Statistics Iceland reports that the monthly wage index in January 2009 increased by 0.6 percent to 355.7 points. That figure is around 7.5 percent over the previous 12 months.
The January increase means that ‘real wages’ stayed the same in that month, but have fallen 9.4 percent in the last year as a whole. Real wages are an assessment of spending power where the effect of inflation is subtracted from the numerical significance of wage increases.
“According to an agreement between the Association of Local Authorities and the Association of Teachers in Primary and Lower Secondary Schools, wages increased by 2.5 percent from 1 January 2009.
“The wage index in January also reflects the effects of a collective agreement made between signatories at the local government level in December 2008 and an agreement between the Confederation of Icelandic Employers and the Confederation of Icelandic Bank and Finance Employees which was signed 5 December 2008,” the report says.
[…] Icelandic wages still increasing […]
>Ok , give me a break somebody has to be a little controversial while SIR EURO/GUS is A.W.O.L
Actually, you’ve got a good one here. Parity looks to me to be well below the current rate, say GBP 1 : ISK 100 if we stick to margaritas. As soon as there’s any topping involved it moves up to something like the Sedlabanki rate, but as imports are expensive even that’s surprising.
The only explanation I could come up with is if a sizable portion of the cost of making pizzas is the energy cost.
If multi dimensional adolescent spoof fantasies are your observation hobby then I’d concede that Gus provided much material to fill out a classic profile.
Yes I miss Gus too…the forum is not the same without him.
Big Mac Index Part 2
The reason big mac cost so much in Iceland is because franchise owners were greedy and placed huge mark ups.
Also MCdonalds not that popular in Iceland we used to have 4 i think now only 3 ,and burger king also closed.
Icelandic fast-food outlets do make better burgers.
Pizza Index!
For some strange reason pizza is main diet of the youth in Iceland.
Probably in the Reykjavik area there is around 50 pizza takeaways, maybe more?
Yes.. i know ,ridiculous.
But ,the competition was so strong you could get a large 16″pizza for around 1000 isk or a little more providing you self collected.
I believe this was cheap even by international standards?
So just a thought if you substituted price of big mac to pizza ,the results would be very different!
Ok , give me a break somebody has to be a little controversial while SIR EURO/GUS is A.W.O.L
To:- ISK
You Wrote:
[Many who comment here have lived in Iceland a short time, have visited Iceland for a short [vacation or maybe was involved in Icesave .
[and I presume some who have NO connection to [Iceland ,but try to STUDY US ,(from news they [pick up)
[Well i read here to STUDY YOU IDIOTS!
[The truth is unless you were born or have lived [in Iceland a very long time ,you people will just [NEVER understand!
[Iceland is “special ”
[We did and will continue to be “ourselves”
]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]
You are right!! ….many idiotic comments here are clearly from those that made a stopover in Iceland or those that are on vacation in Iceland for a short while, they do not know how the system works, all they do is make idiotic comments. Most of them are very ill informed. They have to live here for a long time to know the system or be born here!
;)
Iceland will be Iceland! and Icelanders will always be themselves.
Note: A round of applause to you ISK :-)
@Alexander
Funny comparison indeed. :-)
Now let us suppose that the animals in the forest want to measure the weight of elephant.
They construct some kind of scale and start weighing. They conclude that elephant weighs 4000 parrots (they had to look very very long before finding so many parrots) and 80 monkeys.
After this they were delighted to notice that monkey weighs 50 parrots…and they did not even have to weigh him to know this!
Four old friends – Elephant, Monkey, Parrot and Python – have been enjoying good day in the jungle. Monkey, looking at Python, suddenly said “Look at him! He is sooooo long! BUT! But how long is he indeed?”
Parrot replied “Well, we can measure him and find out how long he is” (as Parrot was considered to be an expert in …well everything).
Elephant asked “But how can we measure him? And what does it mean – to measure? Is it dangerous? Is it easy?”
“No problem at all. We can measure Python …in Parrots!” replied Parrot.
So they lined up both and found that Python’s length is exactly 38 “parrots”.
Monkey (suddenly) wished to measure Python in “monkeys”. Ok, they did this and found that the length was 6 monkeys.
After that Elephant insisted to measure Python in elephants. It was done – and it was 2 “elephants” in length.
After all that Python who was keeping silence all the time said “Guys! I have to tell you that in parrots I’m much, much looonger!”….
The Icenews article headline blasts out “Wages still increasing”
yet the article content clearly indicates wages are decreasing.
