Wages Have Risen too Sharply, Finance Minister Observes Skip to content
Prime Minister Bjarni Benediktsson
Photo: Golli. Bjarni Benediktsson.

Wages Have Risen too Sharply, Finance Minister Observes

Bjarni Benediktsson, the Minister of Finance and Economic Affairs, believes there are indications that many Icelandic companies are struggling to deal with negotiated wage increases. The interest rates should have been kept higher for longer, he told Morgunblaðið on Wednesday.

A sense of uncertainty

In an interview with Morgunblaðið on Wednesday, Bjarni Benediktsson, the Minister of Finance and Economic Affairs, expressed his concern for wage increases in the labour market:

“I think there is reason to be concerned when companies that have been doing well start to show losses and when wage rates have risen significantly. There have been indications in some financial statements that companies are struggling to cope with the negotiated wage increases.”

“This is unmistakably the case,” Bjarni continued, “and now we need to find some balance again. We need to read the situation and act as necessary. We have emphasised regaining balance in fiscal affairs, supporting the reduction of inflation and protecting vulnerable groups from the effects of inflation while it lasts,” Bjarni observed, noting that there was a sense of uncertainty within the economy.

“It has to be said that there is a certain amount of uncertainty. We see it, for example, in the Stock Exchange, when we witnessed the third biggest stock market drop in a single day since 2009. These are big events. They reflect insecurity and uncertainty, a certain sense of fear and a kind of reset. Things are being reconfigured,” Bjarni remarked.

BSRB strikes ongoing

As noted earlier this week, 1,000 workers belonging to the BSRB union – Iceland’s largest federation of public sector unions, comprising 19 labour unions with some 23,000 members – went on strike as part of BSRB’s ongoing negotiations with the Icelandic Association of Local Authorities (SNS).

The strike actions affect, among others, staff in sports and primary schools in Kópavogur and Mosfellsbær, after-school programs in Mosfellsbær, preschools in Garðabær, and Seltjarnarnes primary school:

Sonja Ýr Þorbergsdóttir, Chair of BSRB, stated that the Icelandic Association of Local Authorities must pay the same wages to BSRB union members as others in similar jobs. BSRB is demanding retroactive wage increases from January 1, when the last collective agreement was still in effect. The negotiating committee has offered wage increases from April 1st.

On Tuesday, BSRB released a statement emphasising that strike actions were planned for next week, extending to sports programmes and primary schools in Hafnarfjörður, Hveragerði, Árborg, Ölfus, and the Westman islands: “Further strike actions are being prepared in light of the fact that there is no progress in the negotiations.”

“The municipal staff have had enough of this injustice – and they want to take further action. Justice is, of course, workers receiving the same salary for the same jobs. Raising the minimum wage is long overdue so that people in essential jobs can make ends meet,” Sonja Ýr observed.

Sign up for our weekly newsletter

Get news from Iceland, photos, and in-depth stories delivered to your inbox every week!

* indicates required

Subscribe to Iceland Review

In-depth stories and high-quality photography showcasing life in Iceland!

Share article