Three party coalition in Iceland: Tough tasks for new minister

Negotiations with the Icelandic Confederation of Academics, BHM, are already underway. The collective agreement for the public and private sector runs out in 2018/2019. 

Wage negotiations over the next one and a half years will be enormously important for securing Iceland’s economic stability, believes Professor Grétar Þór Eyþórsson at the University of Akureyri. Wage negotiations with trade unions must be held.

The greatest problem right now

There are already negotiations between the Icelandic Confederation of Academics, BHM, and employers’ representatives. Changes have just been made to academics’ pension systems. Grétar points out that changes to the pension system must be compensated by higher wages.

“This is perhaps the greatest problem right now,” says Grétar.

“We also need wage negotiations to get academics’ wages to the same level as private sector wages,” says Grétar.

“It might be difficult to find the right balance here,” he thinks.

The government has plans

The government is expected to use its influence in the labour market to help reach an agreement. Exactly what that might be, Grétar Þór Eyþórsson does not know. But he thinks the government already has plans.

Grétar points out that the new Minister of Social Affairs Ásmundur Einar Daðason has already said he wants to end poverty in Iceland. He also wants to increase the tax offset for older people without cuts to their pension payments. But these are welfare issues which have nothing to do with wage negotiations.

Must keep their promises

Þórunn Sveinbjarnardóttir is the BHM’s Chair. She points out that the confederation already has held constructive talks with the former finance minister Benedikt Jóhannesson. Since the election things have changed, negotiations have already been put back two months. Þórunn says it is not good to change government ministers too frequently when wage negotiations are ongoing.

“It was good that the government parties met the social partners before finalising the government negotiations, but we still do not know the results of that meeting,” says Þórunn Sveinbjarnardóttir.

“The government now needs to keep its promises of its planned course of action for the labour market,” she says.

Experienced government ministers

Iceland’s new government is a coalition between the Left-Green Movement, the centre-right Independence Party and the centric Progressive Party. Katrín Jakobsdóttir, leader of the Left-Green Movement, is the Prime Minister.

Professor Grétar Þór Eyþórsson points out that Katrín is an experienced politician. He expects that she, as a left-wing politician, will maintain good links with trade unions. The new minister Ásmundur Einar Daðason has experience as a member of parliament, but has not been a government minister before.