” ‘real wages’ stayed the same in that month, but have fallen 9.4 percent in the last year as a whole”.
You would have to be a total moron to believe that wages have increased in real value as the headline deceptively indicates.
@Alexander
Yesterday you posted some things on immigration and integration which really make a lot of sense but you also tried to belittle Bromley.It is not correct to do so, since Bromley knows his facts and alwasy does his best to come up with sensible answers.
@ISK
a mouse that tries to roar like a lion….is still just a mouse (jiddisch proverb)
* Should read ISK 75/l in that final table. That’s what I used for the calcs.
“Currently, almost half the cost of a tank of gas in Iceland is made up of government taxes, including a value-added tax and a special tax on fuel.”
April 2008 http://edition.cnn.com/2008/WORLD/europe/04/24/iceland.fuel/index.html
Assuming that nothing has changed, and assuming petrol is currently ISK 144/l, we’re looking at ISK 75-80 per litre with the tax stripped out.
Also, according to wiki, those UK tax figures are wrong. They reckon untaxed fuel in the UK is about 28p in Dec 08 (same prices as now).
http://en.wikipedia.org/wiki/Gas_tax#United_Kingdom
The US is harder, but including tax seems to be 51c.
http://en.wikipedia.org/wiki/Gasoline_and_diesel_usage_and_pricing#Average_gasoline_prices_around_the_world
Tax varies a lot, but seems to average ~47c/gallon, or ~12c/l:
http://en.wikipedia.org/wiki/Gas_tax#United_States
So US fuel, stripped of tax, is 39c/l
Therefore:
Test:
USD 0.39/l
GBP 0.28/l
Exchange rate – GBP 1 : USD 1.44
Petrol parity – GBP 1 : USD 1.39
Not bad, seems to be working.
Now Iceland to US & UK. We’ll take the smallest possible cost of ISK 75.:
USD 0.39/l
GBP 0.28/l
ISK 70/l
Exchange rate – GBP 1 : ISK 162
Petrol parity – GBP 1 : ISK 267 (+65%)
Exchange rate – USD 1 : ISK 112
Petrol parity – USD 1 : ISK 192 (+71%)
Oops. Looks like that exchange rate is fictional :) . Also, it makes those fishermen exchanging ISK for NOK at 136% look very smart.
@Alexander
talking about the Bigmac (and i can proudly say that i do not eat the stuff too) one of the reasons for the fact that it is used as a kind of measurement is the fact that they are usually not imported but composed of simple products (meat, lettuce, bread, cheese) that are bought locally (reflecting local prices) . However, if your hometown is really somewhere in Siberia with very little agriculture around it (I do not know the situation off course) then it is possible that they are flown in, but this is a rather exceptional situation.
As for fuel prices in iceland, for me, visiting as a “Lord Euro” from a country with ridiculously high fuel prices, the icelandic level indeed was a pleasant one.
ISK said:
“I am sorry but people have tried using this one before to CLAIM our mighty ISK was the most overvalued currency in the world.
BULLSH*T”
The facts speak for themselves, the real value of the ISK has been set at 300++ per Euro in the free market outside Iceland. But people like you know better than the worlds economists who use facts (such as the well regarded Big Mac index) to value currencies.
Hubris and self delusion is the heart of Iceland’s problem and its seems that some at least still suffer from it.
>Bromley86. You are free person as well as others. If you need support in such a simple matter – what do you understand about economy then?* :-)
Actually, I was asking if anyone else wanted to provide the information that we need to do a sensible petrol_price:exchange_rate comparison. Mounting some sort of anti-Alexander campaign, as well as being pointless, would just feed your ego :) .
But let’s do it your way.
ISK 144/l Price of petrol in Iceland
USD 0.51/l Price of petrol in US
So ISK 144 = USD 0.51, therefore $1 equals ISK 282. Not quite the same as the Sedlabanki rate of 112, is it :P .
Now is it clear why you stip out the tax element? Probably it is to you but, as you seem to prefer to try to get a reaction than to discuss, no doubt you’ll try to insult me instead :D .
2 Bromley86
* – it was a joke of course.
BTW – 86 is your DOB?
BTW these same people are driving used Jap cars ;-)
Ah! One more thing, Niels. I’m comparing FUEL prices not car prices. And I mentioned about Toyota as Icelandic Toyota “eats” same fuel and in same volume as Dutch Toyota. If we use BigMac tool – I have no idea how much you consume – but I never eat them anyway. And because in my town few people are asking for it – prices are much higher. As production volume is very low (most likely airlifted from west part of the country?)….
