Wage Agreements Signed; Keflavík Airport Strikes Averted

Keflavík Airport

Strikes at Keflavík International Airport have been averted following the signing of agreements between the Confederation of Icelandic Enterprise on behalf of ISAVIA, and the labour committees of the Union of Aviation Workers and Sameyki. The agreements, resulting from prolonged negotiations, will now be presented to union members for a vote, concluding by late May.

Strike action called off

Yesterday, agreements were signed between the Confederation of Icelandic Enterprise (SA) on behalf of ISAVIA and the labour negotiation committees of the Union of Aviation Workers (FFR) and Sameyki, a nationwide union of public servants. The strikes that had previously been announced at the Keflavík International Airport have been called off.

As noted in an article published in IR last weekend, negotiations for a new collective bargaining agreement had been ongoing since last September, with the labour dispute being handed over to the Office of the State Mediator on April 8.

As reported by Vísir, State Mediator Ástráður Haraldsson expressed satisfaction with the parties reaching an agreement. He noted that people are generally not overly joyous after wage negotiations – but he hoped that everyone was “reasonably dissatisfied.”

The agreements will be presented to the members of Sameyki and FFR, who will subsequently vote on them.

A desired balance struck between negotiating parties

In an interview with Vísir, Þórarinn Eyfjörð, Chairperson of Sameyki, stated that the negotiating parties had achieved the desired balance between their interests. Þórarinn added that the unions were quite pleased with the outcome, although “one is never completely satisfied when signing wage agreements.”

Þórarinn characterised yesterday’s negotiations as “a tough working day” with many positive developments, although one never fully achieves all their goals.

As noted by Vísir, the union members’ vote on the agreement will conclude around May 20. Þórarinn expressed confidence in taking the agreement to the members, noting that an information campaign will now begin, followed by a voting process just before May 20 expected to end between May 23 and 24.

Þórarinn remains optimistic about the agreement’s approval, though he acknowledged that nothing could be guaranteed.

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Governor Optimistic About Iceland’s Economy After Wage Deals

Central Bank Ásgeir Jónsson seðlabankastjóri

The recent wage agreements reflect a unified effort, with all parties seemingly unified towards a common goal, the governor of the Central Bank told RÚV this morning. He anticipates a decline in inflation, potentially setting the stage for lower interest rates.

Uncertainty regarding global economic outlooks

This morning, the Central Bank’s Financial Stability Committee presented its semi-annual Financial Stability Report, which, as noted by the Central Bank’s website, presents “an overview of the position of the financial system, its strengths and potential weaknesses, and the macroeconomic and operational risks it may face.”

This newest report indicates, among other things, that interest rates may have peaked in light of the tightening of monetary policy over recent months. There remains, however, significant uncertainty regarding global economic outlooks, not least because of the armed conflicts in Gaza and Ukraine. Furthermore, there has been a slowdown in the growth of the Icelandic tourism sector, with signs that tourists are staying in the country for shorter periods and spending less. The geological unrest on the Reykjanes Peninsula has also had negative effects. Nonetheless, the position of the major commercial banks is strong, and their capital ratios are healthy.

“Headed in the right direction”

In an interview with RÚV this morning, Ásgeir Jónsson, the governor of the Central Bank, stated that things were headed in the right direction:

“In my mind, everything is moving in the right direction. There has been significant economic growth; the Icelandic economy has grown by 20% over three years, from 2021 to 2023, which is a tremendous growth rate. Our goal at the Central Bank in this regard was to keep debt growth low. We wanted to ensure that this boom did not lead to the financial system overreaching or to seeing significant debt accumulation, and we have succeeded,” Ásgeir remarked.

Upbeat about the wage negotiations

As recently reported, collective bargaining agreements have been negotiated with a majority of wage earners in the general market, with the primary goal of reducing inflation and, thereby, interest rates. Ásgeir is sanguine about these agreements:

“I just want to say that these agreements are very positive. We haven’t fully overviewed them yet; they are complex and involve many parties, including the Treasury, and they are not yet concluded. I believe negotiations with the largest union are still pending, as well as various special unions. But the approach has been correct.”

The governor also stated that the agreements proved that everyone was aligned in their efforts, and now it was up to the Central Bank to ensure inflation decreased and the agreements delivered purchasing power to the public. He added that he could not comment on the interest rate as the monetary policy committee was yet to meet; the day of the next interest rate decision is just over a week away. As noted by RÚV, the analysis division of Íslandsbanki Banks predicts a 0.25% point decrease in interest rates, with others having similar expectations. The governor understands these expectations well:

“I understand this well because what we are seeing now is that inflation has decreased – it’s on the right track. The Central Bank predicts it will continue to fall. Likewise, we are seeing the real economy responding, the overheating is cooling down, and a decrease in loan demand. We are witnessing a decline in private consumption, investment, and other things, which suggests that we can start to ease up on the tightening of interest rates.”

Vote on New Mediating Proposal Closing, Results Expected Soon

A vote on the temporarily-appointed state mediator’s new proposal will end at 10 AM today. The results of the vote are expected to be in shortly thereafter.

Results expected shortly after voting closes

On March 1, temporarily-appointed state mediator Ástráður Haraldsson called a press conference to announce that representatives from the Confederation of Icelandic Enterprise (SA) and the Efling union had agreed to vote on his new mediating proposal. While voting took place, all ongoing and impending strikes and lockouts were to be postponed.

Voting began at noon, Friday, March 3, and it is set to conclude at 10 AM this morning.

As previously noted, the new wage agreement between Efling and SA, as provided by the proposal, would be fully retroactive from November 1, 2022, and salary increases would be tantamount to those stipulated in agreements signed by other unions. The contract would, however, differ in two respect from other similar contracts: a new job title for general hotel staff (i.e. almennt starfsfólk gistihúsa) would be created and drivers of the oil companies and Samskip would receive additional hazard pay.

