Economics
‘Crazy’ Labor Agreement Ties Iceland Wage Increases to Rate Cuts
Photographer: Arnaldur Halldorsson/Bloomberg
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Trade unions and employers in Iceland ended months of deadlock by agreeing to make wage increases dependent on the central bank cutting interest rates.
The unusual arrangement also involved the government extending parental leave and cutting taxes. It provides options for a shorter working week and includes a clause designed to ensure workers receive an extra pay hike when the economy grows at a certain rate.