Kristrún to present measures aimed at protecting wage agreements
Thursday 1st October 2026 on 18:15 in
Iceland
Icelandic Prime Minister Kristrún Frostadóttir will present a package of measures to her cabinet on Friday, aimed at protecting wage agreements, reducing inflation and creating conditions for lower interest rates, mbl.is reports.
Frostadóttir announced the plan at the annual meeting of Samtök atvinnulífsins, Iceland’s employers’ association, in Harpa on Thursday. She said it followed constructive three-party talks between the government, the Icelandic Confederation of Labour and the employers’ association.
The measures would be limited in scope and, she said, would neither increase costs for businesses nor threaten the government’s goal of a balanced budget.
The government is prepared to limit increases in general fixed-amount charges and fees charged by state agencies to 2.5%, provided wage agreements hold and other parties contribute. Frostadóttir pointed to a resolution by the Association of Local Authorities in Iceland calling for local-government fees to rise by no more than 2.5% in 2027. State-owned companies would also be encouraged to follow the same limit.
She said the government was changing course in its fight against inflation by putting public finances in order and cooling the economy. Inflation remains just under 6%, which she said was too high.
Frostadóttir said she had expected greater interest over the summer in exploring the possibility of completing Iceland’s EU membership negotiations and adopting a more stable currency. She said a stable currency could have served as an anchor for the labour market and economy, but added that voters had made their decision and the government would respect it.
She also highlighted business investment, saying investment by the business sector was at its highest level in Iceland in half a century, except for the three years before the financial collapse, when company borrowing was high and construction at Kárahnjúkar was at its peak. Investment as a share of the economy is now twice the level seen in the years after the collapse, she said, while general business investment is expected to rise by more than 6% this year.