
NOTE: This article is more than 5 years old. 23 June 2006 / Prime Ministers Office Statement by the Government Statement by the Government to facilitate an agreement between the Confederation of Labour (ASI) and the Confederation of Employers (SA) to keep the present wage agreements in force. The Government supports the goal of ASI and SA to reduce inflation in 2007 and will cooperate closely with the parties to ensure the implementation of the economic premises underlying their agreement, especially as regards the development of prices. For this purpose, the Government hereby states that it is prepared to cooperate on the following measures to promote continued stability in the labour market: 1. The personal income tax credit will be increased from 29,029 krónur to 32,150 krónur as of the beginning of next year. With this increase, including a cut in the income tax rate, the tax-free income threshold will be increased from 79 thousand krónur to 90 thousand krónur a month, or by 14 per cent. The Government also pledges that the personal tax credit will be revised annually, on January 1st 2008 for the first time, in line with changes in the consumer price index over the previous twelve months. 2. The Government states that it is prepared to review provisions regarding tax credits for interest payments, if it turns out that the final tax assessment next August shows a significant reduction in such tax credits due to the rise in real property prices in 2005. 3. Child allowances for children up to the age of eighteen instead of sixteen will be adopted as of the beginning of next year. This change comes in addition to the previously decided 25 per cent increase in the income threshold for child allowances and the reduction in income-related allowance reductions. 4. In light of the above changes, the Government pledges that the previously decided 2 per cent cut in the personal income tax as of the beginning of next year will be reduced to a 1 per cent cut, i.e. from 23.75 per cent to 22.75 per cent. 5. Appropriations for adult education and job training will be increased in 2007. These funds will be used for giving courses and retraining of individuals in the labour market that enter a course of study based on the curriculum certified by the Labour Educational Centre and confirmed by the Ministry of Education. The purpose is to strengthen educational and career advice and ability assessment in cooperation with the industrial education centres for those wage earners that have completed partial training in organised career courses and in order to strengthen the operations of continuing retraining centres of ASI in the capital area. This support will be more closely defined in an addendum to a service agreement that presently is in force between the Ministry of Education and the Labour Educational Centre. A total of 120 million krónur will be devoted to the above projects on an annual basis in addition to the funds already allocated for this purpose. 6. The Government has decided to initiate a cooperation between public authorities and the labour market partners in order to review issues regarding foreign labour in the Icelandic labour market, since it is important that the increasing number of foreign companies and foreigners do not undermine rules and conventions aldready established in the Icelandic labour market. It should be ensured that the rights of workers are not violated, and that companies operating here respect the law and wage agreements. Precise rules shall be drafted regarding the registration requirements of service providers that bring their employees to this country and how the government enforcement system can be improved to ensure that foreigners reside and work in this country on a legal basis. The Government also states that it is prepared to work with the labour market partners to fight the underground economy. The main emphasis should be on uprooting the so-called notional subcontractors, such as in the construction industry, construction-related services and in the restaurant sector. The surveillance of the operations of and tax enforcement on foreign service providers and their employees shall be strengthened. An effort shall be made in the area of tenders in order to forestall low bids that are based on the so-called shifts between national registry numbers or that are based on the premise that the pay terms of employees of the relevant subcontractor are not in accordance with Icelandic law and wage agreements. The Government states that the present proposals of the labour market partners regarding these matters will be had in regard when laws and regulations will be reviewed, and that funds for that purpose will be provided. 7. The Government states that it will see to it that the basic unemployment compensation will be increased by 15,000 krónur on July 1st 2006 in accordance with the increases embodied in the agreement between ASI and SA. At the same time, the maximum amounte of income-related unemployment compensation will increase from 180,000 krónur to 185,400 krónur. Changes in old age and disability pensions are under consideration, where a further implementation will be decided upon in accordance with the above decisions. Reykjavík, June 22nd 2006 Tags Prime Ministers Office Go back

NOTE: This article is more than 5 years old.

