New budget places greater burden on the public

Iceland’s new budget places greater burdens on the public, according to Finnbjörn A. Hermannsson, president of the Icelandic Confederation of Labour, ASÍ.

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This is reflected in the increase in the mileage charge, and we see that the personal tax credit is not increasing as it should. The difference is 3 billion króna.

He pointed to an increase in the mileage charge and said the personal tax credit was not rising as it should. The difference amounted to 3 billion Icelandic króna, he said. Child benefits would also fail to retain their value.

Hermannsson said pressure to restrain welfare spending appeared through higher user charges, including increased health-care fees introduced on Sept. 1. “All these demands for restraint are taken from people elsewhere,” he said.

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The demands for restraint on the welfare system appear through higher user charges, such as when health-care fees increased on Sept. 1. All these demands for restraint are taken from people elsewhere.

He said ASÍ supported the first balanced state budget in eight years, but only if it was built on the right foundations. In his view, the real value of child benefits was falling and the interest relief system was being dismantled, placing the burden on younger people and widening a generational divide if the approach continued.

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We support a balanced budget. That is commendable, but it needs to happen on the right foundations.

Hermannsson also challenged the finance minister’s claim that wages had grown faster than prices. He said wage drift had occurred, but agreed wages had not increased above inflation. Contracted wages were losing purchasing power, he said, while market wages had risen because of wage drift, producing uneven effects.

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Contracted wages are losing their value in real terms, while the market has risen because of wage drift. This affects people differently.