Unions Split on Wage Negotiations

vr union iceland, Ragnar Þór Ingólfsson

The coalition of unions engaged in wage negotiations with the Confederation of Icelandic Enterprise (SA) suffered a setback yesterday when VR, one of the largest unions, pulled out of the talks. The other unions will go forward with their negotiations as they’ve reached an agreement on major points of contention, Morgunblaðið reports.

Negotiations on a new collective bargaining agreement had been halted for two weeks after a disagreement on a clause in the proposed four-year deal to protect workers from downside risks if inflation and interest rate targets were not met. An agreement on salaries had already been made in principle.

Negotiations to proceed

Talks began again Wednesday and apart from VR, the unions accepted a compromise on the aforementioned clause. “We disagreed on whether the clause went far enough and we decided to step aside,” VR President Ragnar Þór Ingólfsson said. “I sincerely hope that they reach an acceptable deal for their constituents and that could be the foundation that we could build from and reach an agreement on what we need for our constituents.”

SA Director Sigríður Margrét Oddsdóttir said that it was a disappointment to not be able to reach an agreement with the coalition as a whole. She is still hopeful for a long-term agreement that would create the conditions to lower inflation and interest rates.

VR Leaves Negotiating Table, Finance Minister Denies Blame

Minister of Finance Bjarni Benediktsson

The Prime Minister has expressed disappointment in VR’s decision to break off wage negotiations with SA Thursday evening. The Minister of Finance does not believe his comments on the Central Bank’s interest-rate hike were “the deciding factor,” RÚV reports.

Mixed messaging among ministers

This morning, Ragnar Þór Ingólfsson, Chair of VR (the Store and Office Workers’ Union) confirmed to RÚV that he had walked out of negotiations with SA (the Confederation of Icelandic Enterprise) last night, which had recently been referred to the state mediator.

The reasons, Ragnar stated, were “numerous,” although the incongruous messaging of Prime Minister Katrín Jakobsdóttir and Finance Minister Bjarni Benediktson concerning the Central Bank’s interest-rate hikes “played a role.

Prior to the Central Bank announcing that it would be raising interest rates, VR and SA had been aiming toward an agreement predicated on less inflation and a lower interest rate:

“But then the Central Bank announced a hike, which, in reality, altered the premises from which we had hoped to proceed,” Ragnar Þór told RÚV. “The PM subsequently invited us to a meeting yesterday morning, in which she attempted to reset the parties’ expectations. It was a pretty good meeting.”

Ragnar observed that the parties proceeded to Karphúsið (the facilities of the state negotiator) where they hoped to continue their negotiations at noon.

“We’ve hardly taken our seats when an announcement is made by the Minister of Finance in which he echoes the Governor’s (the Central Bank) message, which is completely at odds with what the PM had told us. After that, the negotiations became quite difficult. And when it became clear the kind of ideas that SA were entertaining regarding a 14-month contract, which we had been discussing, it was obvious that there was no ground to continue negotiating.”

An interest-rate hike of some consequence

Following a cabinet meeting this morning, Katrín Jakobsdóttir discussed Thursday’s wage-negotiation collapse with RÚV. Asked if she had wished that the Central Bank had not raised interest rates, Katrín responded thusly:

“The Central Bank makes its own decisions in accordance with the statutory aims under which it operates. It’s not my place to comment on those decisions, but it is clear that this decision led to the collapse of negotiations.”

“I regret the fact that VR decided that it was appropriate to leave the negotiating table at this time, but I hope that we can find some kind of opening,” Katrín added.

“Best to speak honestly”

This morning, Bjarni Benediktsson was asked to respond to Ragnar Þór’s claim that his comments, justifying the Central Bank’s actions, had been a deciding factor in the collapse of negotiations.

“No, I think it’s always best to be completely honest about things,” Bjarni remarked. “And I just saw an announcement from VR where no mention is made of my comments; it’s likely that the premises had changed following the Central Bank’s decisions, premises which likely were the basis for the parties’ negotiations.”

Bjarni told RÚV that it was clear that inflation would rise and that it was only natural for the Central Bank to employ those tools at its disposal to keep inflation in check:

“But the truth is that the inflation forecasts have worsened, and the ghost of inflation is set to follow us a bit longer, and inflation will be higher next year than we had hoped just a few months ago. The tension in the economy runs high. We’re nearing maximum production capacity and the level of employment is very high. Consumption is high, which is one of the factors to which the Central Bank has pointed. It doesn’t really surprise me that the Central Bank continues to send these clear messages, that it will continue to fight inflation, and it’s desirable that all of us cooperate to do the same.”

VR is Iceland’s largest trade union, representing some 40,000 workers.


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.





FSA Iceland Investigates Pension Funds’ Decisionmaking Following Icelandair Stock Offering

The Financial Supervisory Authority of the Central bank of Iceland is investigating the pension funds’ involvement with Icelandair’s stock offering last week, Central Bank Governor Ásgeir Jónsson revealed yesterday. No specific pension funds were mentioned but the last few days have seen disagreement within the board of the Pension Fund of Commerce surfacing over the decision not to participate. The Director of VR (the Store and Office Worker’s Union) declared in an open letter in Fréttablaðið that he had no confidence in the board’s Vice-Chairman after she aired her opinion that she was surprised at the board’s decision.

