjórsárdalur valley being the single most important breeding ground for pink-footed geese globally.