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News - 28.04.2023

Concerns about the state of the economy at the ASÍ Congress

The Board of VR submitted a resolution on economic and wage issues at the ASÍ Congress and expressed serious concerns about the economic situation and the government's lack of action. The resolution was adopted and is published in its entirety below.

„The 45th Congress of The Icelandic Confederation of Labour (ASI), expresses deep concern about the state of the economy in Iceland and the government's lack of action. The Central Bank's repeated rate hikes have not been successful in dealing with inflation, but have extremely serious consequences for working people who live with rising costs. The government has left fighting inflation in the hands of the Central Bank and the government‘s new financial plan does not contain any measures to accommodate the rising debt burden or to attack inflation immediately. Employers and public bodies, such as municipalities and government institutions, have not kept price and tariff increases in check, and oligopolistic competition in the field of daily products, fuel, insurance and other necessities leads to the profit of the capital forces at the expense of the public.

The situation in the housing market is very serious. Rent has risen rapidly, people with indexed loans have once again watched their loans grow, and those with non-indexed loans had to pay higher interest at the end of each month. In the coming months, many people will need to refinance their homes when the period of fixed interest rates comes to an end. If nothing is done, there is a risk that we will see similar consequences to what happened during the economic collapse in 2008. The benefits of the last collective agreements are almost exhausted and may put the labor movement in the position of having to demand massive wage increases to meet the heavy burdens placed upon workers because of a situation they did not create.

The ASÍ Congress demands that employers and the government join hands with the labor movement in the coming collective agreements to find ways out of this impasse for the benefit of workers and the public. The ASÍ Congress completely rejects the approach of letting workers, tenants and debtors bear the burden alone.

The government needs to show that it is serious about addressing the nation's housing problem. The Central Bank must take responsibility for its mistakes and use more precautionary tools than the policy rate alone to reduce inflation. Price restrictions need to be seriously considered and the tax system used to shift the burden from those who will suffer and onto those who can bear it. Here we can mention resource fees on the fishing industry and bank tax. Inaction is not an option in these circumstances."