No Resolution September
30. September 2026September Ends Without a Resolution
In early March, it became clear that the conditions underpinning the collective agreements were less likely to hold than had generally been assumed. Inflation was rising. Public-sector fees had increased, price increases by companies had become almost a daily occurrence, and there was still no sign of the long-awaited action on housing, which is the biggest driver of inflation. The United States and Israel had launched an illegal war of aggression against Iran. The conditions underpinning the collective agreements were likely to fail regardless of increases in oil prices, and once those increases were factored in, it was clear that the impact in the autumn could be even more severe. As soon as this situation became apparent, specifically on 10 March, VR, LÍV and the skilled trades unions (Fagfélögin) formally began working together on the conditions underpinning the collective agreements. We knew that the situation called for thorough preparation and unity.
The clock is still ticking
We immediately began calling for measures to address the situation. At our initiative and that of the Icelandic Automobile Association, the Government introduced a progressive cap on oil prices into law, thereby protecting Icelandic households from the wide-ranging effects of rising oil prices. However, little progress was made on other fronts. Price increases continued to affect inflation figures month after month, while the authorities failed to act.
This was unfortunate because, in our view, measures could have been introduced in early summer that would have had a visible impact and thereby improved the prospects of keeping the collective agreements in force. In our article “A Summer Without Action”, published on Vísir in early August, we reviewed the situation. At that time, however, the attention of politicians and voters was primarily focused on the referendum on the EU. Meanwhile, the clock was ticking in the labour market. And it is still ticking.
Since then, little has changed. The oil price cap expired without any further measures being taken. The effects have already appeared in the inflation figures and will work their way through the various indexation mechanisms and ultimately into people’s housing costs. The Government presented a budget bill that appears almost designed to sustain inflation and increase the burden on wage earners, although it has now emerged that this was part of some kind of ill-conceived game theory.
First, the problem must be acknowledged
VR, LÍV and Fagfélögin have sent letters to price-setting companies and municipalities, asking them to clarify how they intend to meet their commitments under the collective agreements. It has become apparent that most of them did not consider themselves to have any obligations at all in relation to the current collective agreements, despite having signed declarations stating that everyone should now pull together.
Some companies have, however, now risen to the occasion, and there have also been positive indications from municipalities of a genuine willingness to keep increases in fees under control. The focus now remains on the Government and Parliament when it comes to the budget bill. The problem, however, is that none of this will be settled by 8 October, which is the deadline for the trade unions to terminate the agreements.
We at VR, LÍV and Fagfélögin have taken a firm position that the same promises made in 2024 cannot simply be renewed. Wage earners have been let down, and if trust is to be rebuilt following that breach of trust, the starting point must surely be to acknowledge the problem and accept what has happened.
We have called for such an acknowledgement in the form of an adjustment for wage earners, who have borne the burden alone. In doing so, we have pointed to the fact that collectively agreed wage increases for large groups of our members have fallen behind inflation, while services for families with children — who were specifically meant to be protected during a period of inflation — have been reduced.
In practice, this means that people’s real wages have fallen at the same time as housing costs have risen sharply for many households and the daily juggling act faced by families with children has become more difficult. This is not what was agreed.
The ball is in SA’s court
The Confederation of Icelandic Enterprise (SA) has stated that it does not intend to accommodate wage earners in the way we have requested. Nevertheless, SA believes that the best outcome would be for the collective agreements to remain in force and has spoken of the need to “keep faith with the project” — namely, bringing down interest rates and inflation, as was intended when the agreements were signed in 2024.
VR, LÍV and Fagfélögin have repeatedly emphasised their willingness to keep the collective agreements in force, but not on the basis that wage earners continue to foot the bill while other groups remain protected.
Out of respect for SA’s request that we “not give up on the project”, we have made a final proposal aimed at resolving the situation while keeping the collective agreements in force. We are not prepared to lock our members into continued deterioration in their terms and living standards. We have therefore proposed that the collective agreements remain in force, but with two new review clauses: one in March and another in September.
By the turn of the year, it should become clear whether measures taken by companies are delivering results and whether the state and municipalities are honouring their commitments regarding increases in public fees. If they do, inflation should fall, allowing the collective agreements to run their full course.
But if the Government and companies once again sit back while wage earners are left holding the bag, the trade unions must have a way out of the agreements. Our proposal for the new review clauses is designed to provide precisely that.
We will now see whether the Confederation of Icelandic Enterprise truly has faith in the project.
The ball is in SA’s court.
Halla Gunnarsdóttir, President of VR.
Jakob Tryggvason, President of RSÍ.
Andri Reyr Haraldsson, Vice-President of RSÍ and President of FÍR.
Eiður Stefánsson, President of LÍV.
Gunnar Sigurðsson, President of VM.
Óskar Hafnfjörð Gunnarsson, President of MATVÍS.
Source: Visir