Iceland PM hopes talks can avert wage agreement terminations

Icelandic Prime Minister Kristrún Frostadóttir says continued talks with the Icelandic Confederation of Labour and the Confederation of Icelandic Enterprise could prevent the termination of collective agreements, mbl.is reports. She stressed, however, that the decision rests with the trade unions.

Twelve-month inflation has reached 5.6 per cent, up from 5.3 per cent last month and its highest level in two years. The increase breaches a provision in the collective agreements, which set a target of 4.7 per cent inflation at the end of August.

“We have been analysing the purchasing power and income position of these groups, the rental market and housing issues,” Frostadóttir said in an interview with mbl.is.

She said the government was also preparing several bills concerning the labour market for the coming winter, in cooperation with the labour movement and the employers’ association.

Frostadóttir described the 5.6 per cent inflation rate as disappointing, saying prices had not developed as hoped over the past four to five months.

She said inflation had been below 4 per cent during the first year of the current government, but that an external shock, including higher oil prices, had contributed to the recent increase. Airfares and other oil-related factors accounted for a large part of the additional rise, she said.

“But this only gives us further encouragement to keep our major promises regarding public finances and ensure a balanced budget this autumn,” Frostadóttir said.