"Out of the Question" to Cap Public Employee Salaries - The Reykjavik Grapevine

“Out of the Question” to Cap Public Employee Salaries

Published June 9, 2010

The labor union Federation of State and Municipal Employees (BSRB) told state broadcasting service RÚV that Minister of Social Affairs Árni Páll Árnason’s proposed salary cap on public servants until 2013 was “out of the question”.
As reported 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.
Helga Jónsdóttir, director of BSRB, told RÚV that the idea was “out of the question”. Minister of Finance Steingrímur J. Sigfússon said that such a decision was untimely, and that no final decision has yet been taken by the government, adding that he believes the salary cap only needs to extend to 2011.
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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