Government Moves to Tie Benefits Directly to Wages

2026-02-17 - 11:37

A government bill proposing to link social security payments to the wage index is now under consideration by the Welfare Committee of the Alþingi, following its second parliamentary debate. As reported by RÚV, ministers have presented the measure as a structural adjustment to the benefits system, while labour and employer organisations have raised concerns about its broader implications. What's the Story? Bill before the Welfare Committee of the Alþingi to link social security payments to the wage index, following second parliamentary debate Proposal discussed on RÚV’s Silfrin current affairs show Criticism from the Icelandic Confederation of Labour and the Confederation of Icelandic Employers regarding clarity, fiscal impact, and effect on wage developments Stacks of Icelandic Króna. Photo: Golli. Reform Under Review The proposal was discussed on RÚV’s current affairs programme Silfrið. Finance and Economic Affairs Minister Daði Már Kristófersson addressed criticism that the changes could create a so-called “double lock”, allowing benefits to rise faster than wages. “It is based on some kind of liberal interpretation. It is quite clear in the explanatory memorandum to the bill that this is intended to be anchored by the wage index. Annual changes may occur in accordance with the consumer price index, but in the long term this development will follow the wage index.” Critics, including the Icelandic Confederation of Labour and the Confederation of Icelandic Enterprise, have questioned whether the wording of the bill provides sufficient clarity and warned of potential pressure on public finances. Ásta Fjeldsted, CEO of Festi, said: “In light of this, it is important that the government explains very clearly how this will unfold.” Economist Sigríður Ingibjörg Ingadóttir of BSRB argued that applying the wage index across the entire system may limit the ability to direct additional support to those most in need.