Reykjavík leader warns wage decision could backfire

Pétur Marteinsson, leader of the Social Democratic Alliance in Reykjavík, has warned that the city council’s decision to give the Association of Icelandic Municipalities a mandate to negotiate collective agreements on the city’s behalf could amount to short-term cost-cutting with negative consequences later, mbl.is reports.

The change is expected to save Reykjavík City 65.5 million Icelandic krónur a year. Marteinsson said the decision could be viewed as an efficiency measure, but argued that Reykjavík, Iceland’s largest municipality with nearly 10,000 employees, had a political responsibility to take an active role in wage negotiations.

He said the decision should also be considered alongside other changes to the city administration, including the closure of the human rights council and human rights office.

“When Reykjavík’s wage negotiation committee is being abolished, I feel that we are somehow freeing ourselves from responsibility, and this could come back to haunt us,” Marteinsson told mbl.is. He said he would prefer the city to take responsibility for negotiating with its own employees.

Marteinsson said that when services are closed and staff numbers reduced, decision-makers may focus primarily on immediate savings rather than possible longer-term effects.

He cited Virknihús, a city service that helped people receiving financial assistance from Reykjavík become active and enter the labour market. He said the service had helped move people from financial assistance into paying local taxes, creating an annual impact worth hundreds of millions of krónur.

“But when it is closed and four or five people are dismissed, you only see that figure and not how this could come back to haunt us later,” he said.

Marteinsson said the same argument applied to the city’s decision not to take political responsibility for negotiating with its employees, warning that it could also have consequences later.