It is absurd to claim that the nation’s profitable assets must be sold to reduce interest costs, as employers are now claiming. This is stated in a statement by the board of the Efling Union that was approved today, January 31, 2025. “Employers and the wealthy simply covet the nation’s good assets for their benefit – and not for the benefit of the public.”
The statement traces how employers’ associations have come galloping out on the scene with a soup of proposals, proposing to the government the most unrestrained neoliberalism. The proposals consist of ideas for privatization, reductions in taxes on companies and capital, and cuts in welfare spending.
“Efling warns against this false propaganda by employers’ associations and financial powers and urges the government to stick to its promises of social reforms and the necessary income generation from those who are well-off. No additional burdens must be placed on workers, as there is no need for it.”
The resolution in its entirety is below.
Employers covet the nation’s assets
Statement from the Efling board
The employers’ associations (SA, the Icelandic Chamber of Commerce, and the Icelandic Merchants’ Association) are making waves these days. They consider the government’s call for public ideas on streamlining measures in public operations an ideal opportunity to recall the most radical neoliberal ideas about privatization, reducing taxes on companies and capital, and cutting welfare spending and public wages. They have now sent their giant packages on this subject to the government and trumpet the message frequently in the media.
There are many contradictions and weak arguments for the cause of these proposals. For example, SA people say that Iceland is doing exceptionally well in terms of value creation (economic growth per capita) but then say that there is a particular need for increased corporate competitiveness through tax cuts, massive privatization, and cuts in public spending and employee benefits. This is all improbable.
The fact is that the last three years have seen record profits in companies. They are doing so well that new jobs are increasing far too quickly so labor has had to be imported from abroad in large quantities. Among other things, this has completely disrupted the housing market, with the burden of inflation and interest costs for wage earners’ households. The overgrowth of the tourism industry has increased private consumption in the country by too much, with the accompanying incentive to inflation. The public is then made to bear these burdens through interest rate increases.
The second fact is that taxes on companies and capital in Iceland are relatively low among OECD countries, and public spending is just average, not particularly high. Public interest payments are high, not because of particularly high debt, but because of the unusually high interest rates in Iceland right now. Public interest costs will fall when interest rates fall.
It is therefore absurd that the nation’s profitable assets need to be sold to reduce interest costs, as SA people claim. Entrepreneurs and the wealthy simply covet the nation’s good assets for their benefit – and not for the benefit of the public.
There is also no particular need to reduce public activity or income, although some savings can be made. On the contrary, companies, capital owners, and those who exploit the nation’s natural resources need to contribute more to correcting the large accumulated infrastructure debts and welfare deficit that was evident in the recent parliamentary elections.
Efling warns against this false propaganda by employers’ associations and financial powers and urges the government to stand firm on its promises of social reforms and necessary income generation from those who are well-off. No additional burdens must be placed on workers and low-wage workers, as there is no need for it.