Market Solutions and Neoliberalism Rejected in place of Wage Driven Growth and Public Welfare

It is necessary to start in the name of public interest and long term perspectives when responding to the worst crisis in human memory here in Iceland. In seeking out solutions based on neoliberal ideas such as wage cuts, a contraction of the public sector and deregulation of the private sector the root of the issue is not being addressed, and these measures promote a deeper economic crisis longer in duration. This is explored in Efling‘s response to SA‘s proposals outlined in the document „Lets Move Forward“, in which they were presented at the beginning of the months in newspapers and on its website.Efling fundementally rejects SA‘s ideas in addition to the Chamber of Commerces‘ similiar ideas as a response to the current economic recession. Efling asserts that it is urgent to safeguard the living conditions of workers in order to promote continuted demand for goods and services and reduce the loss of jobs within the labor market. The public sector is also encouraged to increase the amount of jobs in infrastructure develioment, even if this requeires temporary debt accumulation. The benefits of maintaining a higher level of employment are reflected in a faster recovery in the economy. It is important to remember that additional debt due to crisis response will not change the fact that the national debt situation will remain low in an international context. It is not correct to say that the public sector has expanded, the reality is that the public sector has only grown in line with the economy as a whole since 1990.Efling completely rejects SA‘s proposals to adapt the tax system to the needs of companies and reinstate the tax deductions for purchasing stock shares. On the contrary, there is a need to create space to lower the income taxes for low wage earners by raising taxes on capital income and high income, raising the resource tax and pursuing tax evasion. Efling agrees with SA that strong actions are needed to bring unemployed people back to work and that it is urgent to reduce real estate taxes for the lowest income groups. No statement was made on the fact that social security contributions will be temporarily reduced in order to offset wage increases or unemployment during this difficult year. Conversely there is a warning that reducing the general level of value added tax has often been linked to an increase in taxes on necessities such as food.Last but not least, Efling completely rejects SA´s proposal to centralize and reduce wage agreements. Efling asserts that bargaining rights of trade unions are the core of the Icelandic labor market system and a cornerstone of democracy in the country. A centralized wage system for wage bargaining not only reduces workers‘ contractual rights but renders them nearly ineffective.Efling also points out that wage agreements should not only be about dividing future economic growth, but also cover changes in income distrubution, development of welfare systems and living/working conditions in general.Efling Trade Union‘s response to the Confederation of Icelandic Employers‘ proposals on economic, tax and labor market issues in response to the crisis can be read here.