Stability Pact to Be Signed in Iceland Today Skip to content

Stability Pact to Be Signed in Iceland Today

Representatives of the government and the employment market discussed a joint resolution on employment and economic matters, dubbed the national reconciliation, in the cabinet until late last night. A stability pact is expected to be signed today.

Stjórnarrádid, the governmental offices. Photo by Páll Stefánsson.

According to Fréttabladid’s sources, the agreement is far-reaching, including state finances, banks and currency restrictions, assuming that no decisions be made in state finances without participation of all parties.

The chairs of labor and employer unions met government representatives at noon yesterday and then carried out wages discussions among themselves at Karphúsid, the facilities of the state negotiator.

The plan was to meet the cabinet ministers again in the afternoon, but the meeting was delayed, both because of discussions at the Althingi parliament and because of items in the resolution that had to be worked on in more detail first.

A committee comprised of representatives of the Federation of State and Municipal Employees (BSRB), the Confederation of Labor (ASÍ), the Association of Academics (BHM), teachers, bankers, pension funds and the Confederation of Employers (SA) along with representatives of the state and local authorities met at 8 pm and submitted a draft of a stability pact to the ministers at 9 pm.

According to Morgunbladid, the draft included an agreement between ASÍ and SA on working on the salary item of the wage contracts from July 1 to November 1 to bring the interest level down under ten percent and strengthen the exchange rate of the króna.

The newspaper’s sources state that the representatives of the employment market consider it of the utmost importance to secure funding for Icelandic companies in the coming weeks and months so that they can continue operations and hire staff.

ASÍ and SA have both emphasized the necessity of lowering the policy rate more rapidly than the Central Bank has done until now.

The policy rate is currently 12 percent and ASÍ and SA consider it too high for “real stability to be created,” Halldór Grönvold, assisting managing director of ASÍ, told Morgunbladid shortly before midnight last night.

The chairpersons of ASÍ member unions will meet at Grand Hotel in Reykjavík today at 3 pm to review the situation. After the meeting in the governmental offices last night, the hope is that a national reconciliation can be reached today.

Click here to read more about the national reconciliation talks and the policy rate.

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