According to an article published by RÚV, experts perceive a stark lack of trust between management and workers.
The recent report commissioned by the office of Left-Green Prime Minister Katrín Jakobsdóttir stated that the maximum pay increase is only four percent. The government is planning to introduce a one percent tax cut for the lowest tax bracket. This will be a huge loss for the state and have a marginal impact on yearly wages for low-income workers, amounting to 10,000 ISK per person.
Reykjavík University economist Katrín Ólafsdóttir noted that the cost of the tax cut would need to be offset by taxes on high income earners or other forms of taxation. The Independence and Progressive parties, the other two thirds of the awkward ruling coalition, do not make a habit of raising taxes on their wealthy donor base. They have the lowest tax burden of the elite in any of the Nordic countries.
The leadership of the largest union, VR, said it may be willing to accept the limited pay increase and tax cut in exchange for shorter working hours and increased housing support. Workers in Iceland work more than their Nordic counterparts. Katrín believes the biggest issue is trust between the negotiating parties. Long-term commitments could restore trust. She believes all sides want to maintain stability and growth in the economy.
Well over 200 contracts are up for renegotiation over the next year.
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