In Focus: Wage War

 In In Focus, Magazine, Magazine Intro, Politics, Society
The banking collapse of 2008 took its toll on the Icelandic nation, both financially and emotionally. Icelanders came together in protest, yet perhaps surprisingly, without the leadership of their unions. Now, ten years later, Icelandic unions are fighting for the rights of their members. With many wage agreements expiring at the end of this year, labour organisations are preparing for negotiations.

What they want

VR, the Store and Office Workers’ Union, is demanding the minimum monthly wage for full-time workers be increased by ISK 42,000 ($340/€300) by January 1. Not only is the union demanding the increase of salaries, but also shortening the work week without cutting wages.

VR is however only one of many unions demanding better wages for workers in Iceland. The Federation of General and Special Workers of Iceland (SGS) is demanding a minimum monthly wage of ISK 425,000 ($3,460/€3,070) as well as making the lowest wages tax free. Many have responded to these demands by asking who would be paying for the increased wages.

The Federation of Icelandic Industries (SI) claims that there is little room for wage hikes, especially in the tourism industry. Prime Minister Katrín Jakobsdóttir says that negotiations such as these must be satisfactory to both parties, the unions and the employers. She has expressed her desire for increased collaboration between unions and employers, not only when wage negotiations are taking place.

Housing issues

For the last several years, the cost of housing in Iceland has risen rapidly, out of step with relatively modest wage hikes for most workers. Many young people are living at home longer in an effort to save money to try to purchase a home of their own. Unions agree that affordable housing is one of their members’ rights and that higher wages would enable more workers to access secure housing.

According to Íslandsbanki bank, the Icelandic housing market’s difficulties stem from a focus on building larger homes, and a historic shortage of smaller, affordable housing. The wage hikes which unions are demanding would be only a small step in trying to solve the housing crisis. There should also be more focus on building housing for all; from small, cheap apartments to luxury homes. There is, however, no doubt that there is a shortage of housing in Iceland, especially in Reykjavík, where approximately 8,000 apartments are needed to meet the housing needs of the population. Newly elected president of the Icelandic Confederation of Iceland (ASÍ) agrees with Íslandsbanki that the solution lies in not only increasing wages. There is more than one step that needs to be taken to solve the housing crisis, but it must be solved.

New leadership

Just weeks into the wage negotiations, Drífa Snædal became the first ever woman president of the Icelandic Confederation of Labour (ASÍ) since its foundation in 1916. In her victory speech, she dedicated her win to all the women that are part of the work force, specifically mentioning midwives, a profession who recently renegotiated their contract, but not without months of arduous negotiations.

Drífa takes over the position from Gylfi Arnbjörnsson, who became president of the confederation only three weeks after the 2008 banking collapse. Gylfi’s presidency was highly criticised by unions this year, for example when the president and the board of Akranes Trade Union (VLFA) declared a vote of no confidence on Gylfi’s tenure in ASÍ. They claimed Gylfi and his board were placing the interests of the government over those of union members. Vilhjámur Birgisson, president of VLFA also claimed Gylfi focused on a low-wage policy when in 2015 he declared a minimum monthly wage of ISK 300,000 was too high. These, and many other criticisms are the reason for Gylfi’s resignation.

Drífa starts her presidency with a bang, going straight into wage negotiations. In a recent article, she wrote that ASÍ will focus on three main issues in the upcoming wage negotiations: housing, taxes, and undocumented workers on the labour market. It will be interesting to see how Drífa tackles her presidency.

What will come next?

If unions and employers could agree to increase monthly minimum wages of its members, many lives would be improved. It is a known fact that many Icelanders struggle to make ends meet, especially those with minimum wage. Increasing low earners’ wages would also boost equality between social classes and give people more opportunities.

Higher wages would also help secure housing for many workers, though building more affordable housing is also a necessary step. As newly elected president of ASÍ, hopefully Drífa will tackle negotiations with union members’ needs in mind, especially those who are struggling the most.


This article appears in the latest issue of Iceland Review Magazine. Subscribe here to get the magazine delivered to your door.

Iceland Review is the longest running English-language magazine, presenting Iceland’s community, culture, and nature since 1963.

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