Sólveig Anna Jónsdóttir, Chair of the Efling union, has stated that she would vote in favour of the proposal.

The website of the Office of the State Mediator notes that the wage rates in the main collective agreement will increase between ISK 35,000 ($246 / €233) and ISK 52,258 ($368 / €349) ISK per month, the average increase being about ISK 42,000 ($295 / €280). The relative increase in wage rates is between 9.5% and 13%, with the average increase being over 11%.

This article will be updated.

National Pact Required to Fight Ongoing Inflation

The Governor of the Central Bank has stated that a national pact may be needed in order to overcome persistent inflation, RÚV reports. Whether or not the country is able to leave indexed loans behind, depends, to some extent, on the nation itself. The Finance Minister agrees with these ideas.

Depends on the nation to some extent

As noted by RÚV, the Governor of the Central Bank, Ásgeir Jónsson, was quoted in an article in Markaðurinn, on June 17, 2020, as saying that “an increase in the issuance of non-indexed loans would be a major turning point and would mean that indexation would die out.” He believes that it depends, to some extent, on the nation itself whether or not indexed loans would become a thing of the past:

“I had envisioned that we could have a nominal interest loan system, which I believe has many advantages over indexed loans. Based on both lower macroeconomic and a more active monetary policy. But it’s quite obvious that if we don’t succeed in keeping inflation down, it’s difficult to adopt such a system,” Ásgeir told RÚV yesterday.

Ásgeir stated that it was possible to change the terms of non-indexed loans to accommodate borrowers when instalments rise. He believes that a new national pact may be needed to overcome persistent inflation. When asked what such a consensus would entail and who would participate, Ásgeir responded thusly:

“A National pact is, naturally, based on parties within the labour market, as was the case when the first national pact was struck around 1990, regarding realistic targets for purchasing power, and so on. Such a pact is also predicated on a certain level of trust between the parties – and government involvement.”

Minister of Finance agrees

The Minister of Finance, Bjarni Benediktsson, told RÚV yesterday that he agreed with the Governor of the Central Bank regarding this national pact against inflation, stating that such efforts had long been discussed within parliament.

After the economic crisis in 2008, economic stability was tackled by the government. A consultation forum was established with the aim of increasing prosperity, where it became clear that various reforms were necessary; the Central Bank had been afforded better management tools, public finances were cleaned up, and actions were taken to strengthen the framework for economic stability.

“There is no question that the stakes are high, regarding, for example, the next round of wage negotiations and our plan to improve the state finances over the coming years. It is of great importance, first of all, for households; second, for the economy as a whole, and this matters, also, in regard to the state treasury and the local authorities, too. It’s simply really important to keep inflation down; interest rates will follow suit and capital costs will decrease,” Bjarni Benediktsson told RÚV.

Bjarni added that inflation expectations were out of control and that the market had “lost faith that inflation could be contained.” The Central Bank’s primary role was to bring inflation down to 2.5%, however, Bjarni noted, it could not tackle the issue alone. The labour market played a big role, given, especially, that there was currently no wage agreement with government employees and that it would not be long before contracts on the public market would expire again. Bjarni also noted that the excessive salaries of CEOs would need to be addressed.

“I completely agree [that CEO salaries need to be curbed]. In terms of taxation, we have a special tax bracket for such income and there is no doubt that we do not want to see wage increases in the upper brackets given the circumstances. Such increases are absolutely the worst solution in a situation where we are trying to create harmony and convince everyone to pitch in.”

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.”

 

 

Sólveig Anna Re-elected Chair of Efling Union

Efling Sólveig Anna Jónsdóttir

Sólveig Anna Jónsdóttir has been re-elected chairperson of Efling Union. Sólveig resigned as chair of Efling less than four months ago amid allegations of bullying and serious workplace issues from Efling staff. Three former staff members sued Efling earlier this week before the Reykjavík District Court, in part for the newly-elected chair’s behaviour, Vísir reports.

Efling is the second-largest workers’ union in Iceland, with members working in public service, healthcare, and other industries. The union’s election concluded last night, with Sólveig Anna’s “B List” receiving just under 54% of the vote. The B List received a total of 2,047 votes, while Ólöf Helga Adolfsdóttir’s A List received 1,434 votes, and Guðmundur Jónatan Baldursson’s C List received 331. Eighty-eight votes were ruled invalid. A total of 3,900 Efling members voted in the election, or 15% of the union’s 25,842 eligible voters.

“It was an incredibly hard election campaign, I have to say that, and the fact that we have won despite the incredible accusations that have been levelled at us, is in my opinion absolutely amazing,” Sólveig told RÚV reporters when the results were announced last night. She expressed gratitude to voters for their trust and stated there is be a lot of work awaiting her as the union’s next chairperson.

Sólveig faces allegations of misconduct

The election campaign was plagued by reports of staff unhappiness, bullying, and misogyny under Sólveig Anna’s tenure. A report released during the campaign found that Efling spent close to ISK 130 million [$1.04 million; € 909,063] on personnel-related matters during Sólveig Anna Jónsdóttir’s four-year tenure as chairperson. Forty out of 50 of the union’s employees (80%) resigned from their positions during the same timeframe.

On Monday, three former employees of Efling sued the union before the Reykjavík District Court for alleged breaches of the wage agreement and reprehensible conduct of Sólveig Anna and Viðar Þorsteinsson, Efling’s former managing director, who is expected to return to his position following the election results. Sólveig Anna has denied all allegations of misconduct and has stated that her focus will be to serve the union’s members.