Iceland News Review: Drama in the East and Joyful Reunions

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In this episode of Iceland News Review, political intrigue in the east of Iceland, the economy looking bright as wage agreements are signed, Palestinian families reunited at last, an effort to bring our folk tales home, and much more.

Iceland News Review brings you all of Iceland’s top stories, every week, with the context and background you need. Be sure to like, follow and subscribe so you don’t miss a single episode!

Collective Agreement Signed, Avoiding Strike and Lockout

VR Union. VR Chairman Ragnar Þór Ingólfsson and SA CEO Sigríður Margrét Oddsdóttir shake on the new collective agreement, March 2024

VR Union and the Confederation of Icelandic Enterprise (SA) signed a four-year collective agreement just after midnight last night, RÚV reports. The airport workers’ strike proposed by VR Union and the lockout proposed by SA have therefore been called off. VR Union’s chair Ragnar Þór Ingólfsson stated that the agreement is acceptable given the circumstances, but that the matter is not over yet.

“It’s been a long and hard period for us and it’s very gratifying that we’ve gotten this long-term collective agreement,” stated Sigríður Margrét Oddsdóttir, CEO of SA. The two parties signed an agreement based on a proposal submitted by the State Mediator yesterday. “The mediator submitted an internal proposal that was based on a certain special wage agreement resulting from the main wage agreement that we were finalising and which the negotiating committees of both parties agreed to,” Sigríður added.

Shift changes for airport workers

She stated that the wage hikes for VR Union members are the same as those that have been agreed on with other unions. They include a general percentage-based increase of 3.25% this year and 3.5% for the next three years.

Ragnar stated that the agreement includes an article on changing the shift schedule for Keflavík Airport workers, the group that had been set to strike later this month if an agreement had not been reached. Changes to the group’s shift schedule are to be agreed on by December 20 with the help of the State Mediator.

Last major signing in a series of negotiations

The collective agreement between VR and SA was the last of a series of collective agreements being negotiated on the Icelandic labour market for the coming years. VR Union also signed a collective agreement this morning with the Icelandic Federation of Trade (Félag atvinnurekenda) with terms similar to those of their agreement with SA.

Another Collective Bargaining Agreement Signed

A new collective bargaining agreement was signed yesterday, Vísir reports, between the Confederation of Icelandic Enterprise (SA) and the labour unions The Electrical Industry Association of Iceland, the food and restaurant union Matvís, the Icelandic Union of Marine Engineers and Metal Technicians, and the printers’ union Grafía.

Stability and gratitude

The contract worked out between the parties is to last four years, and outlines terms similar to the agreement recently approved by the labour union Efling and others last week.

SA director Sigríður Margrét Oddsdóttir told reporters that the aim of the agreement was for “economic stability”, adding, “We are just incredibly proud and grateful after the day today.”

Ball in their court

Kristján Þórður Snæbjarnarson, the director of the The Electrical Industry Association of Iceland, was more guarded in his response to the contract.

While saying that it was indeed good news that their workers had gotten new wage agreements, a pay rise is not the only thing that affects economic stability and keeping up with the cost of living.

“It is also extremely important that interest rates and inflation reduce,” he told reporters, adding, “The ball is in the court of the Central Bank, companies in this country, and state and local authorities to hold back on tariffs and participate in this project with us. That, of course, is what matters. We send the ball their way.”

More negotiations to come

The next major round of labour negotiations is to take place between SA and VR, which is the labour union of employees in commerce, services and offices.

Talks between SA and VR have been contentious, and were recently broken off, but talks between the two parties are set to resume tomorrow.

Shaky Restart to Icelandic Wage Negotiations

State Mediator Ástráður Haraldsson

The first meeting in nearly two weeks between Icelandic unions and Confederation of Icelandic Enterprise (SA) was cut short yesterday, RÚV reports. The meeting began at 9:00 AM and was the first meeting since unions suspended negotiations nearly two weeks ago, calling them fruitless. The parties are meeting again today.

SA is demanding a four-year collective agreement be signed. Unions say they have agreed to the demand but ask for a clause in return that would give them a way out of the agreement if inflation and interest rate targets are not met. SA would not agree to such a clause, which was the reason negotiations were suspended.

The parties have reportedly already reached an agreement regarding salaries.

It is less than a year since the last collective agreement negotiations between SA and Efling Union were concluded after a tense and drawn-out negotiation period that involved strike actions. Unions have called on businesses and the government to take more concrete action to fight the high inflation and high interest rates that are impacting Icelandic households.