Bromley86
You are free person as well as others. If you need support in such a simple matter – what do you understand about economy then?* :-)
As opposed to 2000 km winter road. Once a year. ;-)
I’m just answering to the note, Mossback, that fuel price in Iceland is more expensive because of transportation cost.
So my question – how many people here have heard about not so old “deal” among Icelandic fuel supplies? And their “fair” and “market” bensin prices?
BIG MAC INDEX
I am sorry but people have tried using this one before to CLAIM our mighty ISK was the most overvalued currency in the world.
BULLSH*T
I conclude on this forum we have far to many
“have a go economic experts ”
Many who comment here have lived in Iceland a short time, have visited Iceland for a short vacation or maybe was involved in Icesave .
and I presume some who have NO connection to Iceland ,but try to STUDY US ,(from news they pick up)
Well i read here to STUDY YOU IDIOTS!
The truth is unless you were born or have lived in Iceland a very long time ,you people will just NEVER understand!
Iceland is “special ”
We did and will continue to be “ourselves”
P.S has GUS/sir Euro left the building?
@AlexanderE
> -shipping is the least expensive way.
As opposed to what — perhaps teletransportation?
Man, what a convolution you weave!
The Big Mac index, because of the sandwich’s ubiquitous availability, is a fairly significant, albeit empirically derived, benchmark of a country’s currency’s purchasing power. You can accept it or deride it but it is uncannily accurate. Its appeal is in its simplicity.
I see that I’m wasting my time with you Alexander. Anyone else?
@Alexander
Please read my post:
+++++++
Fuel in Iceland is cheap indeed but this merely shows that the icelandic authorities levy lower taxes on it
+++++++
I was not saying that Iceland does not place any taxes on fuel, just that they place LESS taxes, just like they place more taxes on other goods, like beer and…cars.
Because cars, just like fuel are a consuming device whose price is VERY largely determined by taxes imposed on it by authorities.
Fishy made a good observation on this in the following thread, please here it is:
https://www.icenews.is/index.php/2008/10/21/iceland-debates-refunding-tax-on-used-cars-sold-overseas/
So, when the krona still had a good value against the USD it paid to import a car from the USA to Iceland because that very same car was more expensive in Iceland…because of icelandic taxes.
And I do believe Fishy knows about cars, he has a big one himself :-)
The use of Bigmacs as a reliable device of reference is not caused by its local popularity and even less by its culinary appeal but because it is a product whose price is very much determined by market forces and not by taxation policies or even government intervention.
Moreover it is a product of mass-consumption, unlike a car which people only buy every few years.
In eastern Russia authorities have tried to restrict the people from buying good and cheap second hand japanese cars in order to protect the russian car industry. Such intervention makes cars even less attractive as a valid means of reference.
BTW thumbs up for the culinary taste of the people from your hometown. The fact that they don’t like the McD stuff shows that they know about real food :-)
Please have a look at Bromley’s link too, it was a good anaysis.
@Bromley: one of the biggest german chains of petrol stations (Aral) advertises on every pump: “for every euro of fuel, 66 cents of taxes”
The following chart is both illuminating and depressing
http://www.aral.de/aral/extendedsectiongenericarticle.do?categoryId=9024440&contentId=7047034
Bromley86
Next time visiting pump station just pay 7p to retailer. And explain to him that you’ll pay the rest – taxes and production cost to respective parties – by yourself. ;-)
Otherwise we have to disintegrate Big Mac down to production cost of coal that used to produce steel that used to produce machinery etc. etc. up to expenses for hiring celebrity to advertise junk food ;-)
It doesn’t matter what the product’s cost consists of in different places. It only matters how much YOU can buy with income that YOU generate. And units should be same. And what could be more same all over the globe than A95 bensin and Toyota?
Well – only Kalashnikov comes to mind …. ;-) But they are not sold here.
As such – it’s irrelevant how much goes to government etc. Retailers would be happy to sell you the gas for 300 pound per litre. They just can’t.
But my point was a little bit different (sorry that I have to explain basics to you – like price policy). The point is that fuel in Iceland in times “before kreppa” and “after kreppa” (further just b.k. and a.k.) in nominal prices are practically same. But krona is very different. And with current rate at 145 is looks much more like real value that it was at 85 (or 1.70 euro per litre).
As to transportation cost – shipping is the least expensive way.
