The government’s measures in relation to collective agreements

Sólveig Anna Jónsdóttir, chairman of Efling, and Stefán Ólafsson, expert at Efling, pleased with the new collective agreements.

The Government has published an introduction to the actions it will, together with the Association of Icelandic Municipalities, undertake in relation to collective agreements. Efling, and the entire Union Alliance, made it clear from the beginning of the negotiations that the basic premise for a long-term collective bargaining agreement, with modest wage increases, was the restoration of the public transfer systems and the actions of public bodies to hold back fee increases. With that, and a moderate collective agreement, it would be possible to bring down inflation, and thus interest rates, to everyone’s benefit.

The collective bargaining agreements of The Union Alliance, Efling, SGS and Samiðn, with The Confederation of Emplyers (SA) were signed yesterday, after an agreement was reached with the parties and the government and local authorities had made it clear that they would take action in a satisfactory manner.

In an announcement from the governmet it is stated that the measures should support the joint goal of the government and the parties to the agreement to lay the foundation for growing prosperity, with increased purchasing power and to contribute to the reduction of inflation and interest rates.

The total scope of the measures amounts to up to 80 billion ISK during the four-year contract period of the collective agreements. The measures will increase the disposable income of families significantly, or by up to 500 thousand ISK per year.

Measures ralated to housing

Measures will be taken to promote a healthier housing market, amounting to around 50 billion ISK over the next four years. Emphasis will be placed on the strong development of residential housing, by supporting the development of 1,000 apartments per year for the duration of the contract with 7 to 9 billion ISK initial contributions from the government fund for public housing and by securing cooperative loans. With this, housing security will be strengthened and housing costs will be manageable. The municipalities will provide lots.

Special interest support will be paid to households with housing loans in the current year, up to ISK 7 billion all in all, due to the increased interest costs. Because the conditions of the collective agreements are based on the fact that the interest costs of households will decrease, such special support is not expected in later years of the contract period. Maximum support will amount to 150 thousand ISK for an individual, 200 thousand ISK for a single parent and 250 thousand ISK for cohabiting people, taking into account reductions due to income and assets. It is expected that the support will be paid directly to the loan principal, but it will be possible to request that it be used to reduce mortgage payments for a certain period of time.

Housing benefits will be increased from 1 June to reduce burdensome costs for tenants. Basic amounts will increase by 25 percent. Tenants’ housing security will also be increased and a clearer framework will be established regarding rental amounts.

Measures to support families with children

The government also intends to improve the situation of families with children during the contract period, and the measures involved are estimated at around 50 billion ISK. Contributions to child benefits are to increase by 18 billion during the contract period, the payments will be increased and income reductions will be withdrawn.

School meals for elementary school children will be free from next fall, but parents usually pay about 12 thousand ISK per month for school meals for one elementary school child.

Maternity leave payments will be increased in three phases over the next two years, and the maximum payments will go from ISK 600,000 to ISK 900,000. It is also promised that systematic work will be done to ensure that all children will be guaranteed stay in kindergarten after maternity leave, before the end of the contract period.

Holding back on fee increases

The government  and local authorities will hold back on their fee increases. State fee will not increase beyond 2.5 percent next year. The local authorities declare their desire not to increase fee for the current year by more than 3.5 percent and to revise them if they have increased more.

In addition to this, measures will be taken to eliminate the gender wage gap, improve access to health care regardless of residence, increase the maximum liability from the Salary Guarantee Fund, increase opportunities for vocational training and make changes to the Student Education Fund, which, among other things, aim to ease the interest burden.

Statement by the government and the Union of Icelandic Municipalities regarding collective agreements in March 2024, in Icelandic.

Growing Prosperity – Presentation Slides, in Icelandic.

Sólveig Anna and Kolbrún Valvesdóttir, boardmember of Efling, cheerful after the agreement was signed.