VR union warns budget threatens wage agreements

The board of Icelandic trade union VR has expressed serious concern about the government’s proposed budget, saying it could significantly reduce the chances that collective agreements in the private sector will remain in force, mbl.is reports.

In a resolution issued Thursday evening, the board called on the government and parliament to revise the bill with workers’ interests in mind. It urged them to reduce planned charges on households, freeze public tariffs and introduce effective measures to lower inflation and interest rates.

According to the proposal, public tariffs are set to rise by at least 5.2 per cent. VR said the government should honour commitments made when the latest collective agreements were signed by keeping the increases within the Central Bank’s inflation target.

“The budget proposal instead assumes that tariffs will rise in line with inflation, which can sustain a spiral of inflation and high policy rates,” the resolution said.

The board also called for a legal oil price cap to be reinstated and kept in place for as long as the oil crisis continues. Without such a measure, it said, removing the cap would increase inflation and add to housing costs.

VR supported the government’s proposed rent brake and broader improvements to tenants’ rights. However, it said the government needed to take realistic long-term measures to promote stability in the housing market, adding that there was currently little reason for optimism.

The board criticised plans to reduce capital contributions to the general housing system and lower value-added tax refunds for residential housing. It also said housing and child benefits would continue to lose value, despite being among the most targeted ways to support vulnerable households.

Changes to the calculation of personal tax credits would also increase workers’ tax burden, VR said.

“Taken together, the government’s budget proposal is a cold message to workers, who must now deal with the collapse of the assumptions underpinning collective agreements, distrust of the authorities and companies, and the consequences of four years of high-interest-rate policy,” the resolution concluded.