A link to bc123a’s post where he considers a creme brulee index, rather than the big mac one, as most of the ingredients are local.
https://www.icenews.is/index.php/2008/11/01/icelandic-delicacies-served-in-new-harbour-restaurant/
(and where I demonstrate my inability to google “skyr” :) ).
So, anyone got a current price for creme brulee in an Icelandic restaurant? Don’t forget to evaluate (roughly) the quality of the restaurant.
As Niels has said, fuel costs at the pump are not useful.
Now, if you strip out the tax (both fuel duty and VAT/sales tax) and get just the basic cost, that’ll do.
i.e. the UK Dec 08 (litre):
41p Fuel Duty
28p Manufacturer
11p VAT
7p Retailer
—
87p
[source: http://www.moneysavingexpert.com/travel/cheaper-fuel ]
I can confirm that ~87p is what I was paying in December for unleaded at the pump.
So, the non-tax element is 35p.
Of course, costs to get the petrol to Iceland will be higher due to distance and market size, but I didn’t choose petrol as the comparison tool :) .
Niels.
If you think that petrol in Iceland is tax-free – you are wrong ;-)
And it is more universal tool as it’s basic price is rather global (linked to crude oil prices). Cars are also globally universal consuming devices. Contrary to the big mac’s consumers. In my home town (twice the size of Iceland) you can hardly find 1000 regular big mac users (this food not popular at all). But there are about 200.000 cars.
So what tool is more accurate?
@Alexander
Fuel is not a good basis for comparing prices, since the price of fuel is largely determined by the amount of taxes which authorities put on it (and not by market forces) . Here in western Europe some 2/3 of the price of fuel is a tax , imposed by the gov.
That is the reason that fuel is so expensive in western Europe.
However, european govs argue that the tax earned from fuel is used to improve infrastructure (I do not really trust them, but al least this is the argument they use) . I do not know if this is the case in Iceland.
Fuel in Iceland is cheap indeed but this merely shows that the icelandic authorities levy lower taxes on it
However if you would take BEER the comparison would change completely. And if you would take a look at most imported goods in Iceland you will find that taxes on them are higher too in Iceland than in most EU countries. After all, Iceland is (still) an expensive country, compared to most EU countries.
However your idea in using a common product to compare (relative) prices/ exchange rattes is a good one, but the best product for this comparison is the US BIG MAC!
There is even a ‘big mac index”
http://www.economist.com/markets/bigmac/index.cfm
cheers!
oops…
Denmark 116.1
Iceland 98 cents (144 isk per liter /147 isk per euro)
I see nothing wrong neither with the rate nor with the price.
I have no idea, Easy. Why are you talking about poor Greece?
And I guess you missed my point – all except one car dealers already sold their stuff. So one greedy and stupid is not a problem. I’m just wondering what he is waiting for. And I would be surprised if all people become wise at once. For some wisdom never comes no matter what.
Now let’s look at situation with open ice …sorry eyes. To compare ISK rate to other we need to use some other measuring tool. And what is universal tool? Right – petrol!
Belgium 117.8
Austria 93.9
Belgium 117.8
Finland 114.7
Germany 116.4
Greece 83.0
Netherlands 130.1
Italy 112.7
Luxembourg 91.1
Spain 87.0
France 113.6
Ireland 94.6
Portugal 112.5
Slovenia 91.0
AND
ICELAND
Wellcome to Iscubaland!!!
well alexander, this is just an example of the real situation of this country, and prove of what YOU have been denying all along, so dont BSHT, this shows just how stupid you post are about how well the krona is doing and how the krona reall value should be 120, when corrency gives the option of this kind of “market” it only means one thing. so open your eyes and get real, the only logical coment ou have made so far is about the prices at the bilasalur, and what are this people specting, and this is the situation of the whole nation from bilasalur retailers to centralbank all the way to the goberment, they are waiting for something from mars to come or a get the savior the jews are still waiting for befor them. And you have made it very clear that you agree with that and that thats is the way it shold be SIT and Wait, so you shouldnt be surprised about the bilasala you visited, they are just doing what YOU think this nation should do to get out of this situation. And please if you replay to this post pleas please think befor you write, dont come up with things like:
” yes but cars are different than strawberries, and greece gets a big income of forign currency selling oranges to europe”
WTF!!! is that. cheers!!
Thanks, guys.
This is excellent example how real economy works ;)
People are adjusting to the situation and they do it much faster than any government could possibly perform. Cause this is the only way for them to survive. As contrary to the governments. It’s called “incentives” in market economy ;) In real life it’s called “kick the ass”.
