VR warns it will terminate wage agreements without corrections

Halla Gunnarsdóttir, chairwoman of VR, says the union will terminate its collective agreements if the Confederation of Icelandic Enterprise offers no measures to compensate workers. She made the comments to mbl.is.

The agreements’ conditions broke down last month after inflation exceeded the agreed thresholds. Trade unions have until October 8 to terminate the agreements.

“We are in a difficult position,” Gunnarsdóttir said, adding that a three-way discussion between the Icelandic Confederation of Labour, the Confederation of Icelandic Enterprise and the government was under way and could hopefully produce results.

She said the government’s budget bill had complicated the situation. It was difficult to accept promises of improvements that would come only after October 8, she said.

Talks with the Confederation of Icelandic Enterprise about the collective agreement itself had made little progress, Gunnarsdóttir said. She argued that workers needed to receive some form of compensation after taking a significant financial hit while others had not fulfilled their commitments.

Contractual wage increases have fallen below inflation, she said. The difference is almost 2.3 percentage points, meaning workers received pay rises below price increases while many also faced sharply higher housing costs.

VR will meet the Confederation of Icelandic Enterprise tomorrow. Gunnarsdóttir said the union hoped it would respond to proposals including wage corrections and additional vacation days to compensate for reduced services for families with children, particularly in preschools.

“There is little time left, and I find it incredible how slowly things have progressed,” she said. VR began calling for immediate measures in the spring to prepare for the autumn, but those calls were not answered.

“We are in a difficult position and cannot see a way out of it as things stand. If nothing is done, we have no other option than to terminate the collective agreements,” Gunnarsdóttir said.

VR has sent letters to all companies and municipalities asking what they are prepared to contribute. The union has received some positive responses, she said, but some companies also appeared surprised that they were being asked to honour their obligations under the collective agreements.