Þorsteinn Víglundsson: Legislating for an equal pay standard

Þorsteinn Víglundsson is new in his job as Iceland’s Minister of Social Affairs and Equal Rights. He believes his ministerial post and his former job as head of the employers’ organisation SA gives him deep insight into the needs of the labour market. He knows the social partners well and is quite clear on his mission during this parliament. 

“My experience with labour market issues is a strength. I am sure I will manage to find a balance between the standpoints of employers and employees. I look for solutions which gain everyone,” says Þorsteinn Víglundsson when we meet in his Reykjavik office.

Iceland’s social partners have agreed to review the labour market negotiation model, i.e. the framework for how the negotiating policy and the labour market works. The goal is to create a negotiation framework modelled on the Nordic Model. Work methods used for wage negotiations will be improved. Another aim is to achieve greater purchasing power and economic balance while lowering inflation and interest rates and stabilising the currency. The agreement should also help create balance and calm in the labour market.

New agreement frameworks based on Nordic Model 

The government minister’s biggest task right now is to strengthen and facilitate the introduction of the negotiating model. The process is facing a crisis right now, as some trade unions are unhappy with the wage increases that have been promised until 2018, when the model is due to be implemented.

“The labour market model in the rest of the Nordics is very desirable. It provides a better economic balance,” the Minister of Social Affairs says.

“But if Iceland is to adopt the Nordic model we need to solve the problems facing the project right now. The new government will work closely with the social partners to find solutions,” he says. 

Resulting in new legislation

The Icelandic mediation commission will be revised, new frameworks for how the social partners cooperate must be found: The way they negotiate, solutions for various labour disputes and the processing of salary information – both for individual wage negotiations and for the labour market as a whole. The review will take two to three years. Þorsteinn believes that legislation covering trade unions and labour disputes will have to be revised towards the end of this period, as a result of the new model.

“There is always the same problem. Our labour market is smaller and more fragmented than that of the other Nordic countries. Small trade unions are extremely powerful. We lack discipline and determination in the labour market,” says Þorsteinn.

The Icelandic Confederation of Labour ASÍ’s collective agreement has become the foundation for further wage negotiations, which means trade unions demand and achieve higher wage increases than the collective agreement stipulates. These are problematic circumstances if you want to achieve a balanced economy, argues Þorsteinn. He points out that there is also a need for more discipline in the government’s budget. Efforts have been made over the past six to seven years, but according to him there is still room for improvement.

Legislating for an equal pay standard

We have been sat talking in Þorsteinn’s office for 30 minutes. But the Nordic Labour Journal cannot interview Þorsteinn without asking about the introduction of the equal pay standard, of which there has been much talk for several years. It has been one of his big goals.

“It became necessary to legislate for boardroom gender quotas, although it is for a limited period of time only. In the same way we will legislate for the equal pay standard,” says the Minister for Social Affairs Þorsteinn Víglundsson.

“That way we promote better work methods when it comes to reducing undesired gender pay gaps,” he continues.

Pay gaps still big

Statistics show Iceland has a big gender pay gap. This has not changed for the past ten years. Þorsteinn reminds us about how he, as the head of SA, demanded legislation for the equal pay standard so that companies with 25 or more employees had to make sure there were no wage differences between men and women. 

“I don’t think this is because we want a situation where men are paid more, I’m afraid it has more to do with a lack of knowledge within companies. This has possibly more to do with company leaders’ not paying attention, or not thinking things through,” he says.

He thinks the pay gap problem can only be solved of you really look at the the company books solely with this in mind. He points out that if management goes through salary statistics with the equal pay standard in mind, you will get a standardisation of different services and work tasks, the salary system becomes more transparent and it becomes easer for management to rectify what is wrong. 

“The equal pay standard is a fantastic tool which we will use to get away from the nasty habit which the gender pay gap really is,” he says.

A new three party coalition government

Þorsteinn Víglundsson was voted into parliament for the first time last autumn and has already become a government minister in a three party coalition government. Iceland’s new government enjoys a slim majority. The leader of the largest party, the Independence Party, would have preferred a stronger majority, but at the end of government negotiations the result was a three party coalition led by the Independence Party.

These three parties have had a lot in common from the start, even though there are different opinions on fishery policies, Europe and perhaps also agriculture, says Þorsteinn. 

Changing politics

The government negotiations were unusually lengthy, running over several months. Þorsteinn thinks Icelandic politics are changing. New parties have entered parliament. There are more of them than ever before; a total of seven parties are now represented. Over half of the MPs are new. Þorsteinn thinks that might have had something to do with the length of the government negotiation. 

“The MPs needed time to get to know and start to trust each other,” explains Þorsteinn Víglundsson.

He thinks the long negotiations were a good thing.

“To agree on a government programme we needed to negotiate both on the left and on the right. Parliament managed to finalise the budget negotiations before the government was formed. We achieved solidarity and managed the budget issues in a responsible way,” he says.

“A slim majority gives the government the opportunity to improve its cooperation with the other parties. We need to prepare our proposals better than before, send them to parliament and give it more of a chance to debate our proposals. Hopefully this will lead to better working methods and increased cooperation between the government and parliament,” he says.