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.

Union Leaders Express Alarm at Central Bank’s Interest-Rate Hike

Ásgeir Jónsson, Governor of the Central Bank of Iceland

The Central Bank’s decision this morning to raise key interest rates by 1.25% has sparked a strong response from union leaders. Sonja Ýr Þorbergsdóttir, Chair of BSRB, has stated that the government needs to act to protect the most vulnerable. The Chair of the Federation of General and Special Workers in Iceland (SGS) has remarked that Icelandic households are being “devastated.”

Government needs to respond

In an interview with the radio programme Morgunvaktin (i.e. the Morning Shift), Sonja Ýr Þorbergsdóttir, Chair of BSRB, stated that it was necessary for the government to respond to the Central Bank’s decision to raise key interest rates, which currently sits at 8.75%.

“These actions have the greatest impact on those who earn the least. After all, inflation bites them the hardest. The government needs to take action to support this group, so as to see all of us through this period.”

As noted by RÚV, a new survey by Varða found that around half of wage earners are finding it difficult to make ends meet, with single parents and individuals in the rental market being particularly affected.

“It appears that action needs to be taken to support them. Then we look at the child benefit system and also that there needs to be some kind of rental brake and more support for those who are on the rental market,” Sonja observed. Interest rate hikes will hit those who have signed non-indexed mortgages at variable rates the hardest.

“There is also this question of how to assist this group. We’ve been hoping to ensure that overall housing support, whether you own or are renting, takes your financial situation into account,” Sonja concluded by saying.

A “knockout blow”

Finnbjörn A. Hermannsson, President of the Icelandic Confederation of Labour (ASÍ) told that the Central Bank’s decision to raise interest rates was “a knockout blow” to households in the country.

“Naturally, this is a complete knockout blow for households in the country. It’s that simple. It seems to me that the Central Bank is seeking recourse in the banks’ propaganda department. The Central Bank is clearly afraid of the banks, content to allow households to suffer … everyone seems to have realized, aside from the Central Bank itself, that the decision to raise interest rates only serves to fuel inflation.”

Icelandic households are being “devastated”

Vilhjálmur Birgisson, Chair of the Federation of General and Special Workers in Iceland (SGS), told this morning that he was “shocked” by the Central Bank’s decision.

“I can say that I am utterly shocked over this path that the Central Bank has chosen. Let’s keep in mind that since we signed the collective agreements, policy rates have increased by 3%.” Vilhjálmur added that this single increase was just below the total interest rate increases of other nations since the start of the Ukrainian war.

When asked what effect he thought this increase would have on the upcoming collective bargaining negotiations this fall, Vilhjálmur responded with dismay: “I don’t know how on Earth we’re going to manage this situation that has arisen among Icelandic households. It’s absolutely crazy.”

“In the end,” Vilhjálmur continued, “inflation will start to decrease and, believe you me, the Central Bank will tout its success and say, ‘You see, we’ve succeeded.’” He added that Icelandic homes were being “devastated” by the Central Bank’s decision.

“The reason for the high rates in Iceland is the indexation. In this country, the bank managers sit back because they know they’re protected on all sides by the indexation; it’s become completely intolerable.”

At a press conference this morning, Þórarinn G. Pétursson, the Central Bank’s chief economist, addressed the idea that the increase in the number of households with indexed loans meant that the Central Bank’s monetary policy was no longer effective:

“Unlike what has been claimed in the public discourse, this does not matter. The influence of monetary policy is the same whether the share of index-linked loans is large or small,” he observed. “Claims that monetary policy pushes people into index-linked loans are true. Claims that it affects the mediation process of the Monetary Policy Committee are false.”

State Mediator’s Proposal Meets With Criticism from Efling and SA

SA / Efling Union

State mediator Aðalsteinn Leifsson presented his mediation proposal in the wage dispute between Efling and SA at a press conference yesterday. The proposal met with criticism from both SA and the Efling Union. The state mediator believes that he is well within his legal rights.

