The Confederation of Icelandic Employers and the Confederation of
Icelandic Labour Unions have both urged the government to make further
cuts to the national budget instead of raising taxes. Specifically, they would like to see the government focus more on cuts to the 2012-2013 budget.
Officials from labour, management and the government have been in talks for the past couple weeks now trying to work out a new agreement that would make all parties satisfied. According to sources close to Morgunblaðið, a 13,500 ISK general raise in salaries that was to go into effect on 1 July will instead be cut in two – 6,750 ISK on 1 July, and 6,750 ISK on 1 November. A 3.5% inflation adjustment will be delayed until 1 November as well. Furthermore, a 6,500 ISK pay raise planned for January 2010 will be pushed back to June 2010, where then a 2.5% inflation adjustment will be made as well.
The sources report that labour and management have been satisfied with the 2010 budget, but were sorely disappointed with what the government had in store for 2011 through 2013 – that is to say, raising taxes. Both labour and management are reportedly trying to convince the government to make further cuts to the budget instead of initiating the proposed tax raise. Talks are still ongoing.