New Action Plan for Labor Market Presented Skip to content

New Action Plan for Labor Market Presented

The government of Iceland presented an action plan in 11 parts at a press conference this morning, aimed at expediting the design of new wage contracts and calming the current unrest in the labor market. The measures concern taxation, welfare and housing.

The action plan, presented by Prime Minister Sigmundur Davíð Gunnlaugsson, Minister of Finance Bjarni Benediktsson and Minister of Social Affairs and Housing Eygló Harðardóttir, is predicated on maintaining economic stability in the face of new wage contracts, reports.

Changes to the income tax are supposed to lead to an increase in disposable income for all wage earners, in particular for those with a medium income.

The disposable income for 65 percent of wage earners working full time is set to increase by at least ISK 50,000 (USD 371, EUR 338) per year, while those with a medium income will see an increase of almost ISK 100,000 per year.

The estimated loss in revenue for the state as a consequence is ISK 16 billion (USD 12 million, EUR 11 million) over the current four-year term, which began in 2013.

Bjarni said the income tax bill will be discussed in parliament in the autumn.

The action plan also includes the construction of 2,300 social apartments from 2016 to 2019 with the aim of guaranteeing inexpensive long-term housing for low-income families.

Bjarni stated the housing bill is an important input into the ongoing wage disputes. The goal is to have the bill passed as soon as possible.

Measures will also be taken to make it easier for young people to buy their first apartment, for example allowing them to use savings from their personal pension funds for that purpose.

The collective wage agreements between trade unions VR, Efling, Hlíf, VSFK and the Commercial Federation of Iceland (LÍV) and the confederation of Icelandic employers, Business Iceland (SA), will likely be signed today.

Meanwhile, the Association of Academics (BHM) and the state are continuing their negotiations. A meeting began at the State Negotiator’s at 11 am this morning.

Chair of BHM Páll Halldórsson told that he doesn’t expect any significant progress to be made and that the association’s members are becoming more and more angry.

Eight x-ray technicians, who have been on strike along with other BHM members for more than 50 days, have resigned, Vísir reports.

Nurses, who recently joined the strike, say the situation is unchanged. Their delegation will attend a meeting at the State Negotiator’s this afternoon, reports.

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