News - 30.09.2026

September without a resolution

By early March, it had become clear that the assumptions underlying the collective agreements were less likely to hold than had generally been expected. Inflation was rising. Public-sector fees had increased, price rises by companies had become an almost daily occurrence, and there was still no sign of the long-awaited action on housing, which is the largest driver of inflation. At the same time, the United States and Israel had launched what we regard as an illegal war of aggression against Iran. The assumptions underlying the collective agreements were already likely to fail regardless of increases in oil prices, and once those increases were factored in, it was clear that the impact in the autumn could be even more severe. As soon as the situation became clear, on 10 March, VR, LÍV and Fagfélögin formally began working together on the assumptions underlying the collective agreements. We knew that the situation called for thorough preparation and unity.

The clock is still ticking

We immediately began calling for action in response to the situation. At our initiative, together with the Icelandic Automobile Association, the government introduced a progressive cap on fuel prices through legislation, thereby protecting households from the wide-ranging effects of rising oil prices. However, little progress was made on other fronts. Price increases continued to affect inflation measurements month after month, while the authorities failed to act. This was unfortunate because, in our view, measures could have been introduced in early summer that would have had a visible impact and helped create the conditions for the collective agreements to remain in force. In our article “A summer without action”, published on Vísir in early August, we reviewed the situation. At the time, however, the attention of politicians and voters was focused primarily on the referendum on EU membership. Meanwhile, the clock was ticking in the labour market. And it is still ticking.

Since then, little has changed. The cap on oil prices expired without any further action being taken. The effects have already appeared in inflation figures and will work their way through the various indexation mechanisms and into people’s housing costs. The government presented a budget proposal that, in our view, appears designed to sustain inflation and increase the burden on workers, although it has since emerged that this formed part of what has been described as some kind of poorly conceived game theory.

First, the problem must be acknowledged

VR, LÍV and Fagfélögin have sent letters to companies with a significant influence on prices and to municipalities, asking them to explain what commitments they are prepared to make in relation to the collective agreements. It has become clear that most of them did not consider themselves to have any obligations towards the current collective agreements, despite having signed declarations stating that everyone would now need to contribute. Some companies have nevertheless stepped up and taken responsibility, and there have also been positive indications from municipalities of a willingness to genuinely moderate increases in fees and charges. Attention now turns to the government and Parliament in relation to the budget proposal. The problem, however, is that none of this will be settled by 8 October, which is the deadline for the trade unions to terminate the agreements. VR, LÍV and Fagfélögin have consistently maintained that the same promises made in 2024 cannot simply be renewed. In our view, workers have been let down, and if trust is to be rebuilt following that breach of trust, the first step must be to acknowledge the problem and recognise what has happened. We have called for such recognition in the form of a correction for workers, who have borne the burden alone for years. In doing so, we have pointed to the fact that negotiated wage increases for large groups of our members have been below inflation, while services for families with children – who were specifically meant to be protected during a period of inflation – have been reduced. In practice, this means that people’s real wages have fallen at the same time as housing costs for many households have risen sharply and everyday life has become more difficult for families with children. This is not what was agreed.

The ball is in SA’s court

SA, Samtök atvinnulífsins (The Confederation of Icelandic Enterprise) has stated that it does not intend to meet workers’ demands in the way we have requested. Nevertheless, SA considers it preferable for the collective agreements to remain in force and has spoken about the need to “believe in the project” – namely, bringing down interest rates and inflation, as was intended when the agreements were signed in 2024.

VR, LÍV and Fagfélögin have repeatedly emphasised that they want the collective agreements to remain in force, but not on the basis that workers continue to bear the cost while other groups are shielded from it. In recognition of SA’s call not to “give up on the project”, we have submitted a final proposal aimed at resolving the situation while allowing the collective agreements to remain in force. We are not prepared to lock our members into continued deterioration in their terms and conditions. We have therefore proposed that the agreements remain in force, but with two new review provisions, one in March and another in September. By the end of the year, it should become clear whether the measures taken by companies are having an effect and whether the state and municipalities are keeping their commitments regarding increases in fees and charges. If they do, inflation should decline and the collective agreements can remain in force until their scheduled expiry. But if the authorities and companies once again step back while workers are left holding the bag, the trade unions must have a way out of the agreements. The proposed new review provisions are designed with this in mind. We will now see whether SA truly believes in the project.

The ball is in SA’s court.

Halla Gunnarsdóttir, Chair of VR
Jakob Tryggvason, Chair of RSÍ
Andri Reyr Haraldsson, Vice-Chair of RSÍ and Chair of FÍR
Eiður Stefánsson, Chair of LÍV
Gunnar Sigurðsson, Chair of VM
Óskar Hafnfjörð Gunnarsson, Chair of MATVÍS

The article was first published on visir.is on 30 September 2026.