“We worry that the independence of individual board members wasn’t sufficiently secured; that it wasn’t entirely certain that board members made their decisions based on pension fund member interests instead of the interest of individual companies or corporate disputes. We want to reiterate that that should be the case,” Ásgeir told RÚV.

The Pension Fund of Commerce, formerly the largest shareholder of Icelandair, didn’t participate in the company’s stock offering last week. After the successful stock offering, the country’s pension funds are no longer majority shareholders in Icelandair. The board of the Pension Fund of Commerce’s votes were even, as Chairman of the board Stefán Sveinbjörnsson and Vice-Chairman Guðrún Hafsteinsdóttir were on opposite sides. The board is made up of eight members, four of whom are appointed by the board of VR and four by the employers’ associations. Ragnar Þór, the director of VR, was heavily criticised for his comments last year during controversial wage negotiations for Icelandair’s flight attendants when he suggested that the pension funds connected to the unions should not participate in the airline’s stock offering. He rescinded his comments once the wage dispute was settled.

The Vice-Chairman is one of the four board members appointed by employers associations, and after the board’s decision, she openly aired her disagreement. “I considered [Icelandair’s] forecast to be modest, and it showed moderate optimism. That said, I thought we should maintain our share in the company. To get a good return on investment, you sometimes need to take risks. And I was ready to do so in this particular case,” Guðrún told Rúv.

Guðrún told Fréttablaðið last week that she was surprised at the position the board’s VR representatives had taken, that they did not wish to take part in the stock offering. The director of VR criticised Guðrún in an open letter in Fréttablaðið yesterday over the comments, which he claims are merciless.

“She thinks sinister points of view are the reasons behind the decision not to participate in Icelandair’s stock offering, other than professional. I think this behaviour is unacceptable. I will assume that FSA Iceland will investigate her position and comments,” says Ragnar. He also stated that he has for a long time held the opinion that neither employers nor union representatives should have a hand in the boards of pension funds.

“It should be the pension fund members themselves. The real owners of the funds, who are best suited to make decisions on how the money is distributed and who should control the funds,” says Ragnar.

Does Guðrún believe that the pension fund’s board went against the interest of fund members when they decided not to participate in the stock offering? “Well, let’s not forget that a few thousand Icelandair staff members are pension fund members in Lífeyrissjóður Verzlunarmanna. In this case, everyone was probably looking out for people’s interest even if there were different opinions,” says Guðrún.

Ragnar Þór said that he has no confidence in Guðrún as a board member of the pension fund. “I think Guðrún Hafsteinsdóttir should focus on what she does best, which is to manufacture ice cream,” says Ragnar. Guðrún and her family are the owners of Kjörís, an ice cream factory.

“One does feel it’s unfair that my person is dragged into things in this way, my company and my family,” was Guðrún’s reply.

Two-Day Hotel Worker and Bus Driver Strikes Called Off

trade union iceland

The planned strike of hotel workers and bus drivers who are members of the Efling and VR unions that was planned to begin at midnight on March 28 and end at 11:59 PM on March 29 has been called off, RÚV reports. While multiple short-term strikes are still planned to go forward in the next week, the cancellation of this two-day action does signal that some progress has finally been made in negotiations between six labour unions, including Efling and VR, and the Confederation of Icelandic Enterprise (SA), Iceland’s employer federation.

The decision to call off the strikes was made at a five-hour negotiation meeting between SA and the unions that was held on Wednesday afternoon, mere hours before the strike was supposed to go into effect. It was the sixteenth such negotiation meeting and had, in fact, been postponed for the last two days because union chairs said that uncertainty with WOW air’s situation would impact negotiations. SA had requested that the forthcoming strike action be postponed in light of the ongoing WOW air negotiations, but the unions rejected this request.

The strike was cancelled “…in light of a new basis for talks, which has now been presented on behalf of the employers’ association, SA,” wrote Efling in a statement on its website. The exact details of the “new basis” was not specified, but Efling congratulated its members on “the great work that has been put into the planning and execution of the strikes so far, which have now resulted in a limited but significant success.”

“Whether it succeeds or not, we’re going to try to make it work in the next days and over the weekend,” remarked Ragnar Þór Ingólfsson, the chair of VR.

Both Ragnar Þór and Efling chair Sólveig Anna Jónsdóttir noted that this cancellation does not signal the end of negotiations by any means—it’s simply a step in the right direction. “I must express my feeling that we wouldn’t have made it here except for the fact that the strike weapon is a sharp one and it stings,” said Sólveig Anna.

The next set of 24-hour strikes is scheduled for Wednesday, Thursday, and Friday next week. The city buses run by Kynnisferðir will also start their rush-hour strikes on Monday.