The new collective agreement made between several unions and management has been approved by voting workers, but participation was in some cases lacking. A major food importer and manufacturer is still planning to move forward with price hikes, and retailers are nervous.
As RÚV reports, 17 of 19 unions under the auspices of SGS, which includes Efling, approved the new agreement by majorities of 70% or more. However, voter participation was on average at 12.78%. At Efling, participation was at 10.16%. Voter participation was marginally better at VR, at 20.85%, but of those, 88.35% approved the new agreement.
While there has been much celebration despite the low turnout, the matter is far from over. As reported, ÍSAM, a wholesaler and manufacturing company behind many products sold in Iceland, has already threatened to raise prices on their goods by 3.9%, with a 1.9% increase on imported goods if this agreement was approved by workers.
By all accounts, these price hikes will go into effect, and Vísir reports that Bónus, Iceland’s leading discount grocery store, is particularly worried about what these price hikes will mean for their business. That said, RÚV reports that consumer advocates are ready to fight hard against any such price hikes.
The reasons for ÍSAM’s price hikes are unclear. In 2017, the company boasted on their own website that they had earnings totally over 80 million ISK three years in a row. In 2018, they reported a turnover of 12 billion ISK. Although their profits were down slightly that year, in single-digit percentages, they are not exactly hurting for cash.
In all, ÍSAM’s strategy brings to mind Rick Hanauer, a venture capitalist and billionaire, who has been a vocal critic of corporate capitalism and has pointed out a number of contradictions and fallacies within free market circles. Amongst them is the notion that keeping wages down helps keep profits up. In a recent interview, Hanauer deftly points out why this idea is illogical.
In what he calls an “econo-erotic fantasy”, your typical capitalist, he says, believes that “My customers will all be rich and be paid a lot by their employers. My workers, sadly, will not be paid a lot, so my margins are very high. I’ll exist in this world where my workers need food stamps, sadly, but my customers are wealthy enough to both buy my stuff and pay the taxes that will fund the food stamps.”
The truth of the matter, Hanauer says, is quite different:
“Rich people no more create jobs than farmers create tomatoes. The economy generates jobs, not rich people. The more money consumers have, the more jobs that are created, because people buy things and people like me are required to hire people in order to meet that demand.”
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