Price Increases Threatened Pending Approval of Collective Agreements Skip to content

Price Increases Threatened Pending Approval of Collective Agreements

Several Icelandic food companies have stated that they will increase the prices of their products if pending collective agreements are approved, RÚV reports. The proposed price increases have been harshly criticized by union leaders, while company CEOs claim they will be necessary if there are wage increases and the prices of raw materials go up. Members of trade unions associated with the Federation of General and Special Workers—including Efling, VR, and LÍV—are currently voting on whether or not to approve the terms of the new collective agreements, which would be in effect from April 1, 2019 until November 1, 2022.

Icelandic food wholesaler ÍSAM is perhaps the most prominent entity to announce pending price increases. ÍSAM owns the Icelandic food companies Frón, Kexsmiðjan, Myllan, and Ora, and also imports a wide selection of popular food and foreign home goods brands, such as Always, BKI, Hershey’s, Finn Crisp, Fairy, Pampers, Pfanner, Rynkeby, and others. ÍSAM announced yesterday that there would be a 3.9% increase on all of their local company’s product prices if the collective agreements go into effect. Prices on imported goods would be raised by 1.9%.

Other Icelandic food companies have followed suit. Gæðabakstur, Ömmubakstur, and Kristjánsbakari—all baked goods companies—have stated that they would raise their prices by around 6.2%, effective May 1. According to a statement issued by Gæðabakstur, the price of wheat has risen by 30% due to crop failure, but local wage increases—particularly for those on evening and night shifts—will also have an impact on product prices. The company also points to fluctuating exchange rates, and increases to supplier and transportation costs.

Several companies that provide janitorial or cleaning services have also said that they would increase their prices if the collective agreements are approved.

Flosi Eiríksson, the Managing Director of the Federation of General and Special Workers (SGS), said the announcements came as a “great disappointment,” noting that “it definitively shows a real division within SA [the Confederation of Icelandic Enterprise] in that some of their companies are racing off with these increases while we are voting on the agreements…This is totally contrary to what the SA leaders said when we signed the agreements.”

Speaking of ÍSAM in particular, Ragnar Þór Ingólfsson, chair of the VR union, told RÚV that the company’s attitude poses a real threat to the collective agreements, which specifically stipulate that members’ purchasing power be safeguarded. “I think this is unprecedented—at least as far as I can remember—for a company to proceed with such threats in the middle of voting on the agreements.”

“This is a peculiar stance and approach for [ÍSAM] to be taking,” Ragnar Þór continued, “particularly in that company selling many well-known brands that appeal to consumers. The same people are voting on the collective agreement.”

ÍSAM CEO Hermann Stefánsson contends, however, that the proposed price increases should not be viewed as a threat. On the contrary, he said, ÍSAM is in favour of the collective agreements. Hermann believes that the proposed prices increases are “moderate,” considering the wage increases that are put forth in the collective agreement. “We’ve seen price increases among our competitors that are much higher, higher than what we’re announcing.”

The main terms of the collective agreements can be read in English (and Polish) on Efling’s website. Union members have until Tuesday, April 23 at 4:00 pm to vote on the collective agreements.

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