Justice, equality, welfare
ASÍ president, Kristján Þórður Snæbjarnarson. Photos/Lárus Karl
Dear comrades and countrymen,
Improving the conditions for low-wage workers has long been one of the cornerstones of the Confederation's of Labour struggle. On this day, when we have chosen to focus on the task of ensuring justice, equality, and welfare in Iceland, attention must be directed towards the most vulnerable groups of society, as inflation soars with corresponding increases in goods, services, and interest rates. The situation is, in many ways, precarious, and I have no doubt that the labour movement needs to rely on solidarity in the upcoming battles against forces that show no interest in easing the lives of those already struggling.
The leadership of the current government often talks about "stability" and its maintenance was once said to be the underpinning for the three-party ruling coalition. As the public knows and feels on their own skin, "stability" has not been at hand for quite some time in the economic affairs of the nation.
The Central Bank of Iceland has taken a U-turn in its interest rate policy with the consequence that homebuyers are forced into indexed loans again. After a significant and rapid reduction in interest rates, which made non-indexed loans an attractive option for many homebuyers, the bank has repeatedly raised interest rates with alarming effects on the income of many people. Keep in mind that the full impact of these rate hikes is far from being felt; over the next few months, the payment burden of many will increase significantly as the variable interest rates on non-indexed loans are updated. Inflation and interest rate hikes often directly affect rental prices for housing, and it has now come to the point where many tenants are struggling to make ends meet.
In addition, there is a housing shortage that undoubtedly hits those hardest who already face the worst conditions; young people, single parents, the disabled, first-time homebuyers, migrant workers, and tenants. Many workers live in industrial housing in conditions that can directly threaten their lives, as is well known. In public discourse, it is now considered self-evident and natural to discuss the merits of building temporary housing on the outskirts of urban areas. The social consequences of such a "housing policy" do not seem to have a place on the agenda of national political debate.
The Confederation of Labour has long maintained the view that secure housing is a human right. Housing should be considered a necessity, not an investment. Therefore, the housing system and support within it should be tailored to people's needs, not to wealth. We have proposed a "rent control" system that, in simple terms, limits the raising of rent. We have raised the issue of a "vacancy tax" so that owners of unused residential housing are encouraged to put it on the rental market or pay a fee. Additionally, we have introduced measures to counteract capital owners accumulating residential housing for rent and exploiting people's desperation.
The labour movement has not been idle in housing matters, as evidenced by the Bjarg housing cooperative and the excellent initiative of the VR union, which has undertaken projects for multi-family houses with rental apartments for its members in Úlfarsárdalur. There is reason to hope for further efforts by unions in this field.
The above points could be part of a comprehensive long-term housing policy. However, the problem will not be resolved without the direct involvement of the state and municipalities. This involvement must be directly related to the rapid increase in the population, especially incoming migrants, and forecasts for the need for labour in the country in the coming years. Efforts are being made to facilitate the arrival of people from outside the European Economic Area to work here. Where will these good people live? Are temporary housing solutions waiting for them?
The situation becomes even worse given that plans for expanding the housing supply will most likely not come to fruition due to high capital costs and a lack of land for new construction. Many municipalities seem unable to secure enough land supply, and it is curious that they are unable to fulfil their basic obligations to citizens and adhere to given promises.
If nothing is done quickly to address the housing crisis, the situation will become completely unmanageable.
The lack of progress in housing issues is a common denominator for the indifference to the well-being of the people in the country that characterizes the government and many municipalities. In recent months, news from abroad have told us of various measures taken by authorities to address the income crisis, primarily caused by inflation, significant increases in energy prices, and food prices. Direct interventions to soften the blow have been the norm in most countries in our region.
Here in Iceland, the government has taken measures that have directly led to further cuts in living standards. These include higher taxes and fees at the beginning of 2023, which both eroded purchasing power directly and fuelled inflation. These measures certainly hit the low-income population the hardest, just like before, and are just as unacceptable as before.
Direct interventions, such as tax cuts on fuel and food, have not been considered. Instead, the government offers a vague and hastily drafted financial plan to the public, where "reviews" and "reassessments" of various aspects are announced.
There is nothing in this plan that can improve the financial situation of households in the coming months. Direct measures to reduce inflation are not presented. The welfare system’s transfer mechanisms are underfunded. There are no plans to address the large interest rate differentials, usury, and banks’ excesses, which, contrary to government officials’ statements, have reaped all the benefits of reduced bank taxes. Financing of expenditures is in disarray, and once again, the ruling forces refuse to meet the obvious demand for the nation to benefit from resources in its possession. Extremely high wages and capital income will not be taxed further.
Indifference and distrust
As with housing issues, the government’s financial plan shows the indifference of the authorities towards the income crisis of wage earners, the collapse of purchasing power, and inflation. This is a major concern and widespread. Do politicians no longer share the living conditions of the general public in the country? Surveys show decreasing trust in the Parliament and other fundamental institutions of society. Is this attitude related to some kind of rift between policymakers and citizens? It is surprising that there is not more discussion about the public's attitude, as revealed by trust surveys.
In the last collective agreements, which were of a short duration, we achieved good results. The power of the labour movement was demonstrated to our counterparts and all citizens. Soon, new rounds of wage negotiations will begin, and in that regard, people have generally been looking at longer agreements. The uncertainty that led to short-term agreements has not diminished. On the contrary, it can be argued that it has increased, not least due to the actions of the authorities, which cause both disappointment and surprise. Under these circumstances, long-term agreements do not appear to be an attractive option.
As I have outlined here, wage earners in Iceland are facing significant challenges, turning points even, which call for our unity and strength, even beyond what we have experienced for quite some time. The prerequisites for welfare are justice and equality. Against the values of our struggle stand forces that take advantage of the slightest disagreement in our ranks to weaken the labour movement.
Our movement is the greatest force for progress in our society. We think with gratitude and respect of those who went before us; their struggle, visions, unity, and sacrifices. We look forward with optimism and a fighting spirit to the tasks ahead of us and vow never to waver in our struggle for justice, equality, and welfare in Iceland.
Happy Labour Day!!