Two Enter, One Leaves: Iceland’s Labour Struggle

Iceland’s largest labour unions have been gearing up for an intense struggle for workers’ rights when collective bargaining negotiations begin in early 2019, with labour leaders working to reach a consensus on their demands. At the same time, Minister of Finance Bjarni Benediktsson has been issuing veiled threats towards these unions in public interviews.

If the union leaders seem angry, it might have something to do with not just the Minister’s threats, but also what appears to be an imbalance of priorities in the government as a whole. As such, it appears all but certain that 2019 is going to be a vibrant one in Iceland’s ongoing labour struggle.

To understand how we got to this point, it is important to understand how labour negotiations in Iceland work.

The “worker’s paradise”

Iceland has a highly unionised workforce; about 80% of all workers are in a labour union, but the collective bargaining agreement for any given trade applies to all employers and workers in that trade whether they are unionised or not. Further, replacing striking workers—also known as scabbing—is illegal. Agreements are negotiated every one to three years, give or take, involving not just union leaders and management, but often times also a government arbiter (although they usually only step in when negotiations between labour and management are untenable). The importance of this last point will come up later.

While this might make Iceland appear to be a worker’s paradise, the reality can be very different. For example, it might be illegal to replace striking workers, but Parliament can order striking workers to go back to work if they believe it is within “the public good”, as they did to striking airplane mechanics in 2010. Previous union leaders were often perceived as too cozy with management, leading to insignificant gains for workers, and prompting a major uprising of more radical-minded leaders this year. Even then, unions have difficulty keeping up with their own casework when it comes to worker exploitation.

Contrary to popular belief, labour unions generally seek to avoid going on strike; the public perception of strikes almost always falls negatively on unions, no matter what their demands actually are.

All these things have brought us to where we are now: Iceland’s workers want their share of the wealth they produce. But the government in general, and the Ministry of Finance in particular, have been adamant in their opposition to the major demands.

The cost of living

Kveikur, an investigative news programme on Icelandic public broadcasting, recently met with Sólveig Anna Jónsdóttir, the chair of the labour union Efling; Ragnar Þór Ingólfsson, the chair of the labour union VR; and Drífa Snædal, the president of the Confederation of Icelandic Labour Unions.

All three were on the same page when it came to one of their major demands: raising the minimum wage by about 40%, to 425,000 ISK per month before taxes. They justify the demand in citing the skyrocketing cost of housing in Iceland, especially in Reykjavík, where the current minimum wage of 300,000 ISK does not even cover the average rent in the capital area.

“No room” for wage increases

That demand will be hard fought. In an interview Bjarni gave to the magazine Stundin last July, he stated in no uncertain terms that “It is obvious, and has been obvious for a long time now, that room for wage increases is little to none.” However, just before Parliament went on Christmas break, MPs generously awarded themselves a 20% payout to parliamentary parties after having already doubled that payout in 2018. Further, they also allowed themselves to hire 17 new assistants over the next three years, at a cost of 250 million ISK per year.

In an interview Bjarni gave to Morgunblaðið around this time, he stated that proposed tax cuts to Iceland’s lowest paid workers may have to be reconsidered if labour negotiations “get out of hand”, effectively threatening labour leaders with taking money away from workers in one area if they demand what he considers too much money in another.

Take it to the state

Undeterred, Efling, VR and the Akranes Labour Union issued a joint statement saying they would be joining forces in the upcoming collective bargaining negotiations. Furthermore, they have said that they will preemptively call upon the government arbiter to step in, indicating that they not only anticipate a hard fight ahead—they are ready for it.

The move is not unprecedented, but it is highly uncommon. Contrary to popular belief, labour unions generally seek to avoid going on strike; the public perception of strikes almost always falls negatively on unions, no matter what their demands actually are. As such, calling upon the government arbiter ahead of time means more than just the unions being ready to take action; it also means they are hopeful that any strikes can be avoided.

All that said, given the clear and unmoving positions both sides have taken, 2019’s labour struggle may indeed be marked by a strike, perhaps even more than one. Collectively, the unions taking the hardest stance have a huge chunk of the workforce behind them. Whether the government will choose to avoid a crisis or force the unions’ hand remains to be seen.