I noticed that some dealers were able to get rid of their stuff very quickly. But looks like not all are that smart. Two days ago visited one of bilasala – it was terrible. Line by line of cars at huge prices. What are these guys waiting for? Buyers from Mars?
Alexander E, here is a quick and dirty translation, sorry for any spelling/grammar errors:
“Flood of cars from Iceland to Norway
=====================================
The collapse of the icelandic economy has led to a huge “closing sale” in the used card marked, writes (the paper) Finansavisen.
– The transport ships are going all the time. We tries to be cheapest and do the best buys. We buy a lot and sell quickly, says car dealer Trond Sandven in Bergen to the paper.
One third of the new car price
——————————
Sandven do not buy so many luxury cars from Germany any longer, but rather cheap and smaller cars from Iceland. The dealer says that he so far has taken 143 cars from Iceland, and they have 52 on the way.
But it is not only smaller cars that are offered on the Icelandic used card market. In the happy ‘YAP’-days there were sold huge amounts of luxury 4-wheel card on Iceland, and, accourding to Sandven, you can now buy 2007-models of Toyota Land Cruiser, Rover Sport and Porsche Cayenne for a third of the new car price.
Payment twist
————-
However, the payment has been as problem for Sandven, since there is practically no trade in Icelandic kroner after the central bank has fixed the price.
But the salesman from Bergen has found a solution.
– We have one man in Iceland for this. Through him, we got in touch with some fisherman, who get very poor payment for Icelandic kroner in Euro. So we do the exchange with them instead. Noone can deny us to transfer the money in this way. I just did a trade for 500.000 Euro in the Icelandic spotmarket. The official rate for gives 16.5 Icelandic kroner for one Norwegian, while my rate was 22.5 kroner, says Sandven to the paper.”
Just Googlated it and wasn’t surprised to see that the trading was done with fishermen.
Although, that said, it’s not working the way that I expected. The fishermen are selling the Norwegian car dealer ISK at the Central Bank rate +36% (presumably because the exchange controls prevent them getting the currency from the bank itself)..
I’d assumed that they were already selling their catch abroad and would be flush with foreign currency, which they’d then have to change at the disadvantagous Central Bank rate. Presumably that is happening, but at a corporate level rather than for each individual boat.
Anyway, the translation (such as it is):
Collapse in the Icelandic economy has led to the country’s used car market, it is pure termination sale, writes Finansavisen.
Load ships going almost shuttled. We try to be the cheapest and have the best purchases. We buy a lot and sell quickly, “says car dealer Trond Sandven in Bergen to the newspaper.
Third of the price nybilen
Sandven has even toned down the German luxury imports for the benefit of cheap cars from Iceland. Car dealer said that they have so far taken in 143 cars from Iceland, and that they have 52 on the way.
But it’s not only cars that falbys used in the Icelandic market. It was in the glade Jappe currently sold quantities of luxurious firejulstrekkere in Iceland, and according to Sandven and get them bought 2007 models of Toyota Land Cruiser, Rover Sport and Porsche Cayenne for third of nybilen price.
Betalingsvri
Payment, however, has been a problem for Sandven, when in practice not done any trading with Icelandic kroner after the central bank has set the course
But bilkremmeren from Bergen have found a solution.
– We have a special man to this Island. Via him, we have come in contact with some fishermen, who are very poorly paid for the Icelandic kroner per euro, so we switch to them instead. No one can deny us to transfer money in this way. I just traded for 500,000 euros in Icelandic kroner in the spot market. The official exchange rate gives 16.50 Icelandic kroner for one Norwegian, but my course was 22.50 million, says Sandven to the newspaper.
For those who are not so good in Norwegian – could you give brief translation of most interesting parts?
And the name of the article is misleading. In nominal numbers it’s higher but relative to euro and inflation – my is 1/2 of the one in January 2008.
The paper Dagens Næringsliv had a very interesting article about Iceland and the ISK today. It seems in fact like there IS a black market for the ISK, which showns the “real” value of the currency.
The article is really about the export of cars from Iceland to Norway, but at the end, the importer here in Norway tells how to get almost 40% more ISK when exchanging the NOK to ISK.
I am not really surprised, the surprising thing is that this has not been revealed before.
Read the article (in Norwegain) here:
http://www.dn.no/dnBil/article1617255.ece?jgo=c1_re_right_5