News - 25.11.2025

That’s Why It’s a Bad Idea for Reykjavík City to Link Preschool Fees to Income

Extensive changes are currently underway in preschools. One municipality after another is attempting to address the challenges of the preschool level—particularly due to the shortening of the workweek—by reducing the number of hours children spend at preschool. In the long term, it is desirable that children spend less time in preschool and more time with their parents. However, such changes will never materialize unless the shortened workweek is fully implemented across the general labour market, as most working people still spend significantly longer hours at work compared to public sector employees. It is hardly possible for children to spend time with their parents while the latter are at work.

Complex Fee Structures That Require Calculators

Municipalities take different approaches to achieving the goal of reduced preschool attendance time, but the prevailing trend appears to be price controls. Gradually, preschool fee schedules have become so complex that they are barely comparable between municipalities, and parents struggle greatly to understand the fees they are supposed to pay. The complexity has reached such a level that special calculators have been developed, allowing parents to enter the intended hours of attendance and their total income to determine their preschool fees.

The idea that seems to have taken hold is that it is desirable to link preschool fees to income, and city councillors and preschool policy administrators frequently speak of the reduction in parents’ financial contributions as if it were a negative development. This change has occurred over the period in which preschools have shifted from being childcare solutions for single mothers to becoming full-day general educational institutions—one of the most important pillars of Icelandic society. But why not link the fees to income? Isn’t that a fair way to make those who can pay do so, while sparing those who are worse off?

At first glance, this may seem like a progressive approach, but it is not. Income linking undermines universal systems, shifting them from providing service based on need to serving only those who can pay. Universal systems are generally more effective and cost-efficient, while income-linked systems are more expensive and administratively complex. Income-linked systems almost without exception become so extensive that people in full-time employment experience reductions in benefits, and those on lower to middle incomes frequently hit income ceilings. In Iceland, for example, child benefits are income-linked and the reduction thresholds are set in such a way that most fully employed parents are not entitled to full child benefits. The same can be said about preschool fees in Kópavogur, where the full discount does not apply to low-income parents in cohabitation. People on lower middle incomes must pay the full amount. This gradually turns services for families with children into a form of poor relief, rather than support for children and their parents during a vulnerable stage of life.

A Penalty for Working Extra

Young people today face one of the most difficult housing markets in living memory. They struggle to secure a roof over their heads, and when they do—often with help from close relatives—the burden of payments is heavy. One way to cope with such a reality is to work a little more, take on extra shifts when possible, and try to scrape together enough to pay down a loan or cover the holidays. But what does that mean in an income-linked world? It means that all of a sudden, preschool fees increase, and child benefits decrease. How are people supposed to make ends meet?
Income linking penalizes overtime or wage increases and encourages undeclared work, which in turn undermines the rights of wage earners—both now and in the future. It fuels tension between income groups, especially given that income tells only half the story when it comes to people’s financial situations; housing costs tell the other half.

A Violation of Collective Agreements

Last year, collective agreements were made in which the involvement of the state and municipalities was characterized by political will to support families with children. Child and housing benefits were increased, free school meals were introduced, and promises were made to bridge the gap between parental leave and preschool. Furthermore, municipalities committed themselves not to increase fee schedules excessively and to spare families with children. The ink was barely dry before some municipalities began sharply raising preschool fees, and now such proposals are on the table in Reykjavík City. These increases are in direct conflict with collective agreements and undermine the trust that the labour movement must be able to place in public authorities.

Within VR, there are five thousand parents of preschool children, and VR is the largest trade union of young people in Iceland. VR has protested increases in preschool fees on behalf of its members, and the congress of the Commercial Federation of Iceland passed a resolution at the end of last month opposing income-linked preschool fees. We demand that the interests of working parents be taken into account in changes to preschool operations. Income linking is a bad solution, and it is unacceptable that parents in the general labour market should foot the bill for the shortened work hours of public sector employees.

Other solutions are possible, and VR is ready to collaborate on developing them.

Halla Gunnarsdóttir, Leader of VR

This article was first published on visir.is on November 25, 2025.