From Iceland — Government Introduces New Economic Package; Unions Expressly Disappointed

Government Introduces New Economic Package; Unions Expressly Disappointed

Published September 30, 2020

Photo by
Art Bicnick

Prime Minister Katrín Jakobsdóttir introduced yesterday a new economic stimulus package aimed at keeping Iceland’s economy alive through the coronavirus pandemic. The points of emphasis have drawn criticism from labour; in particular the union Efling, which characterised the package as “only support[ing] employers and the wealthy”.

There are eight main points for the stimulus package, which are the following:

1. Refund for the VAT extended through 2021.
2. Insurance premiums will be lowered until the end of next year, wherein the reduction of the social security contribution will be equivalent to the amount not deducted from wage increases due to be implemented at the start of 2021.
3. Economic assistance to companies currently struggling to remain profitable in numerous forms, including both loans and grants.
4. Tax incentives for investors.
5. Economic assistance for innovation and food production.
6. Improvements to planning and construction.
7. Reforms to the pension system.
8. A bill which supports the “life collective bargaining agreement”, which pertains to rental law, bankruptcy regulations, indexed loans and other details.

The package was not entirely warmly received by labour. Drífa Snædal, the president of the Icelandic Confederation of Labour (ASÍ), expressed her misgivings about the agreement with Vísir.

“We should have in mind that social security payments fund parental leave and unemployment insurance,” she said. “It is very important to keep these going. We will never agree to having the proposed extension of parental leave being postponed because of it, and I hope that is not the plan.” For the record, Minister of Social Affairs Ásmundur Einar Daðason said that the extension will not be postponed.

“It is curious indeed that the government foresees a basis for such cooperation while wage theft, breaking of labour law and threats of voiding agreements happen without consequence.”

Efling, one of Iceland’s largest labour unions, had a more pointed response to the package. In a statement posted to their official site, they criticised the government’s plan, saying it “only supports employers and the wealthy. It is a concession to pressure on their behalf, and disregards working people.”

Efling points out that the package includes nothing about the promised penalties for wage theft, “a simple matter of justice which will not cost the government anything”, saying that a “new and astonishing promise is seen instead, of tax breaks for the wealthy to ease their purchase of company shares”.

Furthermore, the union accuses the government of having “allowed itself to be blackmailed by the employers’ association, SA, who charged ahead with baseless threats of voiding collective agreements.” They conclude that the government is demonstrably favouring employers over working Icelanders.

“The methods of employers, unto which the government has now given its blessing, do not bode well for the ‘cooperation’ of social partners on the preparatory report ‘on future arrangements of collective agreements and labour market affairs’ which is spoken of in the action plan,” the statement concludes. “It is curious indeed that the government foresees a basis for such cooperation while wage theft, breaking of labour law and threats of voiding agreements happen without consequence.”

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