A controversial step, setting a questionable precedent

Yesterday, State mediator Aðalsteinn Leifsson presented a special mediating proposal (i.e. miðlunartillaga) to resolve the dispute between the Efling Union and the Confederation of Icelandic Enterprise (SA). Negotiations between the two parties have devolved into a sort of Gordian knot, with the last meeting between Efling and SA lasting only a minute. The proposal means that members of the Efling union will have to vote on the same contract previously agreed upon by other unions.

Sólveig Anna Jónsdóttir, Chair of Efling, told RÚV yesterday that she believed the state mediator had broken the law with his proposal: he had not consulted with Efling. Halldór Benjamín Þorbergsson, Director of SA, struck a similar note, arguing that it was “the right of the disputing parties” to bring the case to a conclusion.

State Mediator defends his proposal

Following the response from Efling and SA, Aðalsteinn sent out a press release yesterday in which he rejected any claims about the illegality of the proposal. A mediating proposal was one of the resources available to the state mediator to try to ensure peace in the labour market.

“Given the state of the dispute between SA and Efling, it was my assessment, the office’s assessment, that it was inevitable to try this remedy.”

Aðalsteinn admitted that the labour legislation imposes the duty on the state mediator to consult with the parties to a wage dispute before submitting such a proposal: this applies to the content of the proposal and the procedure for voting.

“And that’s why I called representatives of both parties to a meeting with me today for this purpose. I discussed it with them before the proposal was made public. This obligation to consult the parties, however, does not imply that they have the right to intervene or veto the proposal.”

As noted by RÚV, Aðalsteinn denies that the way in which the proposal was presented was illegal in any way. When asked if the parties to a dispute should be familiar with the content of the legislation, he replied that the law was very clear as regards the authorisation of a mediating proposal. “It is also very clear in the labour legislation that when a mediation proposal has been submitted, a vote must take place.”

The proposal a “monstrosity”

Sólveig Anna went on to describe the proposal as a “monstrosity” (i.e. óskapnaður) that failed to mediate anything. Efling’s point of view had not been taken into account: the state mediator was simply imposing SA’s offer on the Efling Union.

Aðalsteinn replied that this was far from the case. He was not proposing an agreement from SA but rather one that the Federation of General and Special workers in Iceland (SGS) had negotiated with SA.

“After very difficult and demanding wage negotiations – where an agreement was struck. This agreement has since been approved by an overwhelming majority of votes in all of the eighteen unions within SGS. It should also be noted that this agreement includes the highest proportional increases that have been settled in this round of wage negotiations, within the general labour market, over the past weeks and months.”

Efling yet to submit its membership list

At the time of writing, the Efling union had not submitted its membership list to the state mediator; the deadline was 8 PM yesterday. As noted by RÚV, Efling is thereby shirking its statutory duty, given that the office of the state mediator has the right to receive the membership list.

Elísabet S. Ólafsdóttir, Chief of Staff at the State Mediator’ office, told RÚV yesterday that the office would have to consider its next steps: “At this stage, we can send Efling another notice. If the notice proves ineffective, it may eventually be necessary to obtain a ruling from the district court to force delivery.”

The proposal will be put to a vote by the members of Efling and voting will begin at 12 noon on Saturday and continue until 5 PM on Tuesday.

This article will be updated

Deep North Episode 8: Wage Negotiations

hotel workers strike Reykjavík

With the dust from this fall’s leadership turmoil still unsettled, one-third of wage contracts need to be re-negotiated between their trade union and SA, the employers’ union. High interest rates and inflation have made this a particularly tricky negotiation round, and we briefly outline why it matters.

Note that wage negotiations are still ongoing. Read the latest coverage here.

SGS Signs New Contract with SA, Causing Controversy

sgs trade union iceland

A new short-term contract has been reached between SGS, one of Iceland’s larger trade unions and SA, the Federation of Icelandic Employers. The agreement was reached on Saturday, December 3, between 17 of SGS’s member organisations and SA. Notably, Efling, SGS’s largest member organisation, was not a signatory to the agreement.