23 June 2006

Prime Ministers Office

Statement by the Government

to facilitate an agreement between the Confederation of Labour (ASI) and the Confederation of Employers (SA) to keep the present wage agreements in force.

The Government supports the goal of ASI and SA to reduce inflation in 2007 and will cooperate closely with the parties to ensure the implementation of the economic premises underlying their agreement, especially as regards the development of prices. For this purpose, the Government hereby states that it is prepared to cooperate on the following measures to promote continued stability in the labour market:

1. The personal income tax credit will be increased from 29,029 krónur to 32,150 krónur as of the beginning of next year. With this increase, including a cut in the income tax rate, the tax-free income threshold will be increased from 79 thousand krónur to 90 thousand krónur a month, or by 14 per cent. The Government also pledges that the personal tax credit will be revised annually, on January 1st 2008 for the first time, in line with changes in the consumer price index over the previous twelve months.

2. The Government states that it is prepared to review provisions regarding tax credits for interest payments, if it turns out that the final tax assessment next August shows a significant reduction in such tax credits due to the rise in real property prices in 2005.

3. Child allowances for children up to the age of eighteen instead of sixteen will be adopted as of the beginning of next year. This change comes in addition to the previously decided 25 per cent increase in the income threshold for child allowances and the reduction in income-related allowance reductions.

4. In light of the above changes, the Government pledges that the previously decided 2 per cent cut in the personal income tax as of the beginning of next year will be reduced to a 1 per cent cut, i.e. from 23.75 per cent to 22.75 per cent.

5. Appropriations for adult education and job training will be increased in 2007. These funds will be used for giving courses and retraining of individuals in the labour market that enter a course of study based on the curriculum certified by the Labour Educational Centre and confirmed by the Ministry of Education. The purpose is to strengthen educational and career advice and ability assessment in cooperation with the industrial education centres for those wage earners that have completed partial training in organised career courses and in order to strengthen the operations of continuing retraining centres of ASI in the capital area. This support will be more closely defined in an addendum to a service agreement that presently is in force between the Ministry of Education and the Labour Educational Centre. A total of 120 million krónur will be devoted to the above projects on an annual basis in addition to the funds already allocated for this purpose.

6. The Government has decided to initiate a cooperation between public authorities and the labour market partners in order to review issues regarding foreign labour in the Icelandic labour market, since it is important that the increasing number of foreign companies and foreigners do not undermine rules and conventions aldready established in the Icelandic labour market. It should be ensured that the rights of workers are not violated, and that companies operating here respect the law and wage agreements. Precise rules shall be drafted regarding the registration requirements of service providers that bring their employees to this country and how the government enforcement system can be improved to ensure that foreigners reside and work in this country on a legal basis. The Government also states that it is prepared to work with the labour market partners to fight the underground economy. The main emphasis should be on uprooting the so-called notional subcontractors, such as in the construction industry, construction-related services and in the restaurant sector. The surveillance of the operations of and tax enforcement on foreign service providers and their employees shall be strengthened. An effort shall be made in the area of tenders in order to forestall low bids that are based on the so-called shifts between national registry numbers or that are based on the premise that the pay terms of employees of the relevant subcontractor are not in accordance with Icelandic law and wage agreements. The Government states that the present proposals of the labour market partners regarding these matters will be had in regard when laws and regulations will be reviewed, and that funds for that purpose will be provided.

7. The Government states that it will see to it that the basic unemployment compensation will be increased by 15,000 krónur on July 1st 2006 in accordance with the increases embodied in the agreement between ASI and SA. At the same time, the maximum amounte of income-related unemployment compensation will increase from 180,000 krónur to 185,400 krónur. Changes in old age and disability pensions are under consideration, where a further implementation will be decided upon in accordance with the above decisions.

Reykjavík, June 22nd 2006

Statement by the Government

Statement by the Government

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