Wage Negotiations Advance, Media Ban Imposed

State Mediator Ástráður Haraldsson

Union and business representatives have restarted wage negotiations after a break of almost a week, Vísir reports. The parties have agreed on a basis for the negotiations, according to State Mediator Ástráður Haraldsson. One union leader said IKEA’s price reductions are a good contribution to the negotiations.

Media ban imposed

The negotiations impact the working conditions of some 93% of workers on the general labour market in Iceland. After signs of progress in the negotiations appeared, Ástráður banned all parties from speaking with the media, a move often instituted when an agreement seems nigh.

Price reductions and freezes a positive contribution

Vilhjálmur Birgisson, Chairman of the Federation of General and Special Workers in Iceland, did, however, speak to a Vísir reporter on the price reductions announced by IKEA in Iceland, calling them a positive contribution to the negotiations. The reductions could help in bringing down inflation and interest rates, “which are making Icelandic households miserable,” he stated.

Vilhjálmur pointed out that BYKO has also decided to freeze prices for six months, and encouraged other businesses to follow the two companies’ example.

Union Leaders Sharply Criticise Minister’s Remarks about Worker Demands

Samningar Verkföll Sátti

Union leaders responded swiftly to Minister of Foreign Affairs Bjarni Benediktsson, following statements made by him that they need to temper their demands due to the amount of money that may be paid out to Grindavík residents.

Currently, a broad coalition of labour unions are in negotiations with the Confederation of Icelandic Enterprise (SA). The subjects of these talks range from flat króna-amount pay rises to how many years the next collective bargaining agreement should cover; management is hoping for longer term contracts, while unions are aiming for shorter term.

These talks have been difficult and slow-going, but have not yet reached the point where the matter would be referred to the State Conciliation and Mediation Officer.

Have to see “the big picture”

Speaking about the negotiations on the roundtable discussion show Silfrið, Bjarni Benediktsson cautioned that labour unions should consider the amount of money the state intends to pay out to Grindavík residents when negotiating with management.

“When the state, and all of us, take on such a big project as the Grindavík matter, it of course has an effect on our ability to stretch ourselves towards the demands of others, who are at the same time asking us to do something significant,” he said.

“I think we should insist that people consider the big picture,” he added. “It would be unwise of all parties involved to remove themselves from the larger context that we are all a part of.”

“Tasteless” to use Grindavík

Ragnar Þór Ingólfsson, director of the labour union VR, told RÚV that these remarks did not come as a surprise, but also does not have a good impact on the ongoing labour negotiations.

He added that the amount of money workers are asking for, when compared to the amount of money the state paid out to companies early in the pandemic and after the 2008 financial collapse, as well as how much money is in the disaster fund, come out to “small change”, adding that it was “very tasteless and disgusting to use the situation in Grindavík in order to work against the necessary and important goals that we have laid out in these negotiations.”

Sólveig Anna Jónsdóttir (shown above), the director of the labour union Efling, told Vísir that they are very much aware of the situation in Grindavík, and support the residents getting everything they need. At the same time, she said, these negotiations will directly affect some 115,000 people, or about 73% of the labour market. As such, the government cannot just push the matter aside.

Negotiations between these labour unions and management are still ongoing.

Optimism in Ongoing Wage Negotiations

Westman Islands fish processing plant

The ongoing collective agreement negotiations in Iceland are going well, according to union representatives. Unions are hoping to negotiate a three-year agreement while the Confederation of Icelandic Enterprise (SA) is hoping for a five-year agreement. Both sides have a willingness to negotiate, but say the involvement of the government will be crucial.

“We are ready to negotiate and there’s a good spirit between the contracting parties,” stated Vilhjálmur Birgisson, chairman of the Federation of General and Special workers in Iceland (SGS). “We have reached the point now where it’s quite clear that we need to speak to the government before the weekend, to know what their involvement will be in these agreements.”

Price of services and goods rising

January is the month when fee hikes for public services take effect in Iceland. Prices for goods have also been rising alongside high inflation for more than a year. Both unions and the Confederation of Icelandic Enterprise (SA) have called on municipalities and businesses to keep price hikes to a minimum this year to ease the wage negotiations.

Salaries not a sticking point

Vilhjálmur says that wages themselves are not a sticking point in the negotiations at this time, and speculates that the parties can agree on a period between three and five years for the contract.

It is less than a year since the conclusion of very tense and prolonged collective agreement negotiations between SA and Efling. Tension was also high in November after the current negotiations began, and they were put on hold by union leaders due to proposed municipal fee hikes.

