Bjarni warns wage talks cannot deliver everything

VR and the Federation of Icelandic Commercial Workers (LÍV) have been given authority to terminate their collective agreement with the Confederation of Icelandic Enterprise (SA) if the employers’ association makes no offer, mbl.is reports.

The VR board, which also serves as the union’s negotiating committee, received an unequivocal mandate to end the agreement at a meeting with the union’s representative council yesterday. The board later met with LÍV’s negotiating committee, where a majority supported granting the same authority. Other unions also received permission yesterday to terminate their agreements if they cannot reach a deal with SA.

VR chair Halla Gunnarsdóttir said she hopes SA will sit down with the union to find a solution, adding that this should have happened long ago.

SA has said it could consider shortening the agreement by a few months, according to its managing director, Bjarni Benediktsson. But he said the two sides had not reached a shared understanding of the conditions for doing so.

“We do not see how increasing the cost of these agreements, as they stand, would align with the goals of lowering inflation and interest rates. In the end, people have to decide whether it matters to them that inflation and interest rates come down. You cannot have everything,” Bjarni said.

Halla said VR would consider a shorter agreement, but would not accept weak provisions on its underlying terms that would apply next autumn. She said the proposal would need to be more substantial, adding that the union was open to solutions but would not agree to anything that clearly locks its members into lower wages throughout next year.

Bjarni said wages are due to rise by 3.5% and 5% at the turn of the year, depending on the groups covered. He described the increases scheduled for next year as the upper limit of additional costs employers could take on.

He said he understood VR’s position that wage increases should at least match inflation, but argued that value must be created before it can be shared. Simply saying that wages should track inflation was an outdated approach, he said.

If the agreements collapse, a new round of negotiations will begin in difficult conditions, Bjarni said, and a long-term agreement should not be expected. If negotiators push for more than employers can bear, he warned, inflation could remain higher for longer.