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.