New Collective Agreements Could Be Signed Today

Samningar Verkföll Sátti

Tens of thousands of workers in Iceland may have new collective agreements this afternoon, RÚV reports. Unions within the Icelandic Confederation of Labour (ASÍ) and the Confederation of Iceland Enterprise (SA) are set to sign an agreement at 5:00 PM this afternoon. There are, however, still a few wrinkles to be ironed out regarding the participation of municipalities.

Union leaders expressed optimism yesterday that a deal would be made today. The Chairman of the Federation of General and Special Workers in Iceland (SGS), however, stated this morning that the union would not sign the agreement unless all municipalities in Iceland agreed to subsidise school meals. “Simply because this particular measure is a huge measure in the path we’re taking. It is an ISK 5 billion [$36.6 million, €33.6 million] measure, and the state is contributing ISK 4 billion to subsidise school meals, and the local authorities are supposed to contribute ISK 1 billion,” stated Vilhjálmur Birgisson, chairman of SGS.

SGS represents some 44,000 workers in Iceland. Efling Union, which is also a part of the agreement set to be signed today, represents around 27,000 workers. VR, Iceland’s largest union by membership, is not a party to the collective agreement set to be signed this afternoon but continues negotiations with SA today.

Survey Finds Iceland Priciest for Shoppers

Nettó Hagkaup Bónus Iceland Fjarðarkaup

According to a recent price survey by the Confederation of Icelandic Labour (ASÍ), Iceland is the most expensive supermarket chain in the country. Fjarðarkaup increased prices the least between years, although it is still the cheapest to shop in Bónus.

19% year-on-year increase

According to a recent survey conducted by the Confederation of Icelandic Labour (ASÍ), Iceland ranks as the most expensive supermarket chain in the country. The study, which included eight different supermarkets, was a follow-up to a similar survey carried out in October of the previous year. It showed that Iceland had the highest prices overall and also saw the most significant year-over-year price increase, at over 19%.

Among the surveyed supermarkets, Bónus had the lowest price levels, consistently offering the least expensive products. Fjarðarkaup, meanwhile, registered the smallest annual price increase, averaging about 6.5%.

Heimkaup, which held the distinction of being the most expensive supermarket last year, limited its annual price increase to 8%, moving it to fourth place in the current ranking. Hagkaup and Kjörbúðin are now the second and third most expensive supermarkets, respectively. Following Bónus in affordability are Króna and Nettó, with Fjarðarkaup trailing closely behind as the fourth least expensive option.

ASÍ Concerned Over Rising Debt Service Burden of Households

apartments downtown Reykjavík housing

An economist with the Icelandic Confederation of Labour (ASÍ) has expressed worry over the housing market’s “weak support system” and has called on the government to take special measures to respond to interest rate increases. This year, almost 4,500 households will be withdrawn from the shelter of fixed interest rates, RÚV reports.

Concern for the near future

Since 2020, Iceland’s Central Bank has collected detailed data on real estate loans from the three large commercial banks, the ÍL Fund (the Housing Financing Fund), and the country’s nine largest pension funds. According to this data, almost 75% of households pay less than ISK 200,000 [$1,432 / €1,334] per month in interest and instalments while 14% pay more than ISK 250,000 [$1,789 / €1,667]. As noted in the Central Bank’s Financial Stability Report, defaults by households and companies have been very low. Nevertheless, Róbert Farestveit, Director of ASÍ’s Economics and Analysis Department, fears what lies ahead.

“We are concerned about those groups where over 40% of disposable income goes to housing costs,” Róbert told RÚV. “That group is quite large in Iceland.” Róbert took the example of an ISK 43 million [$308,000 / €287,000] non-indexed loan with a variable interest rate that was signed two years ago. When the interest rate was 3.4%, the payment burden was ca. ISK 163,000 [$1,166 / €1,087]. The interest rate now is 8.5% and the monthly payment has reached ISK 313,000 [$2,240 / €2,088]. “Those who have recently taken out a loan and those who increased their indebtedness at variable interest rates will feel this the most,” says Róbert.

Specific resources required

Since the Central Bank started a series of rate hikes in May 2021, many borrowers decided to fix the interest rates on their loans. This year, almost 4,500 households will be pulled out from that shelter of fixed interest rates. “This group expects to see a higher debt burden as things currently stand. Many borrowers are, therefore, expected to switch to indexed loans – and that trend has already begun,” Róbert remarked.

