Iceland’s overdue national wage contract has now been signed by 12 trades unions, the Icelandic Confederation of Labour and the Icelandic Confederation of Employers.
The new deal, which was signed late on Thursday, will see wages go up by 4.25 percent on 1st June, as well as a one-off payment of ISK 50,000 for each employee (EUR 304), which will be paid out once the new wage contract has been approved by each union’s members in a vote, according to mbl.is.
“The average pay raise is 12.6 percent. If we subtract the estimated inflation [2.5-3.0 percent], we’re talking 7.5-8.0 percent price increases in the three-year contract period, we’re left with a purchasing power increase of three to four percent,” says Olafur Darri Andrason, chief Federation of Labour economist.
Unions hope that the greater than expected pay increases will serve to recoup some of Icelanders’ lost spending power since the economic crisis. It is also hoped that higher wages will not drive inflation to nearly the same extent as the krona exchange rate.