The Office of Prime Minister Katrín Jakobsdóttir commissioned economics professor Gylfi Zoega to write a report about potential wage increases ahead of a series of tough negotiations, RÚV reports. Gylfi estimates that the maximum pay increase is 4%. He believes inflation would set in and erase the gains if wages increased more. This is well below what the rabble will accept, and will undoubtedly be used by Finance Minister Bjarni Benediktsson, the son of one of Iceland’s richest men, to reject worker demands. Bjarni has been Finance Minister for most the last five years, except for a brief stint as Prime Minister last year, and has consistently resisted wage increases.
Þórunn Sveinbjörnsdóttir, the leader of the Union of University Educated Workers (BHM), was unenthusiastic about the wage increase but welcomes the report’s acknowledgement of workers struggles, such as limited and expensive housing. Many of BHM’s members work for the state and have generally seen their wages increase more than those in the private sector.
One exception being the midwives. They recently signed a contract that makes their pay equal to other nurses but well short of what they desired. They had been without a contract for over a year and the new contract expires next year. Union members in the capital region’s District Commissioner’s office staged a long and very disruptive strike in 2015. It delayed the certification of many documents, including liquor licenses and marriage registrations (including a certain Grapevine writer’s. Takk Bjarni!).
Over the next year, around 240 contracts will be up for negotiation and many expect tense discussions. Iceland is in one of its longest and most stable periods of economic growth and workers want their share. In the past few years, members of Parliament, ministers, and CEOs of state-owned companies have received pay increases well above 4%. Income inequality has been increasing. This discontent is evidenced by the recent election in the Efling union, which saw a dramatic swing to the left. The union represents many workers of foreign-origin and those who earn low wages. The new left-wing Socialist Party, who sought and received votes from the same groups, gained a seat on the Reykjavík City Council.
Iceland is a highly unionized country, with over 80% of workers belonging to a labour organization and collective bargaining agreements cover almost 90% of employees. Unemployment is currently at or near historic lows, giving labour some leverage. Unions have succeeded in getting large wage increases in the past, which some economists claim led to high inflation, although this contention is debatable.