Róbert told RÚV that the Confederation of Icelandic Labour (ASÍ) was concerned about those households burdened with increased debt service. “We have been concerned that the support systems of the housing market are weak. Housing support is not great enough. This problem needs to be met with specific measures and not general ones.”

Housing market expected to cool even further

In an interview with Mbl.is yesterday, Þorvaldur Gissurarson, CEO and owner of ÞG Verk, argued that it was likely that the Central Bank’s latest interest rate hike would serve to “further cool the housing market” while at the same time reducing new construction projects and sales. This might spell renewed tension in the market when interest rates begin to fall again.

Mbl.is also spoke to Vignir Steinþór Halldórsson, owner of the construction company Öxa, who stated that the interest rate increases had had a significant impact on the housing market.

“We see what’s happening in the rental market. It’s exploding. Ever since first-time buyers stopped qualifying for loans (i.e. failing bank payment evaluations) – given that the requirements have become so rigid – many have had no choice but to rent or move back in with their parents. So, when interest rates go down, this will blow up in our faces and demand will once again exceed supply.”

Efling Union Would Not Pay Workers in Potential Lockout

Samningar Verkföll Sátti

The Confederation of Icelandic Enterprise (SA) is currently voting on a lockout that would affect 20,000 Efling employees. Locked-out workers would not be allowed to show up to their usual employment. As such, they would not receive wages, accrue leave, or receive pension payments. Efling chairperson Sólveig Anna Jónsdóttir has stated that Efling would not provide financial support to members in the case of a lockout, which differs from the policies of other large unions in Iceland.

Read More: SA to Vote on Lockout Against Efling

The lockout vote is the latest in a series of escalating moves in the fraught collective agreement negotiations between SA and Efling. The vote ends on Wednesday at 4:00 PM and if the lockout is approved by SA member companies, it will begin on March 2 at noon. While workers would not be collecting wages during a lockout, neither would they receive financial support from Efling, a notice from the union states, as “the union does not hold responsibility for a lockout and the labour dispute fund cannot sustain such payments.”

Other unions pay members in case of lockout

Supreme Court Barrister Lára V. Júlíusdóttir told mbl.is that it has been around 35 years since lockouts have been used as a significant tactic in Icelandic wage negotiations. Lára says that Efling’s decision to not pay out to members affected by a lockout would possibly be disputed. She adds that other large Icelandic unions, including VR and RSÍ, emphasise paying from the labour dispute fund both in the case of strikes (initiated by unions) and lockouts (initiated by employers).

Efing is Iceland’s second-largest union by membership, and a lockout would significantly impact most sectors of the country’s economy. CEO of SA Halldór Benjamín Þorbergsson called the lockout an “absolute emergency measure” intended to put pressure on Efling. The union has called the lockout a “one-sided, coercive measure” intended to “force workers to accept a worse outcome in contract negotiations than otherwise.”

Efling approves further strike

In the meantime, Efling members have voted in favour of further strike action. The strikes would begin on February 28 at noon and would affect some 2,000 workers in security companies, cleaning companies, and hotels.

Kristján Þórður Snæbjarnason, president of The Icelandic Confederation of Labour (ASÍ) stated he would have preferred to see Efling and SA spending more energy on negotiations than strikes and lockouts, but pointed out that the two measures are not comparable in their impact on society.

“Efling’s strikes are intended to affect the position of the contracting parties and put pressure on the businesses. However, they don’t have the same crippling effect on society that lockouts could potentially have. I think SA is on a bit of thin ice if they’re going to resort to these actions.”

In Focus: Wage Negotiations

hotel workers strike Reykjavík

Power vacuum When Drífa Snædal resigned from her position as chairperson of ASÍ (The Icelandic Confederation of Labour) this summer, she left a power vacuum at the heart of Iceland’s largest organisation of trade unions. The Icelandic Confederation of Labour consists of 47 trade unions and represents some 2/3 of Icelandic organised labour, around 133,000 […]

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VR to Remain in ASÍ

vr union iceland, Ragnar Þór Ingólfsson

Ragnar Þór Ingólfsson, chairperson of VR, has stated that for the time being, VR’s position within ASÍ will remain unchanged.

VR is Iceland’s largest trade union, representing some 40,000 workers. There have however been suggestions recently that VR will leave ASÍ, or the Federation of Labour. ASÍ, founded in 1916, is the largest federation of trade unions in Iceland and has historically played an important role in labour organisation in Iceland.

