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.

VR and SA Agree on Contract

iceland trade union

VR Union and SA, the Federation of Icelandic Employers, have settled on a short-term contract that will be valid through next year.

The agreement will retroactively cover November of this year, and includes a 6.75% wage increase, in addition to increased holiday bonuses and adjusted wage tables for hourly workers.

Some have noted similarities between the recent VR contract and that recently reached between SGS and SA.

See also: Possible End in Sight for VR, SA Negotiations

The signing was a rather chaotic affair with representatives from throughout the country present. Official statements were relatively brief, given the long and tiring process it has been so far.

Kristján Þórður Snæbjarnarson, chairman of the Electrical Industry Association of Iceland, stated to RÚV. “We were trying to press these negotiations as far as possible. I think this is the best outcome under the circumstances.”

Notably, Ragnar Þór Ingólfsson, chairperson of VR union, gave no interview after the signing.

After the signing, representatives from both the trade unions, SA, and state mediators sat down to celebrate over waffles, a tradition in Icelandic labour contracts.

In Focus: Wage Negotiations

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.

Government and Unions Respond to WOW air Bankruptcy

WOW air airplane

The Icelandic government will allocate an additional ISK 80 million ($652,000/€580,000) to the Directorate of Labour in order to help the institution respond to the mass layoffs that have resulted from WOW air’s bankruptcy. Meanwhile, VR Union is working to ensure its members who have been laid off by WOW will get unemployment benefits immediately, a process that usually takes months.

WOW air’s bankruptcy last Thursday has already led to some 1,500 layoffs so far, the largest mass layoff in Icelandic history. The vast majority of those left unemployed, or around 1,100, were employees of WOW. Another 315 were laid off by Airport Associates, which provides air terminal service at Keflavík Airport. A large construction company in the Keflavík area has let go of 40 employees, while tour bus company Reykjavík Excursions has laid off 59. Keflavík airport’s Duty Free stores have also laid off six employees, citing that around 30% of passenger traffic at the airport was due to WOW air’s flights.

Directorate of Labour gets a boost

The Directorate of Labour mobilised a response team immediately following WOW air’s bankruptcy. “Subsequently, we have been working on measures under the auspices of strengthening the Directorate of Labour, and it was agreed […] that 80 million would be supplied from the reserve fund to support the Directorate of Labour,” stated Minister of Social Affairs Ásmundur Einar Daðason.

The Minister added that the money would be distributed to the directorate’s service centres in Reykjavík and Reykjanesbær, adding that the government would keep an eye on the employment insurance fund, though it was too early to say how much additional funding it may need in light of the layoffs.

VR Union lends to unemployed members

Some 250 workers who lost their jobs as a results of WOW air’s bankruptcy are members of VR Union. The union’s chairperson Ragnar Þór Ingólfsson says VR decided yesterday to lend its members the equivalent of their monthly wages for April in order to bridge the gap until employment insurance kicks in. The loans, Ragnar Þór explained, will be “paid back” to VR from their own employment insurance fund once the pending paperwork comes through. VR also held a meeting yesterday for former WOW employees to inform them on how to fill out the necessary paperwork for claiming unemployment benefits.