Wages Have Risen too Sharply, Finance Minister Observes

Prime Minister Bjarni Benediktsson

Bjarni Benediktsson, the Minister of Finance and Economic Affairs, believes there are indications that many Icelandic companies are struggling to deal with negotiated wage increases. The interest rates should have been kept higher for longer, he told Morgunblaðið on Wednesday.

A sense of uncertainty

In an interview with Morgunblaðið on Wednesday, Bjarni Benediktsson, the Minister of Finance and Economic Affairs, expressed his concern for wage increases in the labour market:

“I think there is reason to be concerned when companies that have been doing well start to show losses and when wage rates have risen significantly. There have been indications in some financial statements that companies are struggling to cope with the negotiated wage increases.”

“This is unmistakably the case,” Bjarni continued, “and now we need to find some balance again. We need to read the situation and act as necessary. We have emphasised regaining balance in fiscal affairs, supporting the reduction of inflation and protecting vulnerable groups from the effects of inflation while it lasts,” Bjarni observed, noting that there was a sense of uncertainty within the economy.

“It has to be said that there is a certain amount of uncertainty. We see it, for example, in the Stock Exchange, when we witnessed the third biggest stock market drop in a single day since 2009. These are big events. They reflect insecurity and uncertainty, a certain sense of fear and a kind of reset. Things are being reconfigured,” Bjarni remarked.

BSRB strikes ongoing

As noted earlier this week, 1,000 workers belonging to the BSRB union – Iceland’s largest federation of public sector unions, comprising 19 labour unions with some 23,000 members – went on strike as part of BSRB’s ongoing negotiations with the Icelandic Association of Local Authorities (SNS).

The strike actions affect, among others, staff in sports and primary schools in Kópavogur and Mosfellsbær, after-school programs in Mosfellsbær, preschools in Garðabær, and Seltjarnarnes primary school:

Sonja Ýr Þorbergsdóttir, Chair of BSRB, stated that the Icelandic Association of Local Authorities must pay the same wages to BSRB union members as others in similar jobs. BSRB is demanding retroactive wage increases from January 1, when the last collective agreement was still in effect. The negotiating committee has offered wage increases from April 1st.

On Tuesday, BSRB released a statement emphasising that strike actions were planned for next week, extending to sports programmes and primary schools in Hafnarfjörður, Hveragerði, Árborg, Ölfus, and the Westman islands: “Further strike actions are being prepared in light of the fact that there is no progress in the negotiations.”

“The municipal staff have had enough of this injustice – and they want to take further action. Justice is, of course, workers receiving the same salary for the same jobs. Raising the minimum wage is long overdue so that people in essential jobs can make ends meet,” Sonja Ýr observed.

State Mediator Not Fearful of Losing Unions’ Trust

Aðalsteinn Leifsson

The state mediator does not fear that he has lost the trust of the unions, despite the reaction to his mediating proposal in the dispute between the Efling Union and the Confederation of Icelandic Enterprise (SA), RÚV reports. The proposal was submitted as a result of unprecedentedly tough negotiations.

Efling refuses to submit electoral roll

State mediator Aðalsteinn Leifsson does not fear that his mediation proposal in the dispute between the Efling Union and SA may have permanently damaged the office’s relationship with the unions – despite the recent condemnations.

“I listen to the comments that are made about my work, but I reiterate my point that I submitted this proposal after careful consideration,” Aðalsteinn told RÚV today.

The proposal puts the same agreement that SA previously agreed upon by other unions to a vote among members of Efling. Efling’s Chair, Sólveig Anna Jónsdóttir, has repeatedly described it as bad for workers. In order for the state mediator to oversee the vote, he needs an electoral roll (a list of Efling members eligible to vote) – which Efling’s Chair does not intend to hand over.

“By refusing to hand over the electoral roll, Efling is standing in the way of members being able to vote on the proposal. If we do not receive the list, we must explore alternative options,” Aðalsteinn stated.

An “unprecedented” round of negotiations

When Aðalsteinn presented his proposal at a press conference yesterday, he stated that the reason for the proposal was the “unprecedented situation” that had arisen in the negotiations. As noted by RÚV, however, strikes have been employed throughout the years without any attempt to avert them with a mediating proposal.

According to Aðalsteinn, what makes the situation “unprecedented” is not the prospect of strikes, but because of the “unprecedented” nature of the negotiations.

“This dispute stands out in that it has been extremely difficult to get any kind of conversation about possible solutions going,” he concluded.

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.