Iceland: Trust in politicians almost regained

There are few events that have affected Icelandic society more than the collapse of the banking system in October 2008. A big part of the effects turned out to be short term, but examples can be found of long-term effects. One of many who lost their trust were politicians, but they are slowly regaining it.

But not everybody lost their trust in them – one of those who kept the faith were the leaders of the labour market, both unions and employers.  Another long-term effect is that the four largest parties in Iceland have much less support than before the crisis and the number of parties has also gone up.

To take a closer look at it, we talked to Ólafur Þ. Harðarson, professor in political science at the University of Iceland. He said that before 2008 trust in politics had been one of the highest in the world and like other Nordic countries. 

“In 2009 trust in politics and the banking system takes a huge dive but that doesn’t mean trust in general decreases,” says Harðarson. 

“That means people still trusted other people and trust in civil service, health care system, courts and the police remained high. The trust in police even increased that year, which is very interesting when you look at the huge riot that took place at the beginning of the year and was a consequence of the crisis.”

There have been many demonstrations against politicians sitting in Iceland's parliament. Here from 2010, when the Icesave agreement was going through parliament. It was about Icelandic banks' foreign customers who the Icelandic state had to compensate when the banks went bust. Photo: Ane Cecilie Blichfeldt/norden.org

If Alþingi is taken separately over 40% trusted it before the crises. In 2009 it fell dramatically, down to 13%. Then it started to increase gradually and in 2018 it was almost 30%. 2019 came another fall, below 20%. The main reason for that is that in late 2018 a discussion of five parliament members at a bar was caught on tape, where they were saying demeaning things about their lawmaker colleagues and even ministers. But in 2021 the trust was measured over 30%. 

“So you can say that the trust is now close to what it was before the crisis but that took 12 years,” Harðarson says. 

When asked why it has taken so long, Harðarson says that economically Iceland recovered fast – in 2013 it was on its way up again. That, however, did not show immediately in the trust in Alþingi. “The reason for that is that the collapse in 2008 was not only economic but also social, political and ethical. Icelanders were in shock. This affected the national spirit and self-esteem. What most people took for granted suddenly wasn’t there. It’s also common that opinions of people take longer to shift than the economy.”

Three more parties in Alþingi

The political system has also changed dramatically. During the last few decades, four parties have had most of the votes. These are the Independence party (Sjálfstæðisflokkurinn, Conservative right), the Progressive party (Framsóknarflokkurinn, centre/right), The Social Democrats (Samfylkinging – previously Alþýðuflokkurinn - centre/left) and the Left green (Vinstri hreyfingin grænt framboð – previously Alþýðubandalagið – left).

These parties have had over 90% of the votes respectively. But this has changed. In the last two elections, 2016 and 2017, these parties have had 65% of the votes and recent polls suggest that it could be even less in the coming elections. 

The number of parties has also gone up. After the elections in 2009, there were five parties, in 2013, they were six, in 2016 seven and in 2017 eight parties were elected. After the next elections parties will be 7-9 in Alþingi according to polls.

“The financial crisis sped up changes in the political system that were perhaps underway,” Harðarson says. 

He thinks the increased number of parties is a permanent thing and the crisis contributed to it, but it is also part of a common development in Scandinavia. 

“It looks like the times of these big parties in the Nordic countries are over. In Iceland, the Independence party often got up to 40% of the votes, but since the crisis it has had around 25%. And the Social democrats had around 30% before the crisis but they have around 15% now. In fact, since the crisis only the Independence party has had more than 15% of the votes. So, we have more parties and smaller parties, just like in other Nordic countries.”

The behaviour of the voters has also changed – they are more likely to change their votes from on election to another. 

“This had started before the crisis and increased faster after it. So, loyalty to parties has been decreasing.”

Harðarson also points out that this has caused inconsistency in governments. The current government will only be the second one since the crisis to finish its term. Three other governments did not manage to do it. 

“The current government was unusually formed, where the parties furthest to the left and furthest to the right formed a government with a central party. The main reason was claims for more stability. There you have three of the old parties together, which could be seen as a reaction to them getting a smaller part of the votes.”

Harðarson also points out that the coalition system has changed. 

“Unlike other Nordic countries, Iceland has a strong tradition for majority governments. Earlier, the Independence party could practically choose which party he wanted to join in a two-party coalition. But after the last two elections, a two-party coalition has been impossible. In 2017, the leader of the left socialist party became Prime Minister, and that was the first time that happened in the Nordic countries.”