Rising interest rates have complicated wage negotiations between many of Iceland’s trade unions and SA, with short-term contracts seen as a compromise to cope with the immediate impact of inflation and interest rates, without locking unions and employers into longer-term contracts that may not be suited to economic conditions in the traditional three-year period.

The short-term contract will be valid from November 2022 to the end of January 2024. It includes a flat minimum raise, as well as more holidays and adjustments for inflation.

Read more: VR Leaves Negotiating Table

However, the recent SGS contract has come under heavy criticism.

Kristján Þórður Snæbjarnarson, acting chairperson of the Confederation of Iceland Labour after Drífa Snædal’s resignation earlier this year, stated that the agreement was not suitable for craftsmen. He expressed his wish that the trade unions would stand together during the negotiating process, but that the inconclusive Confederation of Labour Congress earlier this year caused many fault lines to form within the Icelandic labour movement.

“As I said after the congress,” stated Kristján to RÚV, “I believed that we could take positive steps forward to strengthen the union. Just like our congressional elections are supposed to do. But it didn’t work, so this is what it’s come to. What we need to do is work on our internal issues and find a way forward.” 

Read more: Rising Interest Rates Complicate Upcoming Wage Negotiations

In light of difficult labour market conditions, the current round of wage negotiations was seen by many in the labour movement as a time for solidarity in applying pressure against SA, the employer’s union. The recent agreement between SGS and SA is seen by some as a betrayal of labour solidarity at a time when workers hold more power over their employers than usual.

Sólveig Anna, chairperson of the Efling union, has also been critical of the contract. She stated to RÚV: “We, of course, do not agree to take part in some deception where what people have already won is being simply repackaged and sold back to them.”

Efling is notable as having gone into their negotiations with very ambitious demands.

Along with Sólveig Anna, Vilhjálmur Birgisson, chairperson of SGS, and Ragnar Þór Ingólfsson, chairperson of VR, together represent some of the largest labour organisations in Iceland. The SGS contract, however, has driven a divide between these figures.

In a post on social media, Vilhjálmur stated his side of the case, saying that he was “saddened to see people he considered friends stab him in the back.” He also accused other members of the labour movement of leaking details of the contract to complicate the agreement, and of treating the recent agreement “as if a crime had been committed.”



Union Members Approve Collective Agreements

Anna Sólveig Jónsdóttir Efling Union

Voting results are in for several collective agreements, Vísir reports. Members of Efling and VR unions, as well as members of unions belonging to the Federation of General and Special Workers (SGS) have approved the collective agreements signed by negotiators earlier this month. Though all agreements were approved with a strong majority, voter turnout was fairly low.

Only 12.78% of union members under SGS voted on their collective agreement. Of those who voted, 80.06% voted to approve the agreement, while 17.33% voted against it, and 2.61% did not take a stance.

Voter turnout among Efling members was lower still, at 10.16%. Of those who voted, 77.07% voted for the agreement, 20.59% voted against, and 2.34% remained neutral. Viðar Þorsteinsson, Efling’s Managing Director, expressed his satisfaction with the voting results, saying they represent firm support of the agreement. “We celebrate that [the collective agreement] has gone through. I think it’s to everyone’s advantage that there is such a firm outcome.”

Voter turnout was higher among VR Union members, who voted on two agreements, with the Icelandic Federation of Trade (FA) and the Confederation of Icelandic Enterprise (SA). More than one quarter of VR members voted on the collective agreement with FA, or 26.55%. Of those who voted, 88.47% voted for, 10.42% voted against, and 1.1% did not take a stance. VR’s collective agreement with SA was approved with an 88.35% majority, with 9.85% against and 1.7% neutral. Voter turnout was 20.85%.

This article has been updated.

Price Increases Threatened Pending Approval of Collective Agreements

Several Icelandic food companies have stated that they will increase the prices of their products if pending collective agreements are approved, RÚV reports. The proposed price increases have been harshly criticized by union leaders, while company CEOs claim they will be necessary if there are wage increases and the prices of raw materials go up. Members of trade unions associated with the Federation of General and Special Workers—including Efling, VR, and LÍV—are currently voting on whether or not to approve the terms of the new collective agreements, which would be in effect from April 1, 2019 until November 1, 2022.

