New Wage Agreement Aims to Stabilise Iceland's Economy Skip to content

New Wage Agreement Aims to Stabilise Iceland’s Economy

By Ragnar Tómas

Sólveig Anna Jónsdóttir
Photo: Golli. Sólveig Anna Jónsdóttir.

A collective bargaining agreement, effective from 2024 to 2028, aims to lower inflation, reduce interest rates, and ensure stability. The agreement includes significant wage increases, a premium for shift workers, and a government-supported ISK 50 billion ($368 million / €336 million) financial package to aid its implementation.

The “Stability Agreement”

A long-term collective bargaining agreement valid for four years was signed yesterday between a broad coalition of trade unions in the general labour market, the Federation of General and Special Workers (SGS), Efling and Samiðn and the Icelandic Confederation of Labour (ASÍ). The agreement covers tens of thousands in the labour market and is effective from February 1, 2024, to January 31, 2028, RÚV reports.

The main objective of the agreement, referred to by the unions and the Confederation of Iceland Enterprise (SA) as the Stability Agreement (Stöðuleikasamningurinn), is to create conditions for lower inflation, reduced interest rates, and stability.

Minimum wage increases

As noted by RÚV, the agreement aims for wage increases in several stages, raising wages by a minimum of ISK 23,750 ($175 / €160). The increase is retroactive from February 1 of this year by 3.25%. At the start of next year, wages will increase by 3.5% and then again by 3.5% on January 1, 2026, and 2027. The agreement also includes clause regarding a December wage supplement and a holiday bonus, which will increase annually.

Employees in cleaning jobs will receive special wage increases. Due to the special working conditions of cleaning staff, a cleaning supplement of ISK 19,000 ($140 / €128) is paid monthly on the wage scale for a full-time position.

A shift premium will also be paid to shift workers for all work outside of regular working hours until the end of their shift.

Furthermore, changes will be made to the structure of bonus payments for manual labourers in the tourism sector, and it will be possible to agree on different shift premium payments than those stipulated in the collective agreement at the workplace.

Government to support agreement with spending package

As noted by Vísir, the government introduced an ISK 50 billion ($368 million / €336 million) spending package to support the agreement after it was reached. Municipalities will also contribute to the agreement through increased land allocation and free school meals.

In an interview with Vísir yesterday, Heiða Björg Hilmisdóttir, the chairperson of the Icelandic Association of Local Authorities, stated that free school meals were a point of contention for municipalities but that an agreement was reached wherein free school meals would be implemented in collaboration with the government. Despite the agreements including an additional ISK 10 billion ($74 million / €67 million) for municipalities, local authorities do not stand to benefit more than others, Heiða maintained.

Additional measures include increased housing support for parents in rental housing and increased contributions to child benefits, maternity/paternity leave, and housing benefits.

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