Wage Statistics Committee Reports that Women Earn 86% of Men’s Wages

In their spring report, the Wage Statistics Committee reports that women in Iceland still earn some 86% of what men do.

The report examined the wages of individuals working full time. Although average monthly income is largely the same for men and women, the pay gap is most noticeable in total annual salary, perhaps suggesting that men benefit disproportionately from bonuses, overtime pay, and other sources.

Guðbjörg Andrea Jónsdóttir, chairperson of the Wage Statistics Committee, said in an interview that the pay gap varies significantly between regions and industries. The most pronounced difference is found in the government, where women earn an average of 85% of men’s total salaries. Notably, the municipalities have a much more equitable wage distribution, with women working for Reykjavík City earning 95% of men’s salaries.

These differences take place against a generally positive economic outlook for most Icelandic households, with wages rising an average of 23% since last year. Workers in Reykjavík have especially benefitted from this increase, with wages rising an average of 30% for the capital area.

Women have benefitted more than men have from this rise in wage, primarily because they are more likely to hold lower-paying jobs than men.

The Wage Statistics Committee was founded in 2019 in cooperation with the state, municipalities, and labour organizations to share information on wages in Iceland and better negotiate labour contracts.

Negotiators Sign Collective Agreement

Efling chairperson Sólveig Anna Jónsdóttir.

Unions and the Icelandic Confederation of Enterprise (SA) signed a collective agreement yesterday valid until November 1, 2022, RÚV reports. Following months of tense negotiations and several strikes, a contract which applies to more than 100,000 members of 30 different unions has been agreed upon.

Minimum wage raised ISK 90,000

Four minimum wage hikes over the contract period will raise the gross monthly minimum wages by ISK 90,000 ($754/€673), though the net raise amounts to around ISK 68,000 ($570/€508). Minimum monthly wage as of April 1 will be ISK 317,000 ($2,658/€2,371) and rise to ISK 368,000 ($3,087/€2,752) by the beginning of 2022. All union members will also receive a one-time ISK 26,000 ($218/€194) payment in May of this year.

The wage hikes in the collective agreement are flat-rate hikes rather than percentage-based. This means the lowest wages will proportionally increase the most of all income brackets. The collective agreement also makes provisions for further wage hikes dependent on companies’ performance and economic growth, a clause which the Icelandic Confederation of Labour (ASÍ) calls a landmark in collective agreement negotiation.

Shortened working hours

According to VR Union’s website, the contract also opens the possibility for shortened working hours, between 45 minutes and two hours per week, with the goal of making the labour market more family-friendly. Each workplace is to determine how the change will be implemented – with possibilities including shortening each workday to providing more vacation days.

Government introduces “standard of living” measures

Following the signing of the collective agreement, the government presented an extensive package of measures, the so-called “standard of living contract,” intended to improve terms of employment further than terms of the collective agreement alone. The measures in the contract are particularly targeted toward improving the standing of low earners and young families and are said to amount to an ISK 80 billion ($672m/€599m) investment.

The government contract outlines steps toward the elimination of indexation. Indexed annuity loans will be limited to 25 years maximum starting in 2020. The measures also include tax reductions and increased child benefits, which are expected to yield significant gains for low-earning households, particularly those with children.

The new collective agreement and government contract are said to create a foundation for interest rate cuts, which is believed to be one of the most impactful changes for Icelandic households, leading to more disposable income and lower debt.

Negotiators react

VR Union Chairperson Ragnar Þór Ingólfsson says he’s content with the collective agreement, saying it includes plenty of measures for the most disadvantaged groups. Ragnar says the contract takes genuine steps toward lowering interest rates and housing costs.

“This has been very difficult,” stated Efling Union Chairperson Sólveig Anna Jónsdóttir, “We fought until the very end.” Though she was satisfied with flat-rate wage hikes, Sólveig Anna said she would have liked to see more tax cuts for low earners. She referred to the agreement as a “ceasefire” between employers and workers, saying ASÍ would return twice as strong to the next negotiations.

Socialist City Councillor Takes Wage Cut to Support Fund for Organisers

City Councillor Sanna Magdalena Mörtudóttir

Socialist City Councillor Sanna Magdalena Mörtudóttir has decided to take a monthly pay cut of ISK 158,000 ($1,280/€1,133) and redirect that money to the party’s newly established Maístjarna fund, Kjarninn reports. The fund is intended to empower “those who are worst off” to organise and operate lobbying groups that will work for their interests.

The Socialist Party is using funds received from the City of Reykjavík – around ISK 900,000 ($7,295/ €6,454) – to establish the fund and will supplement these with individual contributions as well as the additional income from Sanna’s voluntary pay cut. According to the announcement on the Socialists’ website, the fund “will work to bolster and strengthen the voices of those who are worst off and assist them in presenting their demands and urging that the country of the future be shaped in the interests of the people.”

Even with the pay cut, Sanna’s monthly salary before taxes is, she notes, 2.5 times the minimum wage. According to data published by Statistics Iceland in August, Icelanders’ average total monthly income—including non-wage, physical or financial assets – was ISK 534,000 ($4,328/ €3,830) before taxes, which are 36.94% for individuals whose monthly income is less than ISK 893.713 ($7,243/€6,410).

“I think we should set a limit on the highest salaries in society – on how much higher they can be than the minimum wage” Sanna remarked. “I think three times the minimum wage is the absolute outer limit, for example, for the mayor and so I’m setting my salary a step below that.”

The first initiative to be funded by the Maístjarna was the demonstration at Austurvöllur square on December 1, in protest of the MPs involved in the Klaustur Scandal. Expenses for the protest came to ISK 140,000 ($1,134/€1,004). An independent group of protesters raised ISK 106,000 ($859/€760) for the event, and the remaining ISK 34,000 ($275/€243) will be subsidised by the Maístjarna.

Sanna is encouraging Socialists who are able to donate to the fund to follow her lead and do so. “The most important step in the direction of a just society is that those who are suffering most under the injustice of capitalism to be able to organise, create solidarity among themselves, and develop tactics to fight for their interests.”

Union Federation Calls for Minimum Wage Hike

The Federation of General and Special Workers of Iceland (SGS) is calling for a minimum monthly wage hike to ISK 425,000 ($3,660/€3,160), RÚV reports. The federation of trade unions published a list of demands for employers and the government regarding approaching contract negotiations for its members. The list also demands that the lowest wages be made tax free.

The demands also address housing, calling for a coordinated, national effort between the state, local governments, and pension funds to address housing shortages and rising housing costs. SGS also hopes to make registered rental agreements a requirement for landlords.