Icelandic food wholesaler ÍSAM is perhaps the most prominent entity to announce pending price increases. ÍSAM owns the Icelandic food companies Frón, Kexsmiðjan, Myllan, and Ora, and also imports a wide selection of popular food and foreign home goods brands, such as Always, BKI, Hershey’s, Finn Crisp, Fairy, Pampers, Pfanner, Rynkeby, and others. ÍSAM announced yesterday that there would be a 3.9% increase on all of their local company’s product prices if the collective agreements go into effect. Prices on imported goods would be raised by 1.9%.

Other Icelandic food companies have followed suit. Gæðabakstur, Ömmubakstur, and Kristjánsbakari—all baked goods companies—have stated that they would raise their prices by around 6.2%, effective May 1. According to a statement issued by Gæðabakstur, the price of wheat has risen by 30% due to crop failure, but local wage increases—particularly for those on evening and night shifts—will also have an impact on product prices. The company also points to fluctuating exchange rates, and increases to supplier and transportation costs.

Several companies that provide janitorial or cleaning services have also said that they would increase their prices if the collective agreements are approved.

Flosi Eiríksson, the Managing Director of the Federation of General and Special Workers (SGS), said the announcements came as a “great disappointment,” noting that “it definitively shows a real division within SA [the Confederation of Icelandic Enterprise] in that some of their companies are racing off with these increases while we are voting on the agreements…This is totally contrary to what the SA leaders said when we signed the agreements.”

Speaking of ÍSAM in particular, Ragnar Þór Ingólfsson, chair of the VR union, told RÚV that the company’s attitude poses a real threat to the collective agreements, which specifically stipulate that members’ purchasing power be safeguarded. “I think this is unprecedented—at least as far as I can remember—for a company to proceed with such threats in the middle of voting on the agreements.”

“This is a peculiar stance and approach for [ÍSAM] to be taking,” Ragnar Þór continued, “particularly in that company selling many well-known brands that appeal to consumers. The same people are voting on the collective agreement.”

ÍSAM CEO Hermann Stefánsson contends, however, that the proposed price increases should not be viewed as a threat. On the contrary, he said, ÍSAM is in favour of the collective agreements. Hermann believes that the proposed prices increases are “moderate,” considering the wage increases that are put forth in the collective agreement. “We’ve seen price increases among our competitors that are much higher, higher than what we’re announcing.”

The main terms of the collective agreements can be read in English (and Polish) on Efling’s website. Union members have until Tuesday, April 23 at 4:00 pm to vote on the collective agreements.

Tourism, Construction Bring Increased Human Trafficking

“It is high time that authorities do their duty to eradicate human trafficking as the patience of those who see the catastrophic consequences of trafficking is long gone,” reads the resolution of a directors’ meeting of the Federation of General and Special Workers in Iceland (SGS). The federation held a meeting last Friday, where they discussed topics such as social dumping and organised crime on the Icelandic labour market.

SGS is a federation of 19 trade unions in the private sector and part of the public sector in Iceland. The federation’s directors say one consequence of rapid growth in the tourism and construction industries is an increase in social dumping in the labour market and direct abuse of people who come to Iceland to work.

The term “social dumping” describes the practice of employers to use cheaper labour than is legally available, for example by underpaying migrant workers or hiring volunteers instead of paid employees. According to Icelandic law, unpaid work is only justified in the case of humanitarian or relief organizations, work related to nature conservation, or work that would not be carried out otherwise.

The directors say human trafficking is one of the worst forms of social dumping and that unions have been waiting for a government-led action plan to address the issue for two years. “Despite the international fight against trafficking, the problem has grown in recent years and will probably continue to grow,” reads SGS’s website. “It is necessary for unions, authorities, and the public to be aware of the growing threat of human trafficking.”