VR warns collective agreements may have to be terminated

The board of VR has expressed serious concern about the labour-market situation and says the conditions underpinning current collective agreements are failing, mbl.is reports. It says the government and companies have neglected their obligations under the agreements despite repeated calls from VR for action in recent months.

When the agreements were signed, workers accepted wage increases below inflation in the expectation that companies would restrain price rises and the government would limit increases in public charges. The aim was to reduce inflation and interest rates, the board said in a resolution.

Instead, the state and municipalities have raised charges excessively, while large companies with significant influence over prices have increased their profits during the period of inflation, according to the resolution.

The board said it remained ready to engage in solution-focused talks with the government and the Confederation of Icelandic Enterprise to preserve the collective agreements. If no other solution is found, however, it considers termination of the agreements unavoidable.

VR’s board also rejected claims by government and employer representatives that the agreements’ conditions had not failed because purchasing power had increased and inflation was caused by external factors.

“Wages determined by collective agreements have risen less than prices, while workers, particularly families with children, are facing enormous housing costs because of extremely high interest rates,” the resolution said.

It added that interest payments for many households had doubled during the term of the agreements, meaning that only debt-free property owners could increase their purchasing power in such circumstances.

The board said inflation was fundamentally a domestic problem rooted in poor housing policy and excessive price and charge increases. It called for domestic inflation to be tackled forcefully to create the conditions for a coordinated response when external shocks occur.

“The government and companies have neglected their obligations towards the collective agreements, and for months VR has pointed to where matters were heading and called for action,” the resolution said. It added that price and charge increases had continued, unemployment had risen and all indications pointed to inflation increasing rather than falling.