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Unions sign deal for 100,000 workers

04.04.2019 - 09:50
Mynd með færslu
 Mynd: Hófí - RÚV
The SA Confederation of Icelandic Enterprise and representatives of around 100,000 workers in 30 different trades unions last night signed a new contract to last three years and eight months, from 1st April 2019 until 1st November 2022.

The wages and working conditions contract is joined by a so-called “quality of life contract” that offers government action aimed at raising the living standards of lower earners in Iceland. 

According to the SA contract with the unions (including the six that were negotiating on their own and all the others who were represented by the Federation of General and Special Workers) monthly wages for the lowest earners will increase by 90,000 krónur a month, spread over four raises over the contract period. The wages of higher-earning salaried workers will increase by 68,000 krónur over the same period. There will also be a one-off 26,000 króna pay-out for all the affected workers at the start of May this year. 

By negotiating a pay rise in krónur instead of percent, negotiators have made sure the raises have proportionately more positive impact on lower earners. Minimum wages, currently 300,000 krónur a month, will rise to 317,000 immediately and will hit 368,000 krónur by the start of 2022. 

Even higher increases are possible if companies and the national economy perform well. This performance related raise element is new in Iceland; as is the possibility of shortening the working week to 36 hours. 

Several other changes to raise the living standards of low-paid workers are included in the union and employers’ contract, but most changes are in the “quality of life contract” between the unions and the government. 

The government is promising to invest 80 billion krónur over the contract period that will include higher child benefits and increasing new-parents' leave to 12 months. A new three-tier tax system will save the lowest earners around 10,000 krónur a month. 

The government is also promising to change the law on inflation indexed loans that would prohibit the inflation indexing of loans with repayment periods shorter than ten years and longer than 25 years, starting at the beginning of 2020. The government will also seek to remove property prices from consumer price index calculations. The government also commits to various housing relief measures and to boost social housing in Iceland. 

While the Central Bank of Iceland remains independent, it is also being called upon to lower interest rates.  

There were smiles on all sides at the signing ceremony last night for the contracts that are said to be especially positive for low earners and young families.