“And now we have a situation, if we look at the polls, that the only chance that the Independence party has to be in government is to be under the leadership of the Left green! This is a whole different landscape from what we are used to.”

Increased government support during the pandemic

The pandemic has of course affected the politics in the world – and that is also the case in Iceland. However, when it hit full force in March the government made the firm policy of laying low until actual measures are announced and let the scientists – chief epidemiologist and the director of health – and the civil protection unit of the state police be in the public spotlight.

Also, the government followed almost to the letter the suggestions of the chief epidemiologist. This approach seems to have worked well with the public and even the opposition hardly criticized the government approach throughout 2020, when two big waves hit Iceland. That has changed in recent months, but the elections tend to have that effect. 

This approach seems to have a good effect on political trust. The latest poll, from April this year, indicates that the trust in parliament is now around 30%, a big jump from around 20% the year before. Harðarson also points out that the pandemic has apparently affected government support.

“Every government after the collapse has started with more than 50% support and then it diminishes. The support of this government was below 50% at the start of last year but it increased during the pandemic and now it has 60% support, which is significantly more than the government parties are getting in the polls. This is common during a crisis. The support of the political parties is also above 50% which is good.”

The labour market maintains trust

But has this development in any way affected the communication between the government, the labour unions and the employers? 

Stefanía Óskarsdottir, photo Kristinn Ingvarsson, University of Iceland.

The short answer seems to be no. Stefanía Óskarsdottir, associate professor in political science at the University of Iceland, who has done research in the communications between the authorities and the labour market, points out that in most areas it is clear which organizations represent them. 

This representational monopoly puts these organizations in a strong position and has contributed to a tradition for a good connection between those organizations and the authorities. Unions and employers are no exception to this.

“These organizations have for example always representation in public committees. So, their position in that way is stronger than in other Nordic countries. This creates a foundation for consultation between the labour market and the state.”

Trust built in 1990

According to Gylfi Dalmann Aðalsteinsson, associate professor in human resource management at the University of Iceland, the collective agreements between labour unions and employers have been assisted with a government promise of reform.

This reached its peak in 1990 when, after years of conflicts with long strikes, a deal was made that is daily called the National reconciliation (“Þjóðarsátt” in Icelandic). In short, this deal contained a modest increase in salaries while the workers got a stable economic environment with lower inflation.

Gylfi Dalmann Aðalsteinsson, photo: Kristinn Ingvarsson, University of Iceland.

“With this deal, much trust was built between the leaders of the unions, employers and the state. And this trust was maintained for over 25 years,” Aðalsteinsson says. 

After the banking crisis, trust between the labour market and the government did not diminish even though the trust in politics did. At the time, everybody was adamant about rebuilding the economy.

So, a stability agreement was made in June 2009 between the unions, employers and the government, so that the labour unions would not demand significantly increased salaries if inflation, interest rates, the currency value and other factors would be within certain limits. The Confederation of Icelandic Enterprises pulled out of the deal a year later because they thought it didn’t reach the goals, but this pull-out did not have a long term effect.

That however changed when new leaders were elected in the largest unions. They were Efling, which serves the uneducated workers, and VR, which mainly serves commerce employees. These leaders were elected in 2017 and 2018 respectively. 

“This causes more conflict and more critical debate. However, the consultation between the unions, employers and the government continued and lead to a new deal in 2019, called a deal of living conditions,” Aðalsteinsson says.

 That deal involved, in short, higher salaries, lower taxes, more flexibility in working hours and ways to create a basis for lower interest rates. So even though the trust seemed to diminish with new leaders of labour unions, the deals have been made without too much conflict. 

But all this mainly applies to the private market. This trust and consultation have not entirely reached the public sector. Aðalsteinsson says that usually in the private market the state brings their own suggestions in order to make it easier to reach a deal. The basis there is then used to reach a deal with public employees. 

“What has reduced trust in the public sector is that the unions of those employees are not always consulted, and they have not been happy with that. Alþingi has also stopped strikes in the public sector which also affects the trust,” Aðalsteinsson says.

He says that in short, personal communication matters most when trust is being built between parties. 

“And right now, with the leader of the Left green as prime minister, the trust should be exceptional since that party has a strong connection with the unions.”