However, the most recent ASÍ conference over contract negotiations has proved a turbulent one, with many major trade unions suggesting that they go their separate ways in the future.

Read More: Hopes for New ASÍ Leadership Among Contract Negotiations

The upheavals come in the wake of Drífa Snædal’s resignation earlier this year from her leadership position in ASÍ. Citing political hostility, she said that it was no longer possible to perform her duties in her resignation letter. Since her resignation, ASÍ leadership has been in turmoil, with some of Iceland’s largest trade unions considering leaving during ASÍ’s 45th conference.

Ragnar Þór also withdrew his candidacy for ASÍ leadership at the conference, citing the possibility of a break with the federation. Now, at least for the time being, it seems that VR will remain with ASÍ.

Read More: ASÍ Leadership Up in the Air as Candidates Withdraw

The announcement came today before a formal meeting with SA, Iceland’s leading employers’ union.

In a statement from Ragnar Þór, he said that all of the union’s efforts will now be directed towards the wage negotiations with SA.

Regarding the future, however, Ragnar Þór emphasised that nothing can be ruled out.

ASÍ Leadership and Future Up in the Air as Three Candidates Withdraw

vr union iceland, Ragnar Þór Ingólfsson

Ragnar Þór Ingólfsson, chairperson of VR, Sólveig Anna Jónsdóttir, chairperson of Efling, and Vilhjálmur Birgisson, chairperson of the Association of Trade Unions, have all withdrawn their candidacy for the central board of ASÍ.

At the 45th conference of ASÍ, Iceland’s Federation of Labour, tensions have run high, with accusations of personal attacks and more leading to uncertainty for the future of ASÍ’s leadership. The tensions take place in the wake of Drífa Snædal’s, former chairperson of the ASÍ board, resignation earlier this year. Among the reasons for her resignation she cited that personal conflicts had escalated to the point where it was no longer possible for her to perform her job.

Read more: Drífa Snædal Steps Down from ASÍ

In addition to their candidacies for leadership being withdrawn, they have also stated that they are now considering withdrawing their unions from ASÍ itself. Both Sólveig and Ragnar have stressed in statements that the final decision will be decided among the unions themselves.

The Federation of Labour, founded in 1916, has been the major power in organised labour in Iceland since its founding. Should Efling and VR, Iceland’s two largest trade unions, leave ASÍ, it would represent a historic change in Icelandic labour relations.

Ólöf Helga Adolfsdóttir, secretary of the board of Efling, had previously announced her candidacy against Ragnar Þór for ASÍ president. She is the presumptive candidate for ASÍ president.

 

 

 

 

Hopes for New ASÍ Leadership Amidst Contract Negotiations

trade union iceland así

With many labour contracts expiring at the end of October, pressure is mounting on the current round of negotiations.

Kristján Þórður Snæbjarnarson, acting chairman of ASÍ after Drífa Snædal’s resignation earlier this year, has stated that a major issue at ASÍ’s upcoming conference will of course be wage increases, but that choosing new leadership will play an equally important role.

Read more: Drífa Snædal, President of the Icelandic Confederation of Labour, Steps Down

Drífa’s departure earlier this year caused some turmoil within ASÍ leadership, which Kristján states has unfortunately turned the energies of the association towards inward power struggles, not outward to the wage negotiations.

So far, VR president Ragnar Þór Ingólfsson is the only one to announce their candidacy for ASÍ president, but there still remains the opportunity for individuals to announce their candidacy at the conference.

Another debated issue in the current negotiations is the role of the state mediator. Kristján is on record calling for a simplified process by which unions can call for strikes, giving them relatively more power at the bargaining table. Notably, many other trade unions in the Nordic nations also allow for leadership to call unilaterally for a strike, circumventing the need for union-wide votes. Kristján has called for such reforms to the strike process in lieu of strengthening the role of the state mediator.

The wage negotiations take place against the backdrop of an ever-rising cost of living in Iceland. Main contributing factors include inflation and rising interest rates that have seen mortgage payments increase significantly this year.

Yesterday, the Central Bank announced a .25% increase to the interest rate. Ásgeir Jónsson, governor of the Central Bank, warned that the course of inflation in Iceland was largely up to the labour market. The rate increase could be interpreted as an attempt to dissuade negotiators from too-ambitious of wage increases, as they may drive inflation further.