Confederation of Icelandic Enterprise Warns Against Companies Raising Prices

Halldór Benjamín

Halldór Benjamín Þorbergsson, head of the SA Confederation of Icelandic Enterprise, warns against businesses raising their prices in the wake of recent union deals in Iceland, RÚV reports.

Union leaders have been negotiating with the confederation over the last weeks and months in order to raise salaries of their members. But many companies have said that they in turn intend to raise their prices to deal with the added expenditure that comes with the new deals.

“It is no secret that the negotiated increases in salary will be tough on some companies, but that should test the possibility of businesses rearranging operations and searching for more advantageous ways to do business,” Halldór said in a post on the confederation’s website. “Everybody must contribute and be responsible. That goes for those with the highest salaries too,” he added.

A few companies have come out recently, saying that they are forced to raise the prices of their products in the wake of the new union deals. One such company, ÍSAM, caused outrage when they declared that they intend to raise their prices by 3.9% and the prices of imported goods by 1.9%

In his new post, Halldór talks about the recent deals, explaining how they center around a four-pronged solution: “Higher salaries, especially for those with low incomes, an increased flexibility to shorten the workweek, lower taxes and ways to create an atmosphere that is conducive to lowering taxes in Iceland, indefinitely.”

Purveyor of Baked Goods Forced to Raise Prices

Vilhjálmur Þorláksson, the manager of Gæðabakstur, one of Iceland’s biggest manufacturers of baked goods, says the company has been forced to raise their prices, Vísir reports. Vilhjálmur says that intended pay raises are partly to blame, but also a raise in the price of raw materials. Less than half of the company’s expenses are salaries and Vilhjálmur has said he’d rather raise prices than lay off workers.

Many were outraged yesterday when ÍSAM, a wholesale and manufacturing company declared that they would have to raise prices of their materials by 3.9% should intended pay agreements go through. Consequently Gæðabakstur revealed they would have to raise the price of their products by 6.2%.

“Last year our flour prices went up by 30% due to a poor harvest that year,” a disappointed Vilhjálmur says. “Now salary increases are imminent. Costs of transporting our products around the country have increased by 6%, and then we have an increase in the price of raw materials. We are forced to take desperate measures”.

Vilhjálmur says his company hasn’t raised the price of their products in about 15 months. “Over the last few years we’ve been streamlining our factory procedures, but we’ve hit a wall.”

Asked whether it would be possible to lower prices and find other ways to cover for costs Vilhjálmur isn’t optimistic. “I’m afraid we need this. We don’t have any deep pockets to rely on, I’m sorry”.