March 12, 2026

Wage rate increase takes effect April 1

Date

March 12, 2026

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The Wage and Prerequisites Committee for Collective Bargaining Agreements in the General Labor Market has ruled that the wage rate increase will take effect as of April 1st. This means that wage rates in current collective bargaining agreements will increase by 0.06% from that time.


The decision is based on the fact that the wage index in the general labor market rose above the rate increases of the reference rate in the second year of the stability agreement. According to the agreements, such a development leads to an automatic increase in purchasing prices through a special purchasing price increase.


The collective agreements valid from 2024 to 2028 include specific preconditions related to economic developments. They stipulate that the Wage and Prerequisites Committee, which is composed of representatives from ASÍ and the Confederation of Icelandic Employers, monitors the development of inflation, interest rates and other key variables that may affect the objectives of the agreements.


The agreements were made with the aim of contributing to deflation and lowering interest rates. In the fall of 2023, when preparations for the collective bargaining agreement began, inflation was measured at 8%, but it subsided in the first year of the agreement and was measured at 4.2% in February 2025. A process of interest rate cuts also began at that time. However, in the past year, there has been a turnaround and inflation has increased again.


According to the latest measurements, inflation is 5.2%, or 4.5% if housing costs are excluded. Price increases are measured on a broad basis and uncertainty about the economic outlook has increased.


The Wage and Conditions Committee will next formally assess the conditions of the collective agreements in September 2026. This will include consideration of whether inflation is within the limits set in the agreements. If inflation exceeds a certain threshold, the agreements may be terminated, unless the parties reach an agreement on a response to a failure to meet the conditions.



The committee has also discussed the so-called productivity increase for the year 2025. The conclusion is that productivity developments during the contract period do not warrant its payment this time.

By Freyr Efling March 27, 2026
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By Freyr Efling March 26, 2026
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By Freyr Efling March 24, 2026
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