Iceland inflation breaches wage agreement threshold, ASÍ chief says

“This is bad news for the entire nation, both wage earners and employers,” Finnbjörn Hermannsson, president of the ASÍ labour federation, told mbl.is in response to the latest inflation figures.

Twelve month inflation is now 5.6 per cent, its highest level in two years. A clause in the collective agreements signed in 2024 allows employers or workers in the general labour market to terminate the agreements if annual inflation exceeds 4.7 per cent at the end of August.

“These figures do not come as a surprise. This began taking shape early in the summer, and the result is as we expected,” Hermannsson said.

The so called conditions committee will meet on Monday to decide whether the agreements remain in force. Hermannsson said he expected it to conclude that the conditions had been breached, after which the parties would have to sit down and try to agree on a response.

He said discussions with the Confederation of Icelandic Enterprise and the government had taken place throughout the summer, and that local authorities would now also need to be brought into the talks. According to Hermannsson, retailers, the state and municipalities had passed the effects of inflation into prices at the expense of wage earners.

“If we are not to completely lose control of inflation, all parties must make a concerted effort. That was, in fact, the premise of the 2024 collective bargaining process,” he said.