New Wage Contracts Signed in Iceland Skip to content

New Wage Contracts Signed in Iceland

Twelve labor unions, the negotiation committee of the Confederation of Labor (ASÍ) and the Confederation of Employers (SA) signed new wage contracts shortly before 7 pm yesterday evening.

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Karphúsid, the facilities of the state negotiator, where the contracts were signed. Photo by Eygló Svala Arnarsdóttir.

On June 1, salaries will increase directly by 4.25 percent and additionally a lump sum of ISK 50,000 (USD 441, EUR 304) will be paid out once the contracts have been approved by voting, Morgunbladid reports.

Negotiation partners are overall satisfied with the contracts but emphasize that it is the responsibility of the government to make sure that the conditions for the wage contracts don’t fail.

Vilmundur Jósefsson, chairman of SA, said salary increases ended up being higher than what they set out for. “The fact is that there is significant pressure in society on receiving higher salaries.”

Some have argued that the wage contracts will further inflation but President of ASÍ Gylfi Arnbjörnsson dismisses such arguments, reasoning that inflation is impacted by the exchange rate.

Ólafur Darri Andrason, the main economist of ASÍ, said the new wage contracts involve an increase in purchasing power by three to four percent.

“The average pay raise is 12.6 percent. If we subtract the estimated inflation [2.5-3.0 percent], we’re talking 7.5-8.0 percent price increases in the three-year contract period, we’re left with a purchasing power increase of three to four percent,” he explained.

He added that the purchasing power of those with the lowest salaries will increase more. “There are clear indications that we are about to fight back and will win back part of the purchasing power that we have lost since the collapse.”

The signing of the wage contracts was celebrated with a feast of freshly-baked waffles at the facilities of the state negotiator, the so-called Karphús, which is a long-standing tradition.

Click here to read more about the wage contracts and here to read about calls for a strike, which has now been averted.

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