State role in wage talks cannot create budget deficit, minister says

Finance and Economic Affairs Minister Daði Már Kristófersson says the government is open to the state playing a role in wage negotiations, but any measures must not come at the expense of a balanced budget, mbl.is reports.

Unless the current situation changes, termination clauses in collective agreements signed in 2024 can be activated this winter. However, Kristófersson said there were limits to what the state was prepared to do.

VR, a trade union, is among the organisations calling for government action. Its board has said that if neither the government nor the Confederation of Icelandic Enterprise takes action, terminating the collective agreements will be unavoidable.

“We have been very open to the state having some involvement. But what both the prime minister and I have said is that this cannot come at the expense of a balanced budget,” Kristófersson said.

“If that means solving collective agreements by the state injecting money into the market, that measure needs to be financed, and there needs to be agreement on that financing,” he added.

Asked about the government’s ability to respond to the labour market parties while aiming for a balanced budget next year, Kristófersson was asked whether the government therefore had five billion Icelandic krónur available.

“I did not say that, you did,” he replied. The government is aiming for a five-billion-króna surplus in the Treasury next year.