Union Leader Allays Strike Fears

ASÍ President Finnbjörn A. Hermannsson

Strikes are an unlikely outcome in the current labour dispute between unions and employers, President of the Icelandic Confederation of Labour (ASÍ) Finnbjörn A. Hermannsson told RÚV today. He expects parties to reconvene for further discussions, as the sides are close to agreement on major issues.

Strikes up to individual unions

On Friday, the coalition of unions ended its negotiations with the Confederation of Icelandic Enterprise (SA) on a new collective bargaining agreement. Despite an agreement on modest salary increases being reached in principle, the coalition had hoped to include a clause in the four-year deal to protect workers from downside risks if inflation and interest rate targets were not met.

Finnbjörn says that although the unions involved are members of ASÍ, an umbrella organisation of trade unions, the unions would have to individually decide whether to strike or not. Ragnar Þór Ingólfsson, president of the union VR, had previously said that he did not rule out industrial action to bring about a new agreement.

“The members of the coalition will confere and what they do will be their decision,” Finnbjörn said. “But I expect people to come back to the table and pick up from where they left off.”

Further negotiations upcoming

Finnbjörn added that both parties were focused on bringing down inflation and that an agreement on salaries was near at hand. “And usually when talks fall apart, it is because of the salary issue, not clauses on economic targets. That’s why I expect the parties to come back together and exhaust all avenues before they turn to industrial action,” Finnbjörn said.

Further wage negotiations are coming up for unions in the public sector. Finnbjörn said that informal discussions have begun and that he was optimistic for a good result and positive economic developments in the near future.

Wage Negotiations Halted

Sólveig Anna Jónsdóttir

The coalition of unions has ended its negotiations with the Confederation of Icelandic Enterprise (SA) on a new collective bargaining agreement. The coalition claims that negotiations were not moving forward, Vísir reports.

Disagreement on economic targets

In a press release, the coalition claims that a clause on the development of inflation and interest rates became the point of contention. The coalition hoped to include a clause in the four-year deal to protect workers from downside risks if inflation and interest rate targets were not met.

“The coalition is deeply disappointed by SA choosing to derail negotiations because of this clause,” the release said. “It’s especially regrettable, since both parties have worked hard to reach an agreement on modest salary increases and an agreement on salaries had already been reached in principle. The signing of new agreement was within our grasp.”

The coalition claims that all long-term agreements in recent decades have included a clause such as the one in dispute. “This would mean that workers alone would carry the risks if the targets aren’t reached. It is strange that SA is not ready to cement in a long-term agreement the goals they have often claimed are most important to them: lowering inflation and interest rates.”

Government benefit increases discussed

Negotiations have been ongoing for weeks, with parties also conferring with government ministers. The unions have called for increased government spending on child and housing benefits in exchange for modest salary increases. “We’ve been able to deepen the conversation on possible scenarios and how the government can be involved,” said Prime Minister Katrín Jakobsdóttir after a meeting with union coalition on Thursday. “I’ve repeatedly said that we are willing to back a collective bargaining agreement that supports inflation targets and creates the conditions to lower interest rates. All of us agree on this point.”

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.

Rising Interest Rates Complicate Upcoming Wage Negotiations

central bank iceland

The recent hike in interest rates has complicated the upcoming wage negotiations, with government involvement now a possibility to bring the negotiations to a conclusion.

Now, Prime Minister Katrín Jakobsdóttir has invited leaders from both sides of the bargaining table to a meeting to find a path forward.

This fall, around 1/3 of labour contracts are expiring and need to be renegotiated. Matters have been further complicated by turmoil at the 45th ASÍ congress (The Icelandic Federation of Labour, Iceland’s largest federation of trade unions), which have left the leadership of this organisation unclear. Individual unions have begun renegotiating their contracts, mostly with SA (The Confederation of Icelandic Employers).

Read more: Interest Rates Continue to Increase

Recent increases to the interest rate in Iceland have complicated negotiations, with talks with VR and several other unions and SA breaking down yesterday. The rate increases came in the wake of inflation numbers for October being higher than expected. The 0.25% increase to 6% interest (seven-day term deposit rate) is intended to bring inflation back into an acceptable range. Ásgeir Jónsson, Governor of the Central Bank of Iceland, has previously called on the labour market to help in the fight against inflation, as wage demands at the bargaining table could have an exacerbating effect on inflation.

Alongside the rate increases, the Central Bank of Iceland’s Monetary Policy Committee released a statement that inflation forecasts could turn out to be too optimistic if the ongoing wage negotiations lead to wages rising in excess of the Central Bank’s predictions. Consumer spending in September and October has proved higher than expected, and some fear that wage demands may drive up consumer spending and therefore prices.

Vísir quotes Ásgeir as stating “Our task is to ensure price stability and we believe by doing this, we are supporting the wage negotiations. It would be futile to negotiate such wage increases only to have them burn up in inflation. The Central Bank is therefore of the opinion that it is contributing to the process by ensuring this does not happen.”

Finance Minister Bjarni Benediktsson stated regarding the rate hikes that although the increase had been a “splash of cold water” for many, it nevertheless sent “a necessary message to leaders in the labour market.”

The Central Bank of Iceland’s Monetary Policy Committee has a set inflation target of 2.5%. Inflation currently sits at 9.4%.

iceland interest rate
Interest Rates – From Central Bank of Iceland

The rate hike has, however, drawn critique from both sides of the bargaining table.

Ragnar Þór Ingólfsson, the chairperson of VR trade union, said that because of this, the negotiations between VR and SA will be terminated and, as a result, harsh measures will have to be taken. Halldór Benjamín Þorbergsson, director of SA, also said he disagreed with the Central Bank’s interest rate decision. The decision, according to Halldór, put the wage negotiations in “upheaval” and the bank’s credibility has been “damaged” by this interest rate increase.

Prime Minister Katrín Jakobsdóttir has stated that the government supports a quick conclusion to the negotiations, suggesting the possibility of shorter-term contracts as a solution: “I think that all parties understand that events have not been particularly favourable for us. First an epidemic, then a war, inflation and the consequences of Russia’s war in Ukraine. So, of course, we all realize that there is considerable uncertainty, which may make a short-term contract a more viable option. But it is of course entirely in the hands of those sitting at the negotiating table to make that decision.”

Katrín continued, saying that it would be bad for all parties involved if negotiations were to break down: “Of course that would be bad. It is in the interest of all in our society that there is peace in the labour market. That workers can live on their wages. That business can continue. It’s in all of our interests.”


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.

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.