Public Employees Feel the Crunch - The Reykjavik Grapevine

Public Employees Feel the Crunch

Published June 8, 2010

Employees of the Icelandic state will soon be undergoing a number of changes in an effort to balance the budget, including salary caps, Minister of Social Affairs Árni Páll Árnason told reporters yesterday.
All employees working for the government of Iceland will be experiencing salary caps until 2013. Furthermore, pensions for the retired and other support payments the government makes will also be frozen until this time.
Explaining the reasoning behind the decision, Árni Páll points out that, “Giving raises to public workers in the current circumstances would necessitate a reduction in jobs – we would need to lay people off in order to give others raises.” He furthermore called upon the nation to show solidarity in defending the social welfare system, such as services for the elderly and the disabled, children’s assistance, rent assistance and other programs.
He emphasizes, though, that costs can be spared in other areas, such as certain transportation projects and the reduction of foreign affairs staff overseas.
Not everyone is happy with this idea. Árni Stefán Jónsson, chairman of the Union of Public Servants, questioned the decision and asked whether the minister intended to “go to war against public servants”. Freezing salaries, he contends, would cause people to spend less money, which would exacerbate stagnation within the economy. He points out furthermore that according to Statistics Iceland, salaries on the national average went up by 1.3%, but public servants only saw an average rise